The following is a quote from a newsletter I receive from Stratfor.com and I shall probably find myself in difficulty for reprinting it without permission. Nonetheless, I find the text essentially unarguable and I’d be interested in any rebuttal.
Though it might not be obvious from watching the mainstream print and broadcast media, which have been issuing bearish reports since long before Hurricane Katrina, the U.S. economy remains red hot at the moment.
For the past nine quarters, it has expanded by more than 3 percent per quarter, the fastest sustained growth since 1984-1986.
Moreover, U.S. growth has been steady and stable in the longer run as well. The recessions in 1990-1991 and 2001 were the shortest and mildest in American history, and in reality amounted to only small corrections. One would have to go back to the 1980-82 period and a pair of back-to-back recessions to find the last time dispassionate observers felt the United States had serious economic difficulties.
You know, I remember well the political slogans of just yesteryear when the Democrats were saying, “It’s about the economy, stupid.”
I have been an unrelentingly critical observer of the Bush economic plan. Or, rather, the Bush economic doings. I see no sign of a plan, actually.
So what does one critical observer do with the relevation that the economy has been doing quite well, thank you. Does one continue to denigrate this administration’s foreign policy and attack at every opportunity the decisions which have led to massive forward deficits and relentless depreciation in the value of the dollar?
Does one say to Greenspan, “You, you freaking genius, no, you may not retire!”
What exactly is it that inspires all those countries out there, all those central banks, all those investors, to keep buying our debt, to keep buying our paper, to keep shoveling money back to our government and to our companies every single month?
Are we really that unique, that magnetic? What are we, loveable?
Or is it because it’s our money to begin with and there’s nothing else to be done with it?
I remember when Volker cracked down on inflation in the very early 80’s and spread his mantra throughout the world. I remember thinking then that the world financial scene would be better organized going forward because all major central banks had worked together successfully for the first time. They broke the back of world wide, senseless inflation at Volker’s urging and, by his design, they had done it together. When Greenspan took over and kept the faith there was no turning back.
Now, it’s just business as usual for the world’s central banks to conspire – or rather plan together – on a daily basis.
Maybe this is part of why we own so much good will. Everyone knows that there are no politics without business. Business pays for politics like it pays for every thing else. When our team reminded the rest of the world why we’re all in business and how best to go about making it all work, maybe we struck a little love button in everyone’s chest and are now receiving a little payback?
Or is it because – since we spend darn near everything we get our hands on – we’re recognized as the world’s primary economic engine and it’s in everyone’s interest to keep it going, however?
Probably it’s a combination of all of the above. That it’s our money to begin with is obvious, and if you were a foreign investor or central bank sitting on a mountain of used dollars what would you do with them? You sure wouldn’t want to just sit on them; with the dollar’s continued decline in relative value nearly assured by our massive running deficits, sitting on them assures loss. So you want to invest them. Where are there some good deals? Right here in the United States, of course.
While the interest rates on our long term government debt seems low to us, to others it is relatively high. And, let’s face it, our companies are doing quite well. Business is good. And our forward deficits as a percentage of Gross Domestic Product seem relatively small in comparison to other countries where social services and entitlement programs are even more embedded.
We may not be the hottest deal around. You could look to China for that designation. But we’re still a good deal and our paper still looks good to just about everyone with a few extra bucks to throw around. Yeah, we’re gonna be around for a long time, looking good.
What a country, eh?