There is a lot of talk of double dip, and with a jobless recovery it doesn't seem impossible, that we are just in an upswing in a bearish market than in a true recovery, some may even say that we are in a protracted recession with this its first initial dead cat bounce which will be worse and longer than the depression. That last statement maybe an over-exaggeration of where things may head, but you have reputable people calling for situations close to it. To me, I think there are too many doomsayers out there that think things are going to spiral out of control on a global scale.
One thing that bothers me and keeps me out of the bull camp for the time being is that we are having a jobless recovery where many companies are having great earnings by careful accounting, by cutting and reducing spending. They are not creating earnings the old-fashioned way of creating supply and expansion at the end of every normal recession.
So right now most companies are not playing their traditional role in this so called recovery with many sitting on records amounts of cash, refusing to spend. In every traditional recovery jobs plays a vital role into getting to that next stage of expansion. Without the jobs for expansion, you will not create the added demand for your product or service and hence you have this catch 22 developing.
When these companies cut to create profits, they are in effect killing themselves by killing their future market. If most companies are reacting to the same economic situation in the same wrong way, we could end up with even more economic choking happening. The outlook for the economy recovering by jobs will never happen and you will see a widening of the wealth gap in America between the have's and have nots.
So why is the US economy in this situation? It spent to long being a consumer nation relying on a strong dollar to buy cheap foreign goods than it did on building value in its own economy. It spent too long manufacturing goods in foreign countries selling it to americans than it did trying to manufacture goods in America to sell to the world. It saw cheap labor of the third world and sold itself out.
It sold its manufacturing industry out on a national scale, outsourced everything else, with all those jobs going to the dead end service industry, which are always the weakest jobs being the first to lose and last to hire on in economic swings. They relied on credit to spur the economy well past its means and now the American Consumer is spent out. Can't take out anymore equity on their homes that heave been devastated price wise, can't add another credit card, and in most cases are shell-shocked into savings mode that most won't come out of until their debts are paid off. That could be another 5 -10 years wait for the American economy to come back, if it relies on the consumer.
The one positive of that outsourcing has had is it has help other third world countries develop, but at much slower rates, because of using cheap third world labor. Wages in developing nations are rising fast and soon the that advantage that companies used will no longer be an advantage. Hong Kong recently introduced a minimum wage, being mostly a symbolic gesture that wages are being brought up to western standards. So there is a global incentive that is coming up that will force many companies to make a decision
In my view the government wants a cheaper dollar and is doing everything it can to get a cheaper dollar. First and foremost it makes it easier to pay off all the debt that they have acquired over the years and secondly it will help American industry reinvent itself and be more competitive on a global scale. Hopefully they can entice American industry to come home. Spend those corporate dollars in the good 'ol US which will add jobs. Obviously its a culture of corporate philosophy and thinking that has to be changed on a large scale. There is a glutton of credit available, companies are sitting on records amounts of cash.
In my opinion they have both the ability to be in the expanding areas of the world but rebuilding headquarters at home. It is a long way to recovery, but right now Corporate America is at a crossroads and if they don't choose wisely they will lose an opportunity that others will gladly step up and take. There is a market at home, but without investment, it will not recover.
You hit the nail on the head! Free trade has America in a noose. The consumer needs to get of the crack (cheap third world goods/ & China) and buy American/Canada. Show these global corporations that the jig is up. We want our jobs back. We want "Fair Trade." No more taking advantage of the "slave labour" force these corrupt countries are more than willing to provide. The slave trade is not dead, it just moved overseas. Shame on America!! Shame on the consumer for following for it hook line and sinker. Serves us right for being so greedy!! End global slavery, now!!!!!!! Power to the people!! Not the global corporations!! Get off the crack!!!!!!!! It will hurt at first, but we will be better off in the end. Buy American/Canadian/British/Germany, etc!!!
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