I am not an economist, or at least not a professional one.

But, I can't help but see doom and gloom with regard to the US economy. It's been reported that the gap between the rich and the poor is the highest it's been since the 1920's, the federal government has a huge debt that will require raising taxes to pay off, and those taxes will hamper economic growth, and then there's this subprime mortgage mess, the effects of which are (according to people like Ben Bernanke) going to last a long time.

Of course, these problems are problems also for the international economy, not just the US, but it seems to me that the US would be the hardest hit.

And then we have the political situation, and this worries me the most. I haven't come here to start a political flame war, but, suffice it to say, there are many people, including one presidential candidate, who are openly calling the actions of the US government criminal. IMHO, the atrocities in Iraq, such as the Nisoor Square Massacre last month, have a very real chance of resulting in economic sanctions, either implicit or explicit, against this country. You can only generate so much hate from the rest of the world before people stop trading with you. Add to this problems with domestic policy, like the recently announced ex-post-facto law granting immunity to telecommunications companies for helping the NSA spy on Americans, the pardoning of Lewis Libby, widespread accounts of police brutality, and the firing of nine US attorneys for political reasons, and the threat of an economically devastating open revolt starts to become serious.

I understand that many, if not most, people here will have other opinions about the political state of the country, and that's fine. My point is that dissent and unrest exists, and in a quantity that this country hasn't seen in a long time. I'm sure we can all agree on at least that much. The long term investor typically dismisses short and intermediate term problems like these, and I'm tempted to simply say, "It's a phase, and it'll be different soon," but as I wrote above, the income gap, national debt, and foreign hate could create long term consequences.

I can easily see the poor and working class blame--and rightfully so--these problems on the rich, and respond by electing people who will raise capital gains taxes, or make other attempts at wealth redistribution.

With this in mind, how are you investing? Are you buying nothing but international stock? Have you opened accounts in other countries? Are you hunkering down and waiting for the storm to pass with bonds? Or are you waiting for the revolution with silver? Or do you think the problems are exaggerated, and the US economy will do just fine?

Since this is the personal finance forum, I'm hoping the replies will relate in some way to investing, and that my post isn't too trollish.

I've never heard any suggestions of anything like a boycott of the US. Yes, I know England isn't the whole of the world, but the BBC is pretty good on world news. I think most people are hoping that you will vote in someone they'd prefer more next time, but whatever, its not the end of the world if you don't.

I think most countries like American dollars too much to place a trade embargo against the US. The only countries willing to do so (I believe Venezuela might have one) do not have a large effect on the global economy. The only things the US would buy from Venezuela on a large scale are oil and possibly sugar cane. I'm also not an economist, so I could be wrong.

As a Canadian i can say that the chance of us boycotting you is slim to non our economies are too intertwined for us to boycott you. however countries like Venezuela aren't as dependent and as a major world oil producer that might harm your economy. but you can't look at a boycott in a traditional sence when dealing with your contry because you make very little compared to the amount you consume. think about it when was the last time you saw a 'made in america' sticker? I live right next door and I almost never see that.

Personally I hope the US economy recovers because [like i said] we are so intertwined. but if your dollar is any sign its not. ten years ago the canadian dollar was worth 60c. american now the canadian dollar is worth as much or more! every day on the news [during the market report] canadian news anounces how much our dollar is worth compared to american. at one point the reporters compared our dollar to the british pound to explain that the increase wasn't due to an increase in our economy but to the dramatic decrease and instability of the american economy [i believe that was at the begining of the Iraq war]. When the canadian and american dollar were equal for the first time in decades it made front page news in my city [and i live in a major city]. being on par with the US has greatly effected our economy because of trade.

Your economy is built of overconsuption. I know Bush told the american people at one point to continue their consumerism to help the economy. but the reason that WW2 pulled America out of the depression wasn't just employing every young man in the army, it was becasue everyone cut back drastically on their consuption in order to help the war effort. And as painfull as it would be i can't help but wonder if that would help your economy now, if on a personal level you stopped the massive personal consumer debt.

