Monster Noodle

WARNING!!! Strongly undiplomatic opinions ahead. If you’re easily offended, you likely will be.

We may be in a correction, recession or whatever you want to call it but we’re definitely in the process of paying for some long-term debts owed. For the past several years the US economy has been artificially inflated by loose lending and overly ambitious development. We’ve ignored a trade deficit that has robbed us of our fortunes and instead fueled our economy by building more of what we didn’t need and purchasing it for more than we could afford. These are the things that I see that have really crippled our economy:

1. The automotive industry: If you don’t understand that this was one of the backbones of our economy you need to really get in touch with what has been happening in Detroit. When the Japanese manufacturers decided to enter into the larger consumer truck market, we lost the backbone of our industry. For years Japanese manufacturers have avoided this market to ensure that American consumers had plenty of money to pump back into Japan. When Toyota made the decision to climb to the top at any price, it killed the goose that laid the golden egg. Bad for the US you say? Maybe, but the kamikaze tactic will ultimately cost Japan it’s place in the world economy. Toyota will finally achieve its dream of being number one. Good luck selling cars in China.
2. The housing industry: For two decades or more contractors have been building houses as fast as they could grab the land and put them up. For the most part, these houses are vastly inferior to the construction of a half century ago. In many cases, the land may be worth more in ten years without a structure at all. At the same time, the consumer has cut his own throat by leveraging as much of his pay check as possible to buy the biggest house that a bank would finance. If you paid more than three times your annual salary for a house and you didnt’ have significant financial reserves, you’re part of the problem.
3. The banking industry: Keep on loaning to people that can’t afford it, for things that are not worth it. Enough said.
4. Commodity prices: We have been in a relatively calm area for commodities for the past couple of decades. However, a little pressure in this area can cause mass devastation. All it really took was for oil prices to surpass current cost of living standards. Guess what, it happened in the 70’s too. I guess that we forgot. 
5. Fiat Currency: I hate to jump on this bandwagon but for all that is holy, you can’t print money without something of value to back it up. It used to be enough that the US government backed it and the world believed it but terrible lacks of judgement in how we print money in the past few years have damaged our credibility. Sure, it may help to keep our business back here in the US but there is a fine line between manipulating a currency and destroying it.

In the end, the US has a lot of work to do to reclaim it’s dominance in the world economy. At some point, we must create something real value and sell it. Wow, what a concept.

Until next time, happy blogging.

Megadisclaimer: Take nothing at face value. Everything on this blog is for entertainment purposes. It won’t change the world, or even your opinion in most cases. If you believe everything that you read stop reading now!

written by Lochshen \\ tags: banking, credit, economy, ford, gm