Guess what? Back then, tens of millions of high wage jobs, with nothing replacing them (sorry green energy and "information worker" fans) weren't being shipped overseas, never to return. I just love all you green shoot types who think this is a cyclical downturn, and "things will get back to the way they were before." You amuse me.
That's fine. So do you. You do realize the exact same things were being said back then, except back then it was Japan that was stealing our jobs, rather than China? Silliness never dies, it seems.
Nope. That's not true. The claim was that Japan was "buying up" all of the best assets in the U.S., including companies and real estate (such as Pebble Beach). There was never before a situation like we've seen in the last 7 years, where million upon millions of good jobs have been permanently outsourced to countries such as India, China, etc. Before, based on the business cycle, plants and factories would be idled, when demand slowed. Once demand picked back up, the same workers who were furloughed would return to their jobs. Now, the factories and plants are shut down for good, never to see production resume again, decimating entire towns and cities. It started in the manufacturing areas, and now is affecting areas such as Silicon Valley, Seattle and Ventura, too. The United States has never before gone through a job-gutting experience of this magnitude in its history such as this one.
Back then, they called it "hollowing out" the economy. And it was indeed the Japanese who were doing the "hollowing out". Somehow, despite all those lost jobs in cars and electronics, the US economy came back and stayed in good shape until today, with only the occasional recession. This is a financial panic made worse by the missteps of Paulson followed by the timidity of Geithner, but even these two Keystone Kops can't kill it before its time. That time is coming, but it's not here yet. The tipoff is all the publicity and howling surrounding this one. The real one will sneak up on people. If you've ever read the intro to "Only Yesterday", you'll realize that the Great Depression also snuck up on people at that time. They knew the Roaring Twenties were over, but they didn't know whether what was to come would be really bad or not. This time, now that the crisis has happened, you see all kinds of people knowing, to a dead certainty, that this is the real thing. Which, of course, means it ain't.
Playing devil's advocate, was the US economy in good shape until 2007 or was it merely an illusion flowing from a bubble?
Construction, engineering, real estate agent/broker, legal sector, landscaping, road building, excavators, electricians, carpenters, architects, etc. etc. etc. all benefited from the massive real estate bubble, which masked the loss of manufacturing and other high wage jobs - until that bubble popped loudly.
There is overcapacity in almost every economic area - whether automobile industry, chemicals, computers etc. I have to question central bankers common sense when they celebrate "productivity gains" as success stories. Wait, until there is a wordlwide 20 % + unemployment rate, then I will ask these central bankers again !
Yep. The government tells us that manufacturing capacity is running at around 67%, and I'd be shocked if it were that high. An economist recently said it best when he said "the private sector is dying and the government is propping up the financial sector." On top of that, there are massive bubbles in many parts of the world because of stimulus, and people don't see them because of the low economic levels we're working from compared to 5 or 7 years ago - which makes them no less of bubbles. El-Erian calls gov't stimulus a "sugar high" and publicly questions what will result when the sugar is withdrawn, as it inevitably must be, especially by high debt, high deficit nations such as the U.S. and U.K. I personally think China is in a much larger bubble phase than most westerners are willing to believe. The Chinese are high savers, frugal, and can really retrench when need be. Anyone hoping the Chinese economy can be the locomotive for pulling the globe out of contraction, long term, is not cognizant of the fact that the Chinese economy has been massively bolstered by domestic consumption resulting from targeted stimulus and is a fractal of the U.S.'s.