"While I agree with you that the US is due for a severe recession in the not too distant future to correct its huge imbalances, I think future prospects for the US are fairly bright, compared to those of China, because I believe that US politicians will acquire a bit more spine relatively soon. The US simply needs to adopt policies that strongly encourage savings and discourage excessive consumption, particularly energy consumption. Say, a VAT and a hefty gasoline tax, like in the EU, accompanied by corresponding tax reductions elsewhere, unlike the EU."
Counting on politicians to have more spine or do the right thing or plan correctly for the future is indeed a fool's wish. As has been discussed on this board ad nauseam, the problem for the US is that there is just not one area they need to correct - they have trade deficits, budget deficits, unrecorded future SS and health care costs, huge personal and government debt levels, etc. Not to mention dependency on foreign energy. Adding a VAT tax and reducing other taxes does nothing. If they 'encourage' savings they will implode the economy. If they discourage consumption of anything they will implode the economy. What you have is a country living off credit and BELIEVING that it is a God given right to continue to live that way. What you are saying is that the American public will willingly accept they they are no longer the greatest nation in the world, willingly accept the fact they cannot continue to afford their lifestyle. That will likely eventually happen, but it will not happen willingly. |
