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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (71848)	2/10/2007 12:09:37 PM
From: jimmg	Respond to of 306849

<<The long term depends on two things - labor force growth and innovation (aka productivity).>> Between now and the long term (whatever that is...20 years?) we will need to work out all of the imbalances in our economy built up over the last 20 years. That means a populace that lives within it's means, consumes what it produces (in relative value terms) and doesn't rely on the willingness of strangers to accept IOU's in exchange for goods. To me, that's going to require a tremendous amount of pain during the adjustment process. I think 12%+ unemployment, massive bankruptcies, and a huge reduction in the standard of living for most people while the imbalances get worked out. If we want to outsource all manufacturing capacity to 3rd world countries, we will need to produce products and services of our own that are valued by the rest of the world. Spewing out IOU's for goods and services can't and won't be sustained. Productivity in our maladjusted economy is a joke. By this measure, Goldman Sachs is the most productive company on the planet. It's calculated by simple math: Output (millions per employee) divided by input (60 hours per week). What will America's economy look like once the imbalances are worked out? I really don't know. We have a huge education/skills gap and an increasingly lazy populace that wants something for nothing. The gap between what we want to produce and what we want to consume is enormous and only met by issuing IOU's. For that reason, I'm very bearish on the long term.