More comfort in todays financial turmoil.
I know that many are wondering just which way is up and where it will all end, so I thought I would pass on some info I read in a recent IDB editorial. It seems the US in not in as bad of shape as the DOW and S+P make it look like it is:
From the article:
Just two weeks ago, German Finance Minister Peer Steinbrueck told Britain’s Daily Telegraph today’s crisis was an “American problem” that would end the U.S.’ “superpower status.”
Sorry, but such Euro-gloating aside, this crisis won’t last. We won’t even be close to a depression. And when it ends, fundamentals will reassert themselves — namely, population and productivity growth, the two engines to long-term economic success.
This is the U.S.’ edge — and it’s not going away soon.
Since 1980, real per capita GDP has expanded 69.2% in the U.S. vs. 65.6% for the EU 15. Why? Our productivity is greater. In just the last 10 years, U.S. productivity has expanded 2.5% a year, with Europe growing nearly a full percentage point less.
This will widen. “Historically speaking . . . America’s economic hegemony has never been greater,” wrote Gerard Baker in London’s Times a few months back. He’s right. Financial crisis notwithstanding, the U.S. economy will be twice Europe’s size by 2025.
Even after our stock market and housing losses, the U.S. is still extraordinarily wealthy. In the second quarter, Fed data show, the U.S. private sector owned $110.6 trillion in assets — an immense amount of wealth. The estimated $1 trillion to $2 trillion cost of the current financial mess is small by comparison.
During the Great Depression, U.S. output plunged 27% in four years; unemployment neared a third of the work force. Real private investment shrank 87% in three years; personal spending plunged 41%. We’re not close to that. Nor are we likely to be — unless we foolishly pursue high-tax policies that would kill growth.
It’s easy to give in to excessive pessimism these days. But the U.S. model — based on productive labor, free trade, fewer rules, lower taxes and rewards for entrepreneurial effort — is still sound. We’ll soon emerge stronger, and better, for our current tribulations.
My opinion: Will the next few years be tough, and even tougher with obama and a veto proof, democratic congress; yes; but the US has the ability to overcome like no other country. Obama can only make that harder, but there’s still plenty of people out there who know they can still be successful despite obama, and only in America can they do that.