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Aren't We Fooling Ourselves? Economy in Crisis This article is frightening, where are our leaders, can't they see this? Glowing Government Misleading Statistics Mask The True Condition Of Our Economy Economists claim US gross domestic product (GDP) growth is a sign of our economic strength. This is an anachronistic statistic developed after WWII when all consumer puchases were produced in Amerca. This has now dramatically changed, but is not accurately reflected in this obsolete, but still used bullish statistic. Since 70% of GDP is consumer spending and much of what is purchased is now made by foreign companies or imported, the faster GDP grows, the more money we lose overseas - the better we think we are doing, the worse off we actually are. This trend has been growing unabated for the past 30 years, and we now fund foreign coffers with an unprecedented $1.25 Million per minute - approximately $617 Billion in 2004, heading to $700 Billion in 2005 - by importing 25% of all manufactured goods consumed in this country and exporting only half the amount we import. These losses return not to buy US made goods or services, but to buy title to our irreplaceable strategic wealth producing assets - our future means of generating wealth - at a rate of $1.8 Billion per day. GDP growth averaging 4% over the past decade pails in comparison to the US losses due to importing more than we export, which are growing at 25% per year over the same period. No other country in history has ever suffered such massive losses without collapsing. Our Present Standard Of Living Has Lulled Us Into Feeling No Urgency For Change Hence most Americans do not consider how vulnerable our economy really is, much like the attitude towards terrorism before September 11th. We are not living on current production, but accumulated wealth generated after World War II in 1945, surviving unscathed while the rest of the world was devastated in that war. Our future will be in jeopardy once we have no more wealth producing assets to sell. The economic strength heralded by misleading GDP growth statistics belies the extreme cost of living so well while producing so little. Many Of Our Companies Are "Cashing Out" To The Detriment Of Our Country In the past 10 years, foreign countries have made strategic acquisitions, loans, or investments totaling 4x the foreign investment of the 1980's, a period during which much alarm was raised over the "sellout of America!" 40% of this foreign investment was funded by our own money through US losses due to importing more than we export, according to the US Bureau of Economic Analysis. This "cashing out" is not being reinvested in more productive endeavors as evidenced by the ever-increasing dependency on foreign goods and services. It is being recycled to consumer goods. All of our wealth producing assets are available for sale on the open stock market - and many of our most valuable ones have already been sold. In the past 10 years, foreign interests acquired $3.2 Trillion of US corporate securities including 8,600 strategic takeovers in areas like energy ($116 Billion), transportation equipment ($54 Billion), telecommunications ($146 Billion), printing & publishing ($56 Billion), insurance ($85 Billion), electronics ($61 Billion), and pharmaceuticals ($60 Billion). The result is that many of our industries are now largely foreign owned according to the IRS (e.g. plastics / rubber: 47%, financial svcs: 36%, machinery: 32%, chemicals: 30%, transportation equipment: 27%, publishing: 21%, cement: 81%, motion pictures: 69%, consumer television / electronics: nearly 100%...). We Are Now Vulnerable For Easy Economic Takeovers To illustrate our extreme vulnerability, General Motors could be theoretically 100% acquired for less than 2% of the $1 Trillion US currency held by Japan - and GM, presently capitalized with a value of $20 Billion is available for sale now on the open market. At this price GM could be cheaply bought for nothing more than the cost for use as spare parts by the acquiring company, with devastating impact on the US economy. Hundreds of acquisitions as strategic as General Motors have already occurred. In the past 17 years, the US government has reviewed 1,500 of the thousands of foreign takeovers and rejected only 1. These are not frivolous "dot-com" acquisitions - each one, a strategic industrial chokepoint, a key component of our economy. Other countries forbid foreign control of major industrial assets - why are we not doing the same? In reality, Japan would not need to acquire General Motors to destroy the automaker. Our policies are presently permitting foreign automakers to dismember GM by allowing the sale of subsidized and market-protected foreign vehicles directly to Americans at a fraction of the cost of American manufacturing - with foreign profits and taxes leaving the US, directed to foreign research and development and future acquisition of US assets. We Are Longer Innovative Nor Competitive We are no longer competitive: 22.4% cost disadvantage for American producers versus foreign competitors according to National Association of Manufacturers. We are no longer innovating: foreign corporate research and development is now nearly twice that of US corporate R&D according to MIT - 3x more foreign corporate R&D in automotive, 2.5x in heavy industry, 2x in energy, 12x in electronics, 3x in chemicals, and 1.5x in aerospace. We are no longer oriented towards advanced technology: US now 17th in the world in number of trained new scientists (down from 3rd only three decades ago) according to the National Science Board. We are losing our grip on ingenuity: US world share of new patents has fallen 15% since 1980 while Japan has nearly doubled during that period according to the National Science Foundation. We are disarming industrially: 4 Million manufacturing jobs have been lost in the past 10 years while many of our industries now require offshore manufacturing to struggle to survive against foreign competitors. We Are Dependent On Foreign Loans To Run our Government Foreign countries also used part of their US trade deficit proceeds to loan the US Government $1.5 Trillion over the past 10 years. According to the US Treasury Department, In 2004, 99% of the US Federal Deficit was financed by foreign loans, up from 70% in 2003. Our global competitors are now our bankers, loaning us money for our tax cuts and our global wars. How can we effectively negotiate with those who hold our debt and finance our government? We are always forced to negotiate from a very weak position. We Are Losing Our Key Manufacturing Companies That Are Needed To Produce What We Consume While our net wealth statistic deceptively appears to be growing, much of this is due to "cashing out" of existing inherited wealth producing assets. We are not replacing these assets fast enough to offset the losses through acquisition and predatory foreign competition. The proof is that while GDP has been growing around 4% per year over the past 10 years, the trade deficit is growing at 25% per year over the same period. We are losing more and more of the assets we need to produce what we consume. We Are Losing An Economics War In a military war, the ammunition is bullets. In an economic war which has been methodically waged against us by foreign countries, the weapon is foreign currency reserves used to buy our industries ($3.2 Trillion foreign acquisition of US corporate securities in past 10 years), lobby our politicians (47% of US Trade Representatives were later hired by foreign interests in the 1980's), influence our media (69% of our motion picture industry is foreign controlled), and bind our government (99% of our US Federal Deficit was financed by foreign interests in 2004). We Have Economically Lost Control Of Our Country Japan now holds US dollar reserves of $1.0 Trillion, China has $600 Billion, and South Korea about $200 Billion. We have no plan to address our vulnerable state and mistakenly use measures like GDP to delude ourselves. How can we continue to spend as we are with much less industry to produce wealth, no ability to compete, and with all of our assets available for sale on the open market? The trend for the past 30 years has been unwavering and accelerating. With no change, we have, for all intents and purposes, already lost control of our country. With control of much of our wealth producing assets in the hands of foreign takeover companies, we will soon become subjugated to work for the benefits and at the direction of them, much to a similar extent as if we were retaken by a colonial power. If present trends continue unchecked, we will face conditions we never could have imagined and our future will certainly be nothing like our past. Articles: Reflections On General Electric's Global Strategy |
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