All for freedom and for pleasure
Nothing ever lasts forever
Everybody wants to rule the world
- Tears for Fears
There are those who foresee the decline of American power in this world and a corresponding increase in the strength of the so-called BRIC nations, ultimately leading to deterioration in the United States' influence over world affairs. I admit I've found myself making statements that lean in such a direction. This overhang of doubt and uncertainty that started long before the current recession is feeding on itself, creating the real possibility of these scary consequences. But it needn't be so.
Quick test: What country leads the world in manufacturing production?
That's right, the United States.
Of course, this sector has been on the decline, but for those of you who are surprised by this fact, let it be a reminder that perception is not always reality.
In an attempt to turn our backs on the doomsday predictors of America's demise, let's take a look at how our government is reacting to our current challenges on the economic front, versus China's actions.
At first blush, it seems the two countries are acting in similar fashion with outsized stimulus packages, heady public statements regarding currency levels, and financial favors for homespun companies designed to provide competitive advantages.
But look closer and a very interesting difference surfaces.
China's position and reaction to the recession of '09 is similar in many ways to the United States' situation during and after the Great Depression — particularly with regard to their internal stimulus.
Simply put, China has tremendous and obvious need for new and lasting infrastructure similar to the many projects put forth in our New Deal. By investing today in roads, bridges and other industrial projects, China is building for the future when — as all recessions do — this one ends. It's easy to see China will come out of this downturn much stronger and more able to conduct international commerce than it went in.
Our stimulus spending is not needed in the same way. Certainly there are repairs and even new hard-compound infrastructures that need to be built, but not at the level which will provide significant payoff when the economy returns to growth.
Instead, our stimulus should be focused on what I'll call "second-generation" infrastructure projects. Ideas such as building a modern energy infrastructure with the goal to efficiently fuel our growth over the next 100+ years, or information communication, such as extremely high-speed wireless Internet connections, or even wireless energy transference.
Regarding this last point, it often occurs to me that having the bandwidth to broadcast virtual office environments would eliminate the need for commuting and address the concerns of the global warming crowd, while vastly improving productivity in the workplace and happiness on the home front.
While such technologies may seem like pie-in-the-sky today, much the same could have been said of the benefits of the interstate highway system just 53 years ago when Dwight D. Eisenhower championed the idea, or the U.S. space program led by JFK just five years later. Back then, we had a can-do attitude — something we desperately need to recapture.
So, come on America! Stop looking down on yourselves and realize we've been in tougher spots before. Let's get to work!
Employers cut the fewest jobs in November since employment decline began in January 2008. Nonfarm payrolls dropped just 11,000 — much less than the expected drop of 125,000. In addition, the unemployment rate dropped slightly from 10.2 percent to 10 percent. Though we welcome a breather from declining employment, it is difficult to see the impetus for job growth in the near future, save for potential continued government job increases.
Bank of America raised $19 billion through an equity offering with the goal to pay back $45 billion in TARP funds. The expected net reduction in capital for the company raises several questions regarding the bank's plans for future growth, even though they remain profitable and raised $13.5 billion in new equity capital earlier this year.
The Fed released its December Beige Book last week, stating "economic conditions have generally improved modestly." Diving deeper, all districts reported at least some sign of movement towards growth in the period, providing further evidence of stabilization of the underlying economy.
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