Canada isn't perfect, we overconsume as well and that has negative effects on us as well.

I can't give you much advice as to investing. but one piece of advice I think is very useful is that whoever enters a ressesion with the least debt wins. they are not burdened at a time when there is trouble enough. and when money does come there way they can take advantage of things [like the fact that the intrests rates are lowered].

Nice observations. It's good to hear the points of view of non-Americans when talking about American politics and economics. From my travels, I have learned that many Americans live in a bubble when it comes to anything outside of the US. (I am an American, by the way).

"Made in the USA" is actually a big selling point in many American stores - particularly Wal-Mart. You can often see many products with stickers, logos, or tags displaying the "Made in America" slogan.

Almost all of Europe does this as well. When I lived in England, the Pound was always compared to the Dollar and the Euro. The Euro is compared to the Dollar and the Pound. It's interesting, and I think you're right, it's not that the other currencies are doing so well, it that the US Dollar is not!

Absolutely. It's unfortunate.

yeah, doom and gloom is right. political flaming is right on your part, no matter how you put it. people seem to have forgotten the 80s all of a sudden...we weren't loved then either. people will always hate america for whatever reason, regardless of who is in office and what we do. i'm trying to think of any benign country out there (yeah right, there aren't any) that would use U.S. foreign policy as a reason for imposing economic sanctions, if they could. people seem to forget how huge our economy really is. yes, there are already economic sanctions in the form of barriers (e.g. China's refusal to float its currency). how you can go from Iraq to economic sanctions on the u.s. is beyond me, not to mention the use of "massacre". Sells headlines. not sure what the domestic policies you listed have any bearing on economic policies and why foreign govts would impose economic sanctions. i think you just wanted to vent. if so, fine, but don't pose it in terms of economics.

the gap between rich and poor: stop spending so much on crap and start saving.

the government has always had a huge national debt. we just focused during the clinton years of budget deficit/surplus (republican congress remember). didn't mean we still didn't have a huge national deficit. We still did. what did we do with the budget surplus during the clinton years? did we pay down the national debt? nope. budget surplus was easier to do when the tech bubble was blossoming, no real threats that led to drastic cuts in defense and downsizing of the military, etc. etc. etc. the $128billion surplus pailed in comparison to the $7 trillion wiped out when the tech bubble burst, a significant portion of which would have been capital gains contributing towards the budget surplus.

subprime: ok, there will be a glitch, but the markets are still on a 52 week positive. there are all kinds of mixed economic indicators out there. people tend to focus on the bad and people like to pile on. in another two quarters when the picture is clearer, people are going to be yawning about this. the u.s. has weathered much worse (i.e. S&L).

politics: there are lots of people who whine and complain, rightly or wrongly, about some of these policies. they are political issues now, because they make for good political banter. This stuff has been happening under all the administrations. Clinton pardons Marc Rich, Bush pardons Libby what's new? telecoms and other corporations have always helped the govt out in its spying. firing attorneys is the same thing as stacking the courts with whatever persuasion judges you like as well. people have lots to complain about in the political arena in the u.s., but let's not kid ourselves about them. Do you think it is any better in any other country? look how many cameras the UK has. let's take euro zone countries. Most are in fact police states. it's fun to criticize the u.s. for anything and everything. we were despised and hated in the 80s in europe and in lots of other countries. nothing new. it comes with being a huge, powerful country. do you think foreign countries don't have their own domestic political garbage? They have lots of it and it doesn't matter. The only time it matters is if they want to impose their political will and they have the sufficient power to impose it.

the poor and working class need to start taking personal responsibility for their choices and actions. The rich nor anyone else force anyone into having negative savings. Raise capital gains, you will hurt lots of middle class folk who are saving into 401ks, IRAs, and in the stock market, which more people are doing these days you know. the real problem is that most americans want everything given to them, rather than having to pay for it. The reality is that americans pay very low taxes. If they want social programs, they will have to pay for them. Look at every other social country in the world and compare taxes.

