A Bankrupt Superpower: The Collapse Of American Power

Intelligence Daily ^ | March 19, 2008 | By Paul Craig Roberts

[Fennie]

The Bush administration forecasts a $410 billion federal budget deficit for this year, an indication that, as the US saving rate is approximately zero, the US is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the US government's domestic expenditures. Foreign borrowing is paying US government salaries--perhaps that of the president himself--or funding the expenditures of the various cabinet departments. Financially, the US is not an independent country.

A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the US can forever rely on the Chinese, Japanese and Saudis to finance America's life beyond its means. Imagine the shock when the day arrives that a US Treasury auction of new debt instruments is not fully subsribed...

[Red Boots]

And that is a fault with American society and especially business. The farthest out our companies seem to be able to see is at most a year

This is such BS. All companies plan, but must respond to currently existing market conditions.

These "long term plans" you tout, much like the Soviet Union's 5 year plans, always fail, because then companies are too invested in the plan to respond to what is actually happening in the market.

They kill flexibility, and that's what kills companies.

[driftless2]

"cards has collapsed"

yeah, I guess that's why the parking lots in the mall my wife and I went to last weekend were full. I guess that's why my computer expert son-in-law was told by his firm that recently hired him and is expanding to tell his friends to come in for a hiring interview. /sarcasm.

[Realism]

All companies plan, but must respond to currently existing market conditions.

Maybe they spend too much time smoozing wall street and not enough time getting their hands dirty.

[Gorzaloon]

My firm belief is that if you do whats right, work hard and stick with it, it will work out. I just have a nagging suspicion that living our lives in the pursuit of making money for nothing is not the right thing.

I walked away from the Fortune 500's in total disgust and started a small business that actually manufactures a few legitimate products. I'll never get rich, but the money is real, not based on imaginary value.

I just found out that Form 8903 allows Small Businessses to take deductions for Domestic Manufacturing. About time someone recognized SOME value in it.

[rbg81]

I dunno. Call me old fashioned, but if you run a deficit, you are losing net worth (wealth). They have used that wealth to buy US Gov securities. One day your TV will break down, but they will still have our debt. If its worth something, we lose our wealth. If that ends up becoming worthless, we also lose (big time). Either way, we lose. Only if we have a trade surplus do we win—but we haven’t had one of those in decades.

Its true, I don’t have a PhD in Economics, so maybe I have no clue what I’m talking about. However, those with PhDs in Economics have managed to dig the companies they work for a very big hole. As a result, the Federal Reserve (read US taxpayer) is now in the position of underwriting the investment firms that have played fast and loose with their $$.

[WOSG]

“How has free trade helped labor unions as millions of jobs both union and non-union have been outsourced to low wage nations around the world?”

Export jobs are the highest-paying jobs we have. The employment rate suggests strongly that we are not hurting for jobs in the US, with unemployment under 5%.

The problem is NOT trade, the problem is that we over-consume and under-produce.

The ROOT of the problem is NOT free-trade agreements - they help us - the ROOT of the problem are the aspects of our over-consumption:
- We run large budget deficits
- We tax production but dont tax consumption
- We have a large energy/oil trade deficit due to our failure to drill domestically
- We have to fix entitlements to turn it into an engine of retirement savings not generational cost-shifting

It’s our tax system itself combined with our over-consumption culture and under-savings that is the cause of deficits.

The solution to all three is:
- cut the income tax, cut the corporate income tax and replace with consumption tax
- add an oil import tariff
- drill in ANWR and elsewhere

Here is a detailed proposal for tax reform that would fix this problem:

http://travismonitor.blogspot.com/2008/03/fundamental-tax-reform-15-solution.html

[WOSG]

“10% of the country pays 70% of the taxes. You and I have NO say in what happens until 90% pays 90% ....until then ...we’ve “sold” the government to those 10% ...and those 10% are busy having their way with the rest of us!!!”

On the contrary, it seems the welfare-recipients (and you can include college students, farmers, veterans, elderly, along with poor in that groups of folk getting federal largess) are having their way with that 10%.

