The Fundamentals of Economic Failure
Whether right in predicting a plunge in October or not, I am confident that the economy is not in recovery in spite of the convulsions of last week’s stock market. Not even a little bit in recovery. The U.S. economy is merely shored up with additional rotten wood. The original rot in the floor is as bad as it ever has been. Almost no gains have been made that would take us to a re-envisioned economy. The days ahead do not look better just because of an upturn in the stock market last week. People need to see beyond the immediate reactions of the stock market from good and bad news to what is being accomplished with the fundamentals of the global economy.
The economy’s collapse is a structural failure and remains so because…
The U.S. economy is still based on these failed practices:
- Greedy banking allowed to run almost unbridled with few serious regulations restored even now.
- Institutions being allowed to become “too big to fail” to where their failure can jeopardize the entire global economy. (Instead, we “solved” our banking problems by merging failed banks into other “too big to fail” institutions, making even greater giants.)
- Total advocacy on deficit spending by the U.S. government, including the enticement of consumers via low-interest loans to buy on debt in order to accelerate the economy to where citizens have now returned to their deficit-spending ways.
- Not paying for our supposed social generosity as we go, but shouldering it on the backs of future buy placebo ambien generations just so we can feel socially generous now.
- An obsessive focus on housing as the driving engine of a good economy and now as the thing that needs to be repaired in order to restore the economy.
All of those things were wrong practices because they are not sustainable, yet we have not turned from them. In each case, you can see we seek to repeat the practices that led to catastrophic failure in 2008 in order to get the old economy back, rather than work to envision a much healthier basis for genuine growth. (Growth was never growth at all when it was all bought with debt. There is no increase in wealth when it is all owned via debt.) It is, for example, amazing how much “economic growth” you can create when no one is paying for it because our tax cuts result in deficits that others will have to pay for.
We continue to live in denial that our old economy built on those foundations failed catastrophically because the fundamentals, themselves, were seriously flawed. We will never have a sustainable recovery until we learn our lessons and create better fundamentals for the economy to be built on. Thus, we can continue to anticipate a looooong and great recession.
Further reading / viewing on economic failure:
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Further reading on sustainable economics:
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