The $ will never get cheap enough to compete straight across with low-wage countries—unless we’re nuked into Fourth World-dom, and then we have other issues. Be serious: We’re going to compete with someone making under $.25 an hour in Bangladesh? How many people do you know _personally_ who would go work 10-12 hours a day on a backbreaking assembley line with few benefits for the equivalent of $1.00 and hour or less? . . . How many who aren’t convicts?

Anon 2:

Joe Six Pack is a dope, he gets played by the media and the pols year in and year out, he is outnumbered at the polls by _many other interest groups_ so his influence is A LOT less than his self-inflated interpretation of his status and relevance in society.

But that issue asside, Joe Six Pack doesn’t have anyone in the game to vote for, and won’t get anybody to vote for, ever. ‘Cause Joe isn’t the one to do the leg work to organize his class interest, natch. The Wolf, the Hound, and the Bitch are all sold to free trade; tweaked a little (to make the big boys better dough), but they are not slapping up sky high tariffs. Not one of them. We had a couple of faux populists in this recent campaign; how did they do? Low single digits, and that even in states _loaded with Joe Six Pack-ers_. This ‘political revolt’ concept is soooo overblown. Is Joe gonna vote for the Mutt [Nader] if he’s in, the only candidate who would actually push Joe’s go-cart for him? Of course not: “He’s an egghead, and a finger-wagging wuss.” Congress can stew all it wants, but their heart manifestly isn’t in it, and you have to get this one by the Political Exectutive, too. No go there. Fuggeddaboudit.

Joe Six-Pack loves to sound off, but then he shuffles into line, drops the ballot his boss filled in for him in the box like any other housebroken pooch, and goes to the bar where he buys a pitcher and sounds off to anyone who stops walking about how much we need a fence on the Mexican border. I’d love for Joe to get an actual political education, but education, see, isn’t his strong suit. And he likes it that way, ’cause ‘he knows he’s right.’

*hmmmphh*

—But China will save them. (Maybe.) European-Chinese trade exceeds American-Chinese trade. Some of this is certainly high-value equipment and product exports from Germany. If the yuan comes up some, China can buy more: the lightbulb on THIS deal will go on before long, and China will increasingly work a ‘virtuous’ leverage with Europe, while the US flounders with its (appropriately) depreciated currency.

It is totally in the econominc, political, and military interests of the rest of the world for the $ to decline, and for them to stop funding our guns and chocolate economy. —Except they are still wedded to the export strategies of the last 60 years. But . . . the lightbulb WILL go on. Nobody really talks about this, but we are going to get to live it out, and soon.

There is no way high wage labor can compete with low wage labor for the same value added. The problem in the 70s and 80s was called ‘de-industrialization’ because this had specifically happened in Europe; consider the Dutch example. Smarter countries chose areas where they could remain competitive in manufacturing, and bolstered them as a specific act of policy. For workers in other areas, efforts were made at retraining, with admittedly mixed results. In our country, we elected Reagan. That didn’t strike me as a competitive strategy, nor did it prove to be so.

The time to make an optimal transition for lost manufacturing jobs has passed; the window closed on that, ten years ago at least, probably longer. Now, we get pinched hard by the lack of opportunities between restaurant servers and money masseurs in cubicles. We will have to come up with a national retraining and industrial development policy from a disadvantageous position, starting from scratch. Doesn’t look good, gonna take ten years and several administrations even to get current on this one.

I know! We’ll all become musicians and sell video clips of our performances to eachother, hey. Oh wait, you say nobody pays for digital products? . . . Scratch that.

It is a balancing process, so to get ahead of the game in the market is to invest in U.S. only employers, because protectionism is on the rise at the dinner tables of America and any business that isn’t listening to the American people will be hurt.

On our troubles, here’s the box. It has four sides; three long, one short; the power elite controls two.

—# 1: The US banking system as a whole is insolvent, or very close to it.

The distribution of losses is asymmetric, though. Most of the big boys are flesh-eating zombies, or becoming such. Many of the middies are only hurting, however, tho’ they’ll be howling when commercial re tips over.

—# 2: The $ is sucking vacuum.

We need the best part of a terabuck per annum of capital inflows from foreign money to keep our economy level; a little less in an economic downturn but still plenty money. Now, though, we have private foreign capital _outflows_ to the tune of tens of billions per month; perfectly sensible and rightly so in present circumstances. Foreign central bank and sovereign capital is still coming, evidently, but _proportionately less_ than in the past and building down, and even then only into the best assets. They all want out, sovereign and private, and each are acting according to their nature.

—# 3: We are entering a severe recession in the US.

By next year, we may be pronouncing its name with an initial consonant that is an occlusive rather than a lateral. Consumers aren’t spending ’cause they’re busted and bummed, and business won’t spend if consumers don’t, in addition to which credit is hellish hard to get and even intermittently unavailable (see # 1). Shill and bloviate all they want to, those mediaots, reality is what it is, and it bites when stepped on.

—# 4: The US is engaged in an ongoing, multi-front, military adventure in SW Asia which is a political cancer abroad and at home, a fiscal tapeworm, and a moral crime not least in that we continue to kill by the thousands a people who never asked for our presence or sought us harm.

I may also add that, independent of moral and practical issues, the conduct of grand strategy in this adventure is so colossally inept—on a world historical scale of crepitation—that one must seriously doubt the mental stability of the political executives, current and future, who pursue it with our name, credit, lives, and ambitions.

Now, nothing can be done about # 3. It is a cyclical process which will run its course, with home values a principal driver, though job losses can and probably will overtake that impetus in time.

We can control # 1. Swift public receivership of actually or nearly insolvent banking institutions, plus public credit to other players gone wobbly can at this point keep the US banking system going. It will look a great deal less fat, arrogant, and rich a few years on than it does now, but we need it, we can keep it solvent, so we must. (Barring a derivatives blow-up: that’s the boojum we may hope never to meet.)

We can, in principle, resolve # 4. Our present political executives refuse find that unthinkable (though be it said it’s plain they don’t think to much). I think it’s even money that the boys stay there until their paychecks bounce. It’s hard to root for _that_ eventuality, but . . . . Still, it is, daily, within our power to end this particular march of folly.

# 2, however, is now out of our control. The $ has been, in effect, a Ponzi scheme through the last thirty years: we create more credit in $, one way or another than we produce, and have now saved so little it’s hard to see how we could ever cover our chits. More to the point, it’s hard to see how the game can keep going regardless of what we want. We could try to monetize that debt; that’s the nuclear option which will only drive off our remaining sovereign creditors. Asset deflation _will_ help, maybe, in that our debts will get discounted and our credit truncated, bringing things rather violently back into line. Everything priced in $s is _over_priced. Managing this asset deflation . . . well, good luck. This has happened (and will happen) to other countries: they’re still here, and some of them are doing alright by themselves, now. We are NOT to big to get a spanking and a bath. What I suspect will happen, this being true, is that our creditors will ‘hold a conference and then announce their terms.’ This won’t happen this year unless the banking system does a China Syndrome thing. But the power advantage has shifted, we are incapable of resolving our currency issues alone, and are perhaps incompetent to resolve our currency issues alone since we’ve grown accustomed to our overvaluation and don’t know how to play with other rules. Other players will ultimately ’solve the problem’ for themselves. Then, it’ll be dicker or drop the Big One, and I don’t think we’re crazy. Just spoiled rotten.

Welcome to the 21st century. : )