EconomicCrisis.US

The financial crisis has left conservative policymakers on their heels. The notion that all financial innovation is good is not holding water and wonks on the right are scrambling to concoct viable alternatives to the Consumer Financial Protection Agency (CFPA) advocated by the White House and, in a weaker form, by Rep. Barney Frank’s Financial Services Committee.

In testimony to that committee today, Heritage Foundation scholar David John suggested that a CFPA “would be a huge mistake that would hurt consumers far more than it helps them.” Instead, John proposed the creation of the Federal Financial Institutions Examination Council (FFIEC). The Council would examine regulatory standards set by individual states and federal regulators in order to create uniform standards that apply to all financial institutions and meet “the challenges posed by complex new financial products.”
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The U.S. needs to adopt a policy for a “strong and stable dollar” to ensure sustained economic growth and attract investment, said Steve Forbes, chief executive officer of Forbes Inc.

The U.S. recovery will be disappointing because small businesses are still having financing difficulties and will hold off on hiring, Forbes said in an interview in Kuala Lumpur today. The economy may face another “falloff” after an initial rebound resembling that of the 1930s and the 1970s, he said.

The trade-weighted Dollar Index has fallen 11 percent since President Barack Obama’s inauguration in January, in part because of a budget deficit projected to rise to $1.6 trillion this year as the government increases spending to boost the economy. A strong dollar is “very important” in the U.S., Treasury Secretary Timothy Geithner said this month.
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Both the World Trade Organization and Global Trade Alert recently issued reports detailing the alarming trend of creeping protectionism that threatens to slow the global economic recovery and hinder national competitiveness. At the G-20 meeting in Pittsburgh, President Barack Obama has a valuable opportunity to address this issue head-on by reasserting U.S. leadership in promoting free and open trade, which is essential to global economic growth, job creation and raising standards of living around the world.

Trade is vital to economies throughout the world, and the U.S. economy in particular. In 2008, exports of goods and services generated about $1.84 trillion, or 13 percent, of U.S. gross domestic product, according to the Commerce Department. By some calculations, 10 percent of all U.S. jobs and 20 percent of our manufacturing jobs depend on exports. And trade-related jobs typically pay 13 to 18 percent more than the average U.S. wage. In the case of firms deeply involved in international markets, the wage premium is even greater. Such jobs pay an average wage of $15,000 more than jobs in firms that are less internationally integrated, or $50,000 versus $35,000, according to a recent study.
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You mathematically cannot sustain a leveraged consumer econoomy without consumers.  Over 80% of Americans work in the consumer economy or government supported by consumers paying taxes.

If you kill the consumer, you kill jobs…..and if you kill enough jobs, you kill the economy.  In the last ten years, our consumer economy was fueled by the excessive extention of credit by the banking system.  Now, only few have acesss to credit and the consumer economy is collapsing.

Look around, how many of your friends and neighbors are employed by the consumer economy?  It is not the end of the world, simply the end of the world as you know it.
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