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Ron was educated as a mathematics teacher, trained as a land use economist and has been involved with trading futures for more than 20 years.

Economics

Aug 15, 2011

The current economic mess in Western Europe and the U.S. brings to mind what I regard as the greatest challenge the West has to face, even greater than an aging demographic: middle-class jobs. We used to have a lot of good-paying jobs in the steel industry; now we have the Rust Belt. Before that, we had good-paying jobs in the shoe industry; now we have Italian shoes, perhaps made in China but subcontracted to Viet Nam. At any rate, no good-paying jobs in the shoe industry in New England. Before that, the textile industry left New England, went to the South. Then it left the South, went to... last heard from in China. The auto industry was filled with good-paying jobs (and bad management) in the '60s. Then came the computer industry...oops! Programming is done better and cheaper in India, and China is subcontracting the assembly process, though we still have Fabs and most of the engineering. 

 

The problem, then, is how to restart the economy. The housing industry is supposed to lead us out of the slump (historically), but there are at least two problems: an overhead of foreclosed houses and -- ta daaa -- no one with a job that pays enough to buy a house. While "no one" is an overstatement, it does express the large contrast with the '40s, '50s, '60s, '70s and '80s. So, although liquidity is necessary, stimulus isn't stimulating the economy because there are so few jobs that pay more than minimum wage. Nor are the shareholders of the large banks, oil companies, and so on, getting big dividends, because the good-old-boy-&-girl network that runs the boards of directors, each for the other, has authorized billions to be spent, quite unnecessarily, on bonuses, thus removing the money from dividends and, for practical purposes, from the economy.


 
 

 

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COMMENTS (2 Comments)

r3020
Where have you been Ron? Occupying Wall Street?
7:35 AM Oct 22nd
 
Hog Farmer
The failed socialistic policies of BO have done nothing to stimulate the economy. Get rid of the excessive regulations and the greedy unions (whose leadership seem more concerned with getting Democrats elected than looking out for the best interest of their membership) and we will once again be a country that produces products. Yeah, I don't like big CEO's getting big bonuses either but its not my money, not my decision. If BO would quit taking money from the middle class and giving it to his big business pals and the lazy slugs on welfare we'd be out of this mess by now. And no, I really don't care for most Republicans either, they are just the lessor of two evils.
7:12 AM Aug 16th
 
 
 
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