Decline in the Economy

[Autodidact_33]

The Economic Troubles of the Western World













In any nation there is a direct relation between economic prosperity and their ability to manufacture and export products to the world beyond their borders. After World War 2 and the economies and industrial base of many nations lay in ruin; America became the most powerful and economically prosperous country on Earth because of their industrial might and ability to manufacture products which they could export to the entire world. But now, many Western nations have economies which are in decline and a running up large trade deficits due to the fact that they import more products and commodities then export thus leaving a situation where their financial capitol flows out of their nation to other countries while less foreign capitol comes into their nation in turn. America, once the worlds most powerful industrial economy; now has minimized their manufacturing base and moved them to other nations where labor is cheaper which has led to a situation where their economy struggles and has in the past artificially continued economic growth through the lowering of interests rate which no longer is a viable option since they cannot possibly lower interest rates any more. Meanwhile nations such as China and India have recently become economically successful due to their cheap labor due to the fact that the impoverished oceans of people in these nations are motivated to work hard since there is no nanny state to fall back on and if they don't work they will go without food and other essentials. Poorer nations and other nations with growing economies become effective manufactures because of their almost limitless reserve of cheap labor. So how can the Western world possibly remain competitive as manufacturers in the new globalized economic system?

In nations such as India and China their people have accumulated significant economic savings due to the fact that those cultures are not about materialism or seeking fulfillment through material possessions and instead are much more frugal with their money. So Western economies need to manufacture products that advancing nations which seek to attain a higher standard of living would need. One possible product would be cheap, fuel efficient automobiles which are easy to manufacture and are sold at a much lower cost then conventional cars. Also products that such growing economies might need are new technologies which can lower the cost of utilities; new cheaper ways of heating or cooling peoples homes which can be perhaps achieved through geothermal processes. To have the capacity to manufacture products that the world needs you must understand what kind of products they may be willing to spend their money on. A nation must be able to export products to bring foreign capitol into the country. But many nations in the West have what is called a service based economy where most people are employed in professions which do not manufacture products but simply provide occupations which see to the economic desires of the people in such countries.

Any nation depends on the ability to export for economic prosperity so what kind of products could the West manufacture which many rising economies would need?

 

[Mr. H.]

The U.S. needs to lift the ban on domestically produced crude oil ASAP.

 

[waltky]

Uncle Ferd fixin' Granny's apple stand in case she needs to sell apples onna street corner again...

The West is out of options and out of time
Mar. 2, 2016 - While oil has arrested its march toward $20 at $32 due to short covering, it is worth a pause to see where the next leg down may lie. In short, the long-term picture isn’t pretty: 2008 was potentially just a warm-up.

It is clear that we are heading toward a global recession. The 2% U.S. growth expected by economists and the IMF is a pipe dream. The EU will be in a deep recession by June and while the UK plans to vote for exit, the world’s finger will hover over the dollar “sell” button at the nightmare prospect of a Trump presidency. The dominoes are primed to fall. However, these warning signs are not just rooted in a little market volatility or depressed oil prices—instead, there are structural shifts underway that pose dangers to our way of life I haven’t seen at anytime in my career.

A hint of the larger problem lies in global central banks’ failures to drive either growth or inflation in any capacity. Granted, intervention was necessary to avoid another Great Depression in 2008. I’m still not sure those outside of Wall Street understand how close to the brink we were then, or how close we are now. The continued intervention, including Japan’s recent adoption of negative interest rates, has set the stage for the next crisis of confidence rooted in central banks balance sheets and the starting pistol will be currency devaluations. Before understanding the nuance of bilateral currency swaps and the emerging crisis, it is worth recognizing that structural societal problems, rather than asset valuation problems as in 2008, are the driving problem now. This is fundamentally a different crisis.

Domestic European economic demand will never increase as long as waves of immigrants lands on its shores looking for safety from a Middle East in existential conflict. Meanwhile, Riyadh has begun to build the world’s largest skyscraper in Jeddah; 3200 feet is very tough to justify with WTI at $32 and heading lower. In other troubling European news, Norway’s prime minister Erna Solberg has introduced legislation this week that will allow Norway to renounce the Geneva Convention in preparation for the “collapse” of Sweden. The EU is coming apart at the seams and will only worsen as the UK’s June vote approaches.

A shoe shiner tries to keep warm next to an hourglass graffiti in Athens, Greece.​

Back stateside, General Motors had to sell long term bonds just to make pension payments. Across the United States, private pension plans are unfunded by just under a half trillion dollars—numbers that stand to move higher as asset returns underperform actuarial assumptions. That’s just corporate America’s problem, right? Nope. In 2014, the little-noticed Kline-Miller Act passed Congress, allowing corporations to tell the U.S. Treasury they are insolvent and simply cut benefits in half. Just a few years from now, retirees are going to have the rug pulled out from under them through this back door.

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