crossposted at NoSlaves.com blog
What a surprise, when the nation is about to go over a cliff a little squeak comes from The Federal Reserve chairman. Ben S. Bernanke, said today that a global "savings glut" has helped keep interest rates low, but he warned that major trade imbalances between emerging and industrial nations may prove "counterproductive" to the global economy over time. That's one roar in full battle gear to fight economic Armageddon huh?
Notice he talks about a global savings glut. Well, that means everyone but us. I'm so glad the United States Federal Reserve Chairman is noticing the rest of the world and failing to mention the U.S. savings rate is negative.
Economist Paul Craig Roberts wrote a damning article today, American Economy: R.I.P. The entire article is full of horrifying statistics and this paragraph stuck out:
When US companies offshore their production for US markets, the consequences for the US economy are highly detrimental. One consequence is that foreign labor is substituted for US labor, resulting in a shriveling of career opportunities and income growth in the US. Another is that US Gross Domestic Product is turned into imports. By turning US brand names into imports, offshoring has a double whammy on the US trade deficit. Simultaneously, imports rise by the amount of offshored production, and the supply of exportable manufactured goods declines by the same amount.
We even have phantom GDP growth as pointed out by Economist Susan Houseman. That's right folks, imagine that, offshore outsourcing the jobs and trying to count that as US productivity is kind of cheating. Gee, imagine that, counting productivity metrics outside the United States and assigning them to GDP would somehow inflate the actual domestic economic picture. Shocking.
One fact Roberts mentioned is most damning:
The US now has a trade deficit with every part of the world.
We also have 60% of economists looking for the economy to go into a recession.
Have the chickens come home to roost?
Paul Craig Roberts says
The ability of the US dollar to retain its reserve currency status is eroding due to the continuous increases in US budget and trade deficits.
For understanding what reserve currency status is and means, a little Wikipedia.
So, why do we have Democrats negotiating more trade deals based on the same NAFTA model?
Public citizen spells it out by saying:
Adding improved labor and environmental standards to the Bush-negotiated NAFTA expansion agreements is like putting a new roof on a condemned building