Looking ahead
The Hoover Institution has an article on the likelihood of a recession and how the fiscal stimulus bill might affect it. Plus, a reader emails that the prediction markets now trade the likelihood of a recession at 63%. Well to put that in perspective, those are about the same odds the Intrade market gives that Hillary will be the Democratic nominee. The American Prospect argues that, while the US economy may be slowing down, the nation's long-term prospects are brighter than one might think.
The article then proceeds to make the point that America is more socially and demographically more viable than the doomsayers think. That cultural and political health, the article implies, is far more important than any short-term difficulty. It goes on to say that America faces genuine challenges, but they are not the ones the media imagines.
That might be true in the long run. However most people worry about paying their bills in the short run.
posted by wretchardthecat at 1/31/2008 07:12:00 AM
3 Comments:
America is probably better positioned than most nations for the long haul. Europe (particularly Russia) faces ruin due to declining birth rate. Russia has put itself into the same basket with Saudi Arabia in having its future dictated by petroleum production. China's economy is on the verge of overheating and has a very brittle political system. Also, China like Japan does not have sufficient natural resources for the size of its economy and is dependent upon international trade to keep its economy alive. America is almost unique in having both significant (though much reduced) manufacturing capability and significant natural resources, e.g. coal, uranium, timber, agriculture, etc.
Currently, America's nuts are in a wringer because we were living beyond our means for too many decades and allowed too much of our manufacturing capability to be lost to globalization. I should emphasize that I believe in globalization. Globalization reduces world poverty and diminishes the probability of war (it's morally correct). Modern warfare has become so expensive that almost anything that prevents war is economically justifiable.
There are huge storm clouds on the near horizon, e.g. the credit bubble, peak oil, Islamic fascism, nuclear proliferation, reconfiguation of China's economy, etc. Any one of these could deliver a knock-out punch to the United States. However I think it was Spangler who said that God protects idiots, small children and the United States of America. My suspicion is that through blind luck and perseverance, we'll muddle through.
The Prospect article is good, Wretchard, but I think just doesn't quite "get it" with the quibbles about "Hispanic" vs. "white".
WRT demographic concerns, race is really just a for proxy class, culture & values. His formulation ignores that aspect.
Fiscal stimulous packages are notoriously ineffectual. By the time congress manages to pull its thumb out...businesses have already contracted inventory to the bare bones. By the time fiscal stimulous packages kick in the economy has already started to expand.
The Federal Reserve is much more nimble in this regard.
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