(snip)"But for all the money spent, America’s commerce actually loses market share (the trade deficit hit a new record in 2005; experts expect it to top $800 billion in 2006). And Americans themselves grow poorer.
Don’t hold your breath; neither party will say so. But the typical U.S. worker is losing ground. Not only are fewer new jobs being created, wages are falling for those who have jobs. Stephen Roach reports that the U.S. economy is about 11 million jobs short of what should be expected at this stage of an expansion. Currently, only about a third as many new jobs as usual are being created. And wage growth in private industry is at the lowest level ever recorded in the 25 years of measuring it. Roach estimates that workers earned $335 billion less last year than they should have...leaving them with less real spending power than the year before. In fact, by some measures, the typical workingman earns less now per hour than he would have earned during the Carter administration.
How is it possible? Why would people living in the homeland of the greatest, most entrepreneurial empire the world has ever seen lose purchasing power at the very peak of the empire’s power?
We have an answer. As the empire brought more and more of the world into its protective embrace, people in far-off places entered the global workforce in greater and greater numbers. First, they built things out of steel and plastic - forcing down assembly-line wages in the U.S. Then, they began doing accounting, architectural design, legal work, marketing and many other things. That is why real wages rise in Asia; they are stagnant in America.
But the American workingman cannot believe it. He put his wife to work years ago. Then, under the easy money/big spending policies of the Bush/Greenspan team, he sold off his house...a room at a time. Roach estimates that U.S. householders “took out” as much as $600 billion from their houses in mortgage debt last year. It was more than enough to offset the $335 billion they should have earned. But it was a different kind of money; they have to pay it back. With falling incomes, how will the U.S. wage earner be able? And how will the nation squeeze enough money out of these poor working stiffs to pay its trillion dollar debts overseas, let alone make good on its promises to its own people?
It’s not the same nation...or the same empire...we used to know. It owes more money to more people and is less able to pay.
Bill Bonner
The Daily Reckoning"



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