The truth is our standard of living will be on a slow decline the next several years [View All]

[TwixVoy]

Folks I have been one of the most pessimistic people on the economy. I don't feel we are looking at any dire situations like a complete economic collapse.

I think the reality we all are going to have to admit is that our standard of living is going to be on a gradual decline for many many years. I think Obama tried to warn us of that when he stated that many of the jobs we lost (for example, in the auto industry) were not going to come back ever.

The way I see it we have several key components that will continue to drag us down that have not been addressed, and that corporate America (and corporate owned congress) simply does not care to address. They are:

1. Credit credit credit. We have too many people in debt. Too many of our solutions involved the creation of more debt. Cash for clunkers was OK, but it resulted in giving several hundred thousand people who had no car payment a new debt they will have to service every month. We finance every part of our lives.

We finance our education. We have students walking out of school with massive debts and now can not find jobs sufficient to ever pay those debts off. (which can also never be discharged in bankruptcy)

We finance our homes and then found out we could not afford them. Has the market actually changed to make homes affordable? Not really. It changed when we had crazy lending standards and ultra low rate teasers. When we started having 50 and even 75 year mortgages. When we had interest only and negative amortization mortgages. This allowed more people to attempt to get a home, but it was simply more debt and financing tricks. People could not truly afford them. Has anything changed to allow people to truly afford them? Are people earning higher wages? Nope.

We finance our consumer purchases. The amount of outstanding credit card debt we have as a nation is insane.

2. Our economy is based on consumer spending. It seems to me too much of our lives have been dedicated to spending and getting more "things". Very little emphasis has been focused on personal savings and building true wealth. Many people don't earn enough to do that, and the ones that too are entirely focused on getting "things". Being in debt and spending every dime you have makes you weaker. Many people are in a situation where they can not rock the boat at work. If they lose their job they lose everything. They are debt slaves.

3. We are consumers and not producers. Actually making said "things" is what builds wealth as a nation. China and others now dwarf us on actual production. While they are producing goods, selling them, and building wealth we are consuming them ON CREDIT. China is running a massive surplus and is financially strong. We (as has recently been reported) are looking at a multi-trillion deficit that will continue to build for the next several years. This makes us incredibly weak over time. We have not done anything to increase our ability to manufacture. Hell, we bailed out the banks but let Michigan collapse. We gave the money to the banks no questions asked, yet we demanded Michigan give us a plan and prove they could fix things. It was decided they could not. No such requirement for the banks though. Funny how that works isn't it?

4. We outsourced our middle class jobs. Nuff' said. Pretty damn stupid move. The moment this started picking up steam in the 90's we as a population should have revolted and been marching in Washington. We as a nation can not survive on service jobs. Wal-mart is the largest employer in this country right now. That is a PROBLEM because the largest employer has the largest employee base classified as generally being in poverty. We got rid of manufacturing. We got rid of IT workers. We got rid of damn near anything we could that wasn't service sector.

5. We killed off our unions. This goes along with number 4. Employers tell us that "unions served their purpose and everything is law now". That is BS. If we had strong unions in this country they would have led the revolt on outsourcing. Pretty hard to do though when the vast majority of the country is not involved in the labor movement. There is always going to be a fight between employers and labor. Labor always will be exploited by employers if we don't organize against it. Unfortunately too many Americans have been convinced they don't need to and we can just trust our employers to do what is right for us.

6. Other nations such as China will over take us. Our dollar will eventually lose a ton of its value. Once the world figures out we are broke they will wash their hands of us. This little implosion of ours has alerted the Chinese to just what kind of condition we are in. They are not stupid and will begin to gradually decouple from us over time. Once we can no longer depend on foreign nations to finance our spending, and we can no longer count on cheap goods being imported from them.... where does that leave us? Hell even our medicine is produced abroad now. Our entire consumer economy depends on two things. One being foreign nations lending to us, and the other being said foreign nations willing to send us cheap goods to buy.

Notice how all of these things relate to each other? They all have a net impact of making us weaker over time. This is the root cause of our economic crisis. NONE of these points have been addressed by congress. Instead we have sent even more of our wealth to mega corporations. How have they rewarded us for our generous bail outs? Have they increased wages? Have they bettered working conditions? No. Instead they have rewarded us with more lay offs and outsourcing. They have rewarded us by spending billions to lobby against our ability to have health care.

This is why we will continue to have a slow decline over time. Make no mistake about it. Just because you see the DOW shooting up doesn't mean good things for you. Hell Wall Street has a rally when lay offs are announced. Less jobs = more profit for them short term. None of these core issues has truly been addressed, and our friendly corporations are fighting tooth and nail to make sure it stays that way. Look at what they are doing just on health care reform. They are not concerned with our interests. We will continue to become poorer and poorer over time. That is the sad truth about it, and it won't be until most Americans have trouble having a home and food before enough people are actually willing to turn off American Idol and do something.