last time: well, u.s. economy has shifted from manufacturing to service is the obvious answer.

recovery: the markets are still up for the year, unemployment is still low, etc. etc as it has been for several years, but we do like to focus on the negatives. Canada has NAFTA to thank.

overconsumption and WW2: a little off here. our economy isn't built on over consumption, but yes, we are a huge consumer economy. This has nothing to do with WW2. We were rationing because the war effort was consuming everything and if WW2 had happened today, we probably wouldn't have ever gone to war. Fast forward today, we are spending less than 4% GDP on defense. WW2 we spent nearly 35% GDP on defense. we'll see serious economic declines in the u.s. and everywhere else if americans do stop consuming or significantly reduce consumption. We do consume a lot, and we consume a lot of foreign goods. weaker dollar means u.s. goods become cheaper, heck maybe even u.s. labor will be relatively cheaper. there are reasons why foreign companies are setting up manufacturing jobs in the u.s. now.

as far as the dollar versus other currencies: there is just a lot of dollars out in the international market right now (not helped by higher oil prices and china's unwillingness to float its currency). sucks for americans wanting to buy foreign goods and services or traveling abroad, but in the end it does benefit americans.

Unemployment is a heavily massaged number. Reportedly 500,000 workers recently left the workforce "voluntarily", meaning that half a million jobs are gone but it doesn't count as unemployment.



I think the US economy of the past few years was fueled by over-consumption. A huge chunk of the GDP was funded by credit, people ran up huge credit card bills and car loans, took out HELOCs or refinanced their mortgage and spent the money on renovations and new toys. The national savings rate is negative. If spending money you don't have doesn't count as over-consumption I don't know what does.

Any country that tries to boycott the US will suffer a major economic crisis. I'm not being an obnoxious American, but America is the top trading partner of most countries. If any oil-producing country boycotts the US, they're done. If any export-driven economy tries to boycott, they're done. It's just not going to happen.

<--economist, for the US government

Most of 'popular' news makes news bigger than it actually is, and this is very true when it comes to the economy and how the world would react to it.

Yes, there are difficulities in our economy, but the same difficulties are also present in pretty much every other industrialized economy (and normally, alot worse). Our economy has many speedbumps, but I'm not worreid about the long-term picture

The daily changes in the economy and business mean practically nothing in the long run =)

Presumably you don't mean that there are no benign countries apart from the US?

Of course, if you're arguing that there are no truly benign countries full stop, then I'm right with you.

correct, and it is equally done so by both sides, but even if you account for an additional 500k, we still have low unemployment.

I agree that people are overconsuming, but the economy itself isn't necessarily built on overconsumption. We are a consumer economy as well as a service, industrial, and agricultural one. Although the national savings rate is negative, it doesn't account for monies invested in 401ks and the stock market. 401k investment is very high.

absolutely not...the point was we shouldn't be bantering about bashing the u.s. on the premise that it is a non-benign country. There is no other country in the world that has to seemingly apologize for everything it does. We have Americans traveling abroad bashing themselves for being Americans. Didn't understand this in the 80s when I traveled abroad, and don't understand it now. Is self-hatred really the impression people want to give others because it's de rigueur. You can be proud to be an American and disagree with the politics, a nuance that many in the rest of the world simply cannot comprehend nor are allowed to enjoy.

I completely agree with you on this.

I think aleks said this. Quoting is tough.

Anyways, a good bit of the post 01 growth can be attributed to the maturation of the online/internet markets and businesses. Typically with new tech, there's a big wave that improves the economy, followed by overinvestment and overentry, and then a market correction. However, then the market is left with lots of skilled workers in that industry, and improved 'human' capital, and then we see 'mature' growth of an industry.

Yes, there is an overconsumption problem for the average consumer in this country. Thats pretty much true globally. Sad.