Echos from the Past

Kash gives a good graphic display of the weak Recovery We have endured since 2001. It has been consistently poorer than in previous Recoveries by all measures. It might be quite damning except for the matter of Size. The current economy is much larger than previous Recovery economies, and percentages reflect greater magnitudes of Product and Services transfers. Such added magnitude, though, would only conceal about a 19% hidden Gain over most ranges. The final analysis is that this Recovery has been sickly, and based upon extensive Business and Monetary practices which will engender long-term adverse consequences.

Most will disagree with me, but We are overinvested in residential property. Economic policy pushing for Home ownership, while proving a boon to financial markets, has overpriced Housing and curtailed both Pension-planning along with hard Capital investment. Heavy Government push to expand Trade beside increasing State and Local regulation of Business practice has produced about a 14% greater Cost of Domestic production in excess of foreign production. This later fact has pushed about 31% of Labor out of Production areas where they had experience and competence, while current practices have increased competence Training about 90% higher in Cost. The result is natural, a major underutilization of existing Labor assets based upon experience and education, a marked leave-taking of qualified labor from the Labor market, and generating at least 50% of the suppression of the Wage Gains of this Recovery. (All of the above Estimates are of my manufacture, and therefore, much contestable).

The run of Business trends have worsened the position of the U.S. economy. The sheer volume of Trade since 1998 has probably increased Our foreign Oil consumption by at least 20% of the current volume (think about 37-8% higher than the mid-90s Boom). The disqualification of trained Labor assets from previous employment effectively doubled Our Consumer Debt. Excessive Government Expenditures destroyed Our ability to implement Economic policy through overdraft of Our natural financial capital. Relaxation of Banking and financial instrument regulations has led to a vast increase in Margin buying, placing the overall economy at greater risk from failure of singular sectors. We have a far more stable economic environment than existed in 1928 so any crunch will not be as realistically harsh (plus the fact the economy is simply too damned big to grind to a stop), but I do not enjoy a political leadership who shape an economic structure similar to that of 1928. lgl