The Real State of the Nation: Economic Collapse in the Making

Tuesday, November 29, 2005 at 03:54 PM

In just a few weeks, our illustrious president will deliver his 2006 State of the Union speech.  You and I both know that he won't describe the real state of the nation, or even address many aspects of the nation that are really, really bad.  Dangerous.  Potentially disastrous.

Just to get a jump on the whole State of the Nation thing, here's a brief summary of the state of the nation's economic health.


If you are an employee, you are in trouble.  Some of our leading "economic experts" say that doesn't matter, and the president appears to agree with them.  They're all shooting for the "entrepreneurial society."  Well, there has never been, and never will be, a society in which everybody is an entrepreneur.  The only way that could happen is if you simply redefined the word "entrepreneur."  You know, the old PR trick:  if you collect returnable bottles on the city streets, but no one is your "boss," congratulations, you just became an entrepreneur.  The same for desperate people selling cocaine to other desperate people.  The same for people going door to door looking for a few hours of gardening work to buy baby food.

How bad are things for employees?  Well, only a week or so after GM announced it will cut 30,000 jobs and close facilities, and Ford's announced an additional 4,000 white collar job cuts, the drug giant Merck announced that it will cut 7,000 jobs, and close or sell 5 plants. Story here  All of this follows pretty closely a series of announced downsizings by major newspapers, including the LA Times, Chicago Tribune, San Jose Mercury News, Baltimore Sun, and Orlando Sentinel.  And keep in mind that this comes after more than 2 decades of continual and significant downsizings across the whole spectrum of American business.

In fact, the San Francisco Chronicle recently reported that the maquiladoras along the Mexican side of the border with the U.S. are a source of jobs for Americans who now live in the U.S. and commute to Mexico.  In it's 11-27-05 article, the Chronicle notes that maquiladoras "have drawn not only Mexicans with high hopes to the border, but also Americans. While the Mexicans fill low-wage assembly line jobs and live in sprawling slums, Americans take positions in management, design, engineering and shipping and live in new suburbs....maquiladoras created almost 600,000 American jobs along the border between 1990 and 2002 in shipping and warehousing, product design, remanufacturing management, according to a report by the U.S. Government Accountability Office." Story here

Maybe it isn't as bad as I'm saying?  Well if it isn't, ask yourself why the Commerce Department's Technology Administration refuses to release the full version of research it performed (at a cost of more than $300,000) on the issue of "offshore outsourcing" of IT service-sector jobs and high-tech industries.  Story from Manufacturing & Technology News here  The Manufacturing & Technology News (MTN) story notes that the Department released only a 12-page summary that "is not what was written by its analysts. Rather, it was crafted by political appointees at Commerce and at the White House, according to those familiar with it."  It is also vastly different from some earlier drafts that made their way into the hands of some members of the public.

In response to several specific questions about the report from MTN, the magazine notes, the Commerce Department provided what amounts to an abstract PR statement: "Here's the Commerce Department statement responding to all of your questions: Fostering innovation and competitiveness that leads to job creation in America is a top priority of the Administration. We remain committed to making sure every American who wants to work finds a good-paying job. In carefully developing the report, we sought to ensure that it was thorough, objective and that the competitive environment was properly assessed and supported by hard data."

And remember, have a nice day.


Why do we have a new book, "Empire of Debt" (by Bill Bonner and Addison Wiggin)  that promises to uncover "the whole secret story of how and why America has put itself into the worst financial crisis since 1929"???  Story here

Well, it could be because David Walker, the comptroller general of the United States, recently said in an interview with USA Today that the United States can be likened to Rome before the fall of the empire. Its financial condition is "worse than advertised," he says. It has a "broken business model." It faces deficits in its budget, its balance of payments, its savings - and its leadership. Story here
 The same USA Today article notes that "Some veterans of the deficit-cutting wars are pessimistic about avoiding disaster. 'In the end, CBO and others are no more than speed bumps on the highway of fiscal irresponsibility,' says Robert Reischauer, former Congressional Budget Office director and now president of the non-partisan Urban Institute.

And frankly, it isn't just the federal government debt that's scaring the nonpartisans.  It's the trade deficit. It's the consumer debt.  It's the zero savings rate in America.  It's the sudden claims of bankruptcies by major corporations, even the ones not run by Ken Lay or Bernie Ebbers or Dennis Kozlowski.  It's the fact that as they try to peer into the future, there are almost no scenarios that don't involve massive problems and dislocations.

So as you watch President Bush in a few weeks, and you listen to the exaggerated good news, and the small doses of bad news that he thinks may spur you to support some plan or other, remember this story.  And think about your own job, and the jobs of your neighbors, and how much debt you're carrying, and how much debt the government's carrying, and how unwilling the government is to 'fess up to the real news.  Then get angry.  Not just with the president, but with every one of the elected officials who continues to avoid this issue, and to sugarcoat the projections.  And remember that anger when you enter  your polling booth next November.

And, by the way, pray that by then it will be the people, not Diebold or its friends who decide how many votes each candidate got.