Forum Post: We Must Focus Ourselves: Part 2

We Must Focus Ourselves: Part 2

WHAT IS ONE DOLLAR WORTH ? US$1,000 dollars from year 2000 is only $730 in 2011, and US$1,000 dollars from 1990 is only $330 today. Conversely for every $1,000 you made in 2000 you need $1,270 in 2011 for the same purchasing power, and for every $1,000 in 1990 you need $1,670 in 2011. (Source: www.measuringworth.com).

STATE OF OUR MORTGAGES: There are some 51 million homes with mortgages: Some 28 million seems okay, 5.2 million have been foreclosed or sold in distressed sales, 3.7 million are seriously delinquent, and 14.6 million are underwater. This comes to about 45% of mortgages have problems. Home Equity: The Median Owner’s Equity in household real estate was about US$264,000 in 2005, while in the first quarter of 2011 it was of only US$122,000. Employment: A return to growth in Housing would bring in some 2.8 million jobs while there are some 13.9 million people unemployed. (Source: Time Sept 5,2011 p48).

UNEMPLOYMENT: By national standards a low unemployment has been considered around 4% or about 7 million people. Currently it stands at about 9.1% affecting some 14 million people. By this measure, the current net-loss above what we consider standard would be around 7 million people. To add to this predicament, we now have 15% of our children who are officially poor !!!.. So, it becomes a paramount question what does the U.S. intends to do to create the conditions so that 7 million jobs are created as soon as possible.

GLOBALIZATION:

Concept: In essence globalization proclaims the law of the jungle (survival of the fittest), open markets and free enterprise. It has all kinds of appeal (avant garde, freedom, sophistication, presumptuous knowledge) for which there was not a lot of qualified historical knowledge. It was proclaim as a panacea, and everybody jumped in. Before the era of globalization, the private sectors of each country produced what they needed to sell locally and/or for export. To protect their local industries from unfair and low-cost competition from other countries, each country devised tariffs in the form of import duties which increased the landed-cost of the imported product to be somewhat closer to the locally-made products. The theory assumed that everybody governments and the private sector would play by the rules, and that the respective private sectors would re-invest a portion of their profits in better machinery and systems to be as cost-effective as needed.

After several years of a globalized world economy, we can focus on some of its results for this essay.

Positive: In general, the world is less poor than before, with many countries – specially small ones – have seen the biggest percentage increases in their income-per-capita during the past ten years than in any period before that (source: data.worlbank.org); many foreign-made goods are available at lower prices that benefit the pockets of consumers elsewhere; the quality of labor has improved in many countries as a result of technological know-how transfer; the world is becoming better connected 24/7 in most parts of the world to information on the web.

Negative: Several industries that did not reinvest into becoming more efficient harvested what they sowed and disappeared or became marginal players. Other distortions and discrepancies came up, and some are in different stages of progress, but the most important ones remain life-threatening because they are systemic. They go to the heart of the status quo between the cozy relationships of some elected representatives and some industries of the private sector who make billions of dollars in profits, and do not want to change, and so we must do it for them !. I am appalled that not one person from the banks or the government has gone to jail arising from the 2008-2009 banking crisis ……but if any Joe steals a car…..to jail he goes….what is this ???!!!.

So we should ponder: To what extent has the positive results achieved so far, been at the expense of an ill-conceived applied globalization and a lack of sufficient participation of citizens in our democratic governments in deciding how our country should pursue it social/economic/political development ?

The Eurozone: Regardless of the money fixes Germany and France lead other nations to do, the fundamentals of the Eurozone were flawed from the start. If the parties do not play equally fair, if some countries dont behave responsibly and take unilateral actions in spite of being against the best interests of the group, the upcoming result is easy to foresee. In its best form, I think the Euro will shave-off some countries and if it survives, it will become a more selected group of nations. The process will cause a lot of pain worldwide.