Quote from gnome:
California. 8th largest economy on the planet. Rich with industry, agriculture, and real estate. And look at the mess they're in. $40B in deficit! How did they get that way?
1. Government got too big.
2. Social spending overwhelmed the budget.
And that's in a "high tax" state. You read where they are planning to raise taxes to ease the shortfall.
You also read where many of the wealthy are moving to lower tax states. What happens if ALL the wealthy move to Arkansas? Who will be left in California to pay for social programs?
America as a country is traveling down the same path. The WRONG path. What we should be doing is encouraging GROWTH. Encourage international business to move their money to the USAâ¦. to make their products here⦠and employ American workers.
We accomplish that goal by enabling policies which are business friendly and tax friendlyâ¦. broadly based, lower taxes. NObama plans to raise taxes on business and the wealthy⦠encouraging all to leave who can. Others will follow when they "can't stand it any more". What will be left of America then? Who will be left to PAY for social programs? NOBODY, that's who.
AMERICA CANNOT AFFORD SOCIALISM!
Agree 100%.
Free-trade doesn't work between rich and poor countries.
Trade barriers must exist to protect wages and living standards.
Otherwise, jobs and capital go overseas (or out-of-state) and social programs collapse under revenue shortfall. California provides a good, future road-map. France, UK and US are next.
A broad production base has a multiplier benefit on domestic employment, as each dollar spent puts a local firm to work. Even a pair of shoes creates jobs at a local wholesaler, that creates jobs at a local manufacturer, that creates jobs at a local tanning house, that creates jobs at a local textile shop, that creates jobs at a chemical dies and pigment factory, that all create jobs within those suppliers feeder networks, that all create jobs at local banks!!!
That, in essence, is what money velocity
is
Instead, that money velocity (read: Jobs) was exported to China for shareholder profits. China gets all the jobs and wealth creation benefits from a robust, production-based economy. While we get some fleeting thrills and a wicked hangover.
Our new value chain:
Retailer > Wholesaler/Importer > China. Money circulation then stops and foreigners gets everything.
For the past 15 years, globalism seemingly worked while Americans spent 120% of their incomes via debt accumulation - credit card and home refinance. The economic void carved from our expatriated manufacturing base was smoothed over by the explosion in consumption, financed by debt.
Now, the West is about to fall on very hard times.
The veil has slowly lifted on our "house-of-cards" economy, and every promising new industry, in this eagerly-hyped "new economy" (remember that??) has been exposed as little more than undetectable slight of hand. An electrified moment where a master thief's prowess captures our imaginations, and our wallets while we looked the other way!!
Asset bubbles underwritten by worthless banks, securitization of worthless paper, "endless" real estate profits and all sorts of frenzied brokers fueling a bubble destined to collapse.
The American economy was centered around ponzi schemes - real estate speculation, stock market speculation and banking that provided the liquidity for both.
Thats gone. Won't recover for a decade. Perhaps longer.
Whats left is a decimated service sector that was really a secondary offshoot from the profits generated by flipping and speculating - electronics, gadgets, retail.
And then there's the Auto Industry. It was on life support
during the BOOM. There are simply too many competitors, building too many cars, paying too many unionized fucks, too much money.
We couldn't support their overhead and output during the best of times. Damned if we can support them now!!!
Whats left?
Military. Homeland Security. Pork-Barrel Handouts. Pharma/Healthcare. Federal Jobs.
Everything else is gonna take a enormous hit, in terms of demand.
Forgive the long-winded tirade.
Tieing it back to State budgets.
Unless State programs adjust downward to the long-term drop in revenue, then we're gonna see a lot more California's.
Endless social programs, perks and legions of State employees will simply be unaffordable. And who will buy their debt???
Not US Banks. Not global Banks. Maybe the FED. That, along with everything else, spells our next problem.
Flight from USD = dollar collapse. If and when that happens, America's fate is sealed.
Economic Depression. Social and Political Upheaval.
