An oil well sits in the middle of a corn field on October 3 near Norris City, Illinois. (Scott Olson/Getty Images)
America's fundamental problem is that the economy is fundamentally unsound. it is hollowed out--a consumer economy that depends on persuading people to buy stuff they don't need with money they don't have.
That's a cruel scam, not an economy.
In other words, stabilizing the markets and solving the unprecedented liquidity crisis is only the first step. Long-term, what is needed is a plan to seriously incentivise American companies to manufacture, mine, and drill in America.
What is needed is a plan to reverse the dash to cash—and bring American capital home.
A nation's strength depends on its productive capacity. Incredibly, America fooled itself into believing that financial instruments, fast food, and films could substitute for factories, oil wells, refineries and power plants.
Who's to blame? Everyone—meaning Republicans and Democrats. The former raced to the bottom in search of offshore cheap labor; the latter embraced environmental extremism to block industrial growth and expansion. Both parties put Main Street last and Wall Street first by backing globalization.
Neither Presidential candidate seems to get it: the financial crisis is actually a symptom of an economic crisis. In order to solve the crisis, the country will have to reach back—all the way back to the 1950s when the American economy was the strongest in the world …
Postscript: The silver lining in the current crisis for American consumers and homeowners is that sub-$3 gasoline is returning, and the Northeast, with winter approaching, is dodging a bullet in terms of home heating oil and propane prices. Peak oil? It could be a decade before that hoax again rears its ugly head.
Copyright Andre Pachter. Published with permission. Andre Pachter’s blog China
Confidential may be read at: http://chinaconfidential.blogspot.com/
