The World’s Looming Depression

I have been increasingly worried about the economy, as so many others are becoming now that it is more obviously on the way down. When everyone but the rich are working harder and still not making enough to get by as they were even a year ago, it is hard to trust what the economic cheerleaders and spin doctors are saying on the TV. A crisis is looming that our media and gov’t are simply not preparing anybody for (unless it is homelessness and famine that they are preparing).

Analysts and economists–those few rational ones that can be heard above the din–have been warning America about its suicidal economic behaviors for years now: out of control use of credit by consumers pressured to buy buy buy for the good of the economy, the sub-prime housing scam, the rocketing US deficit due to war spending. And now that inflation confronts you every time you go to the grocery store or to the mall, it is probably far too late for anything to be done for screwed over consumers.

I was not very clear about the international impacts of a crashing US dollar until I read this article in Der Spiegel, titled “The Dollar Nosedive: Why America’s Currency Is the World’s Problem” (thanks to Cannonfire for pointing this out). It goes over all major aspects of the current economic fears comprehensively, so I won’t even try to summarize the article. Here’s a small quote about America’s situation:

What America has lost is nothing less than a substantial share of its production base. The industrial economy left the country’s shores and the service economy arrived, but it is incapable of filling the gap.

The impressive growth figures the US economy has been achieving for years offer nothing but the illusion of a prospering economy. This growth is based primarily on Americans’ rising consumer spending, which in turn is paid for in large part with credit or the sale of assets. To put it simply, the Americans are eating their past for breakfast and devouring their future for dinner.

The savings rate is practically nonexistent. US foreign debt grew by about $1 billion a day in 2006, and it now exceeds $2.5 trillion. Private American households now owe about $13 trillion to lenders at home and abroad. Thirty-six percent of this debt was created within the last five years. Americans can no longer afford much of the present.

The only thing that has doubled in the seven years of the Bush administration is the country’s military budget. By comparison, the average US family income has stagnated in the last decade or so.

You should read the whole article. I’m going to go sulk over the wrongness of a system that measures prosperity solely in terms corporate profits, and encourages greed and throat-slicing over human rights and the concerns of communities and the society in general.

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