Javelin:
Thanks for your candor and no offense taken. I am inexperienced, at least, when it comes to the workings of Finance, Insurance, and Real Estate.
Do you believe it's accurate to say that American manufacturing of goods and services has been out-sourced over the last 30 years to such an extent that today, the miracle of compound interest can produce debt more efficiently than America can produce jobs?
No doubt that American jobs of all kinds, especially manufacturing, have been outsourced to the point that it has caused irreversible damage. Before you can look at the issue of compound interest, and in part your question is partially a trick question, you have to look at another factor.
Productivity is the key, not the production of jobs. Productivity can be measured in different forms. In the past two decades the key focus of productivity is Gross/Net in vs outgo. Its become a numbers game rather than the true measure of asset verses liability. People looked at owning a home as being an asset, when in truth unless it is used for investment purposes, it is a liability. A home does not produce any real productive capacity despite the numbers until the economic fallout showing that it produced "productivity".
So to answer your question, there is no longer any real productive capacity within the United States in that we are no longer producing assets nor acquiring assets but instead have a very long balance sheet of liabilities. As an example, compare us to China where the are acquiring every asset they can get their hands on: oil fields, diamond mines, gold/silver mines, iron mines and now they have the production ability through manufacturing that we built for them via our outsourcing and loan back to us the dollars we financed them with.
We cannot produce the jobs in order to pay the balance sheet, period. In order to produce those jobs and assets we now need to compete with a man in China that can work at a wage of 3 dollars per hour or day and those companies there have no compensation plans to worry about. We cannot outproduce them and we cannot do it at that price. I am sorry but business is not patriotism and made in the USA while I love it, those companies will either be forced to outsource like briggs and stratton has or they will go out of business.
When you look at the debt interest if your productivity cannot outproduce the debt, it is not a measure of numbers on a balance sheet or theoretical potential. It comes down to the competitive ability of a people vs people in different nations. In theory would it be possible to pay off the debt? Sure. In reality will it happen, no. Its quite impossible just as us expecting Obama to resign tomorrow morning and decide to shut down the Federal Government and return all rights back to the States. Could it happen in theory, sure. Will it happen, no. Couple this issue with the fact that our governments (State and Federal) refuse to curtail spending due to "programs" deemed too important and then the desired programs they wish to impliment, there will be no trend change and continued spending. Through 2010 there will be more damage and 2009 was enough alone to sink us. Even with the elections this year in congress there will not be enough change to save us. 2012 will come too late and the needed policies to save us should have been enacted years ago. Too little, too late.
I always look to the most likely outcome based upon current trends to determine future trends. A friend of mine in the Philippines is a CEO of a major corporation there. He mentioned to me that they are finding the American influence weakening so dramatically in their sectors that they have been forced to do business with China. We can no longer compete. The fallout in the USA is affecting nations around the world. In the Philippines a major Nike plant has laid off a huge percentage of its workforce and the only jobs coming into the country are in support of countries like Singapore, Malaysia, China and supporting roles such as IT and call centers. There is a demand for Manderin speaking people emerging over English speaking.
The trends speak for themselves and we can only measure where we are going by where we are and the capacity we hold on a competitive level. In short, we dont have it.
