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America's Economy; A Long Slippery Slope:

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Message Mike Folkerth
Good Morning Middle America, your King of Simple News is up and at ‘em.

U.S. NEWS: I could say that “I hate to tell you that I said so,” but I really don’t. I’ve been in the business of predicting future economic events for some time now and in 2007 I had a perfect season.

The newest predictions to come true is that Wal-Mart is seeing larger sales while higher end stores such as Macy’s are going down. The higher end restaurants are going the way of cassette tapes while the lower cost joints are doing fairly well.

These are symptoms of a very bad problem; Americans are running out of cash and are short on credit. No kidding huh?

As the job market continues to contract under the pressures of diminishing sales and profits in retail, my prediction of some 18 months ago will come to pass; commercial real estate will follow the yellow brick road.

That is the same road that saw recent heavy travel by residential real estate. Neither sector will end up in Kansas however; they will end up in a place that is much hotter. If you are a developer or a speculator, it may resemble living Hades.

More than a year ago I predicted that the U.S. would enter recession by late winter 2007/2008. How am I doing?

I wish that I could say that I have some sort of divine intelligence, but that’s not it at all. Once again, it’s simple mathematics and a little common sense thrown in for seasoning.

The one point that I will forever try to drive home is that “growth is not the answer.” Yet, growth is the plan.

Voters want change that does not require them personally to change. That should have become obvious in the New Hampshire primary. Who won? The two old war horses that have been part of the problem the longest and who are running on a platform of economic growth without meaningful change. Americans don’t like change, they just want the promise of change.

Back to growth, every one of our entitlement programs is predicated on growth. So much to that end that we have amassed some $50 Trillion in unfunded debt! Funding that debt with growth requires 75 years of continual growth at an average of 10% per year. That my friends is physically impossible. Yet, that is the plan.

Let’s take a look at one of the barriers. The U.S. consumes some 10 times per capita of population, what the remainder of the world consumes. The U.S. comprises 4.8% of the world population and currently uses 25% of world energy and 30% of world materials.

I don’t want to jump the gun here; has anyone else noticed that China and India are expanding? Okay, I just wanted to be sure that I wasn’t the only one who had picked up on that.

China and India have 2.4 Billion people that want to consume some of the global energy and natural resources. They represent 8 times more folks than the U.S.

Now then, shall we pretend that the Chinese and the East Indians alone, rise to the per capita consumption level of the U.S.? Sure we shall. That would then be equal to 200% of all energy on earth and 240% of all material on earth. Uh-oh.

And the plan for the U.S. is exponential growth and greater consumption of fininte resources?

And three bears returned home and said, “Who ate my porridge.” And nobody lived happily ever after.
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Mike Folkerth is the author of "The Biggest Lie Ever Believed" and is not your run-of-the-mill author of finance and economics. The former real estate broker, developer, private real estate fund manager, auctioneer, Alaskan bush pilot, (more...)
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