IRS is sending a fat check to anyone making under $75,000. Just a big dumb giveaway that they call a ‘stimulus’.
All it does is add to the deficit and add to spending. What a dumb idea.

[WOSG]

“So then, while we cut defense spending (outside of our current wars) but increased our social spending (unconstitutional) to far exceed our defense spending. And now the USA is dying because of overspending - overspending that is actually trying to make us more like the USSR - Marxist... And the political party that use to lead the charge to control and limit government is now leading the charge towards Marxism. The other party that has pretty much been liberal and Socialist for decades is getting their way regardless of what “party” holds the Oval Office.”

The latest Democrat budget raises spending (over $3 TRILLION) and taxes. Wrong direction.

Our best hope is to get a Republican wave in the House to win back the House from the socialists.

[1rudeboy]

PCR is back! Should I read the thread to see if anyone noticed this column is sourced through Counterpunch?

[Toddsterpatriot]

I saw the thread and wondered how he snuck back in.

[listenhillary]

Fairtax
Taxes don’t go away, but we get rid of all the hidden taxes and bring them out in the open for all to see and all to pay. Plan includes subsidizing the poor by paying a pre-bate check up to the poverty level for every single taxpayer.

We’re already doing that now for the poor with welfare, food stamps, EITC, section 8 housing, SCHIP.

No way I can explain it all. Bottom line for me is a minuscule savings of 1% of what I pay now. The point is to repeal the 16th amendment in it’s entirety and replace it with the fair tax.

http://www.fairtax.org/site/PageServer

[Toddsterpatriot]

Oh yes, first official checkpoint on the Nafta highway will be in KC.

American customs officials will inspect cargo in Mexico, before it crosses the border. Just like now.

[Cringing Negativism Network]

Oh yes, first official checkpoint on the Nafta highway will be in KC.

“American customs officials will inspect cargo in Mexico, before it crosses the border. Just like now.”

-

First official checkpoint on the Nafta highway will nevertheless, be in KC.

Spin little “free trader”, spin.

[Mase]

Has anyone reminded us yet that this head case used to work in the Reagan administration? Even Newsmax doesn't publish this doomer’s doom any longer. PCR’s grim outlook on everything is unfortunate but it's a sad commentary indeed that so many here, who consider themselves Reagan conservatives, choose to buy into it hook, line and sinker.

[Content Provider]

You have it essentially correct. Free trade and credit money have combined to replace production economy with debt economy, as if a dollar of debt was worth a dollar of production. Now, instead of production, we have the debt instead. Having been told for decades that it was worth the same, we are finding out now just how untrue that is.

[Cringing Negativism Network]

“Has anyone reminded us yet that this head case used to work in the Reagan administration?”

-

And that’s a bad thing, how?...

[Irishguy]

thanks i will have a read of that

[WOSG]

“Paul Craig Roberts has turned into a loon over the years... and it appears that his “loon disease” is catching among Freepers looking at some of the replies on this thread. That’s very frightening. No wonder the Huckster and Obama are doing/did so well in this election cycle.”

There is money to be made being a perma-bear gold-bug conspiracy-theory doom-and-gloomer. Fear sells, and it is far more interesting than Pollyannaish whitewashing of things. Some of the expressions are over-the-top.

OTOH, its a matter of where the truth lies.
he is painting half the picture. The other half of the picture - such as record increases in productivity, the fact that we still lead, albeit more narrowly, in innovation; the fact that trade deficits are mirror by investment surpluses; the fact that the economy pre-2008 grew strongly from 2003 to 2007; the fact that our deficit was declining, etc.

Paul Craig Roberts used to be a supply-sider so he should be aware of the positive aspects as well.

There are very worrisome trends, but they are not the whole stor and the bad trends can reverse with good policies.

[Toddsterpatriot]

First official checkpoint on the Nafta highway will nevertheless, be in KC.

As long as the cargo is inspected before it crosses the border.....

[WOSG]

PCR: “The Republican candidate for President said he would be content to continue the war for 100 years. “

Lying talking point. And this nonsense ...

“I sometimes wonder if the bankrupt “superpower” will be able to scrape together the resources to bring home the troops stationed in its hundreds of bases overseas, or whether they will just be abandoned.”