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Why is America suffering so much from a recession that Germany largely bypassed?

By   Follow Me on Twitter     Message Richard Clark     Permalink
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As most everyone knows by now, ever more American jobs, recently even white-collar jobs, have been, and are now being, transferred to low-wage workers in other countries. Since 2000, the U.S. has lost 5.5 million manufacturing jobs, with 2.1 million of those jobs being lost in the last two years alone. Since 2001, over 42,400 factories have closed in the U.S., and another 90,000 are considered to be at severe risk of closing. The last time so few people were employed in manufacturing was in 1941, before World War II spending pulled that sector out of its Great Depression slump.

As a result of the loss of all these outsourced jobs, poverty in America is going to keep getting worse if they cannot be brought back, and ever more American children are as a result going to be raised in poverty and violence, with ever more hellish societal and personal consequences. Thankfully, President Obama has come up with a big, bold solution to deal with the problem: He's going to shut down the federal office that counts how many jobs are being shipped overseas! (Click here for source article)

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What permitted and even triggered all this job outsourcing? Something you will never hear about or read about in our oligarchic, corporate-owned mainstream media: It was a simple change in tax law that occurred during Ronald Reagan's first term in the White House -- a huge gift to the corporate bigwigs who helped get Reagan elected. As a result of this one new law, the importation of products made in American factories located in low-wage countries was no longer taxed the way it was before Reagan took the White House. As a result, virtually everything we buy these days is made by dirt-cheap workers making a buck or two an hour in some low-wage country.

Does it have to be this way? No. Proof: This is not the way it is in Germany -- the Germans still slap import taxes on stuff that their companies might be tempted to manufacture abroad, and by this means and others, the German government protects German jobs and incomes. As a result, last quarter saw more German GDP growth than at anytime since the reunification of the country. Plus, their unemployment rate during the recent recession was never anywhere near as high as ours in America. Why not? Because the German government subsidized worker salaries after it asked employers to cut their hours down to 30 or even 20 a week (rather than terminate any of them) if there wasn't enough work to keep all of them busy full time. This enabled all workers to keep on spending just as they had been, and so a German recession was for the most part, by this two means, avoided.

In short, high-wage countries like Germany figured out a way to compete with China and Mexico. The proof of this: In 2008, Germany ran a $267-billion trade surplus, while the United States ran a $568-billion trade deficit. In a nutshell, Germany came up with a comprehensive plan to encourage manufacturing in Germany, while the U.S., under Obama's leadership, has simply stopped counting how many jobs we are losing, as US corporations continue to transfer our jobs to low-wage countries, so as to manufacture (at the lowest possible cost) the products we are supposed to buy once they are "imported" into the country.

But with what money are we supposed to buy them?! -- most Americans no longer have a house that can be refinanced, their credit cards are already maxed out, and their median wage, adjusted for inflation, has been reduced to the 1972 level.

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If President Obama really wanted to deal with this problem, he would develop a national manufacturing strategy just like Germany did. Problem is, Obama and the Dems are totally cowed by big corporations and would never dream of passing a law that would impose stiff import taxes on stuff that US corporations manufacture in low-wage countries and ship back here for US consumption. Explanation: If the Dems did something like that, they would be kissing goodbye all future corporate campaign contributions, without which they could never get reelected.

So what good is stimulus money given to Americans who are unemployed or underemployed? -- they just spend it on stuff that was manufactured in other countries. So the money they spend either goes to people in those countries (instead of to other Americans, thanks to the inherent multiplier effect) and/or it goes to corporate honchos and corporate stock holders, 95% of whom are in the top 2% of income receivers. In other words, the money is received by a very select and privileged group of Americans, i.e. the upper-income people who own the factories that manufacture stuff cheaply in low-wage countries, for duty-free import back into the US.

More and more, we have monopoly capitalism in America and the Dems are now too afraid to take on these big monopolies and oligopolies. Republican Teddy Roosevelt wasn't afraid of them, and broke up some of the trusts and monopolies. FDR did the same. Even Republicans Eisenhower and Nixon took steps to take the monopolies and trusts down a notch or two. But you won't see Obama and the Dems do anything like that unless the electorate raises holy hell in the coming year or two. And ithat could happen if unemployment and underemployment keeps growing and ever more folks lose their homes to foreclosure, which they most probably will.

Foreclosures have exceeded 300,000 per month for 17 months in a row. Fully 10% of our population is presently subsists on food stamps and handouts. The unemployment lines have lengthened in virtually every city and town across the country. The shelters are full, the food banks are increasingly either empty or short on food, and the economy is flat on its back. Six trillion dollars in home equity has been wiped out, leaving baby boomers scrambling to make up for lost wealth so they can add something to their battered retirement savings.

What we see here is evidence of the greatest heist in the history of the world, and yet not one bankster has been indicted, prosecuted, arrested, convicted or sent to prison.

As economics analyst and Europe-based pundit Max Keiser recently said, America is a walking dead-zombie country:

The key to understanding the current situation is to understand that house prices, jobs, wages, and pensions in the US are all being attacked with original-issue-debt-dollar junk. (Translation: trillions of our tax dollars have been, and are being, surreptitiously distributed by the Fed to otherwise bankrupt megabanks that have used our bank deposits to gamble on derivatives as well as in our casino-like stock market.) Unless it is somehow stopped, this profoundly lucrative attack on, and theft from, America's middle class could well continue until it (the middle-class) has been reduced to a small vestige of what it once was.

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America's megabanks and policy makers are continuing a program, at the behest of Wall Street, to essentially commit a kind of Financial Holocaust, the ultimate result of which will be to virtually eliminate the middle-class majority in America. Wall Street banks with their CDSs, High Frequency Trading and bogus market making are injecting the equivalent of financial Zyklon B into the American and world economy. Just as the goal in Nazi Germany was to eliminate virtually all of the Jews, the goal of Wall Street banks and the associated top half of one percent of income receivers and wealth holders in America is to eliminate the large majority of America's middle class, not by killing them, of course, but by other means.

Through Chinese-based factories and cheap exports from China, the financial elite wants to squeeze every last drop out of the brain-dead American consumer. When the American consumer has bought the last Chinese-made plastic toy and snow shovel from WalMart that s/he can buy using the borrowed money on her/his 100th uncollateralized credit-card, and s/he/they can't hyper-consume one penny more, then China will drop their special double-header "bomb' by announcing: 1) a new gold-backed reserve currency for the world and 2) the sale of a trillion dollars worth of US-government securities.

At least with Bush you knew where he stood. With Obama there is essentially "nobody home." He is essentially a ghost. He doesn't do anything. He is a Manchurian Candidate, a robot, he is nothing but a talking head. He has done nothing, he is doing nothing, he will never do anything. The BP oil spill revealed that America is running with no leadership at all. There is nobody at the helm of the ship.

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

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