Quote from jbtrader23:
The most dangerous thing about the US economy now is the attitude that "because we're America, historical lessons don't apply". No one in mainstream economic circles is even considering the idea that we will fall into a deflationary debt spiral (i.e. Japan). Greenspan mentions the word "deflation", but it is quickly challenged by Mainstreet.
Or that we can lose our competitive edge. Or that foreigners won't rush out of dollar denominated assets. That kind of hubris("it can't happen to us"), I'm sure all great civilizations believed it at one time or another. And look where it left them.
I wonder if alot of American prosperity today isn't really an illusion. Foreigners own trillions of dollars more worth of US assets, than the US owns of foreign assets. Most people don't even think about it.
My long term predictions are:
A very weak stock market until at least the end of the decade. Going nowhere, like what happened in the 30's and in Japan.
A continued secular decline in real wages. There is more supply than demand in the unskilled labor markets (especially with illegal immigration in the southwest).
The FED and Whitehouse that doesn't know how to handle deflation (i.e. Bank of Japan).
A rise in China has an economic giant in the next 10-20+ years.
As bleak as it sounds, realize, life still goes on. Even in the 30's, life moved on. In near bankrupt Japan after their massive bubble, people still get out and have fun. Not all gloom and doom.
