The crisis is not over

ABC
The present financial crisis, a manipulated one, was used by the US investment banks, which control economic policy, to secure massive subsidies to their profits from a taxpayer bailout and from the US Federal Reserve. The crisis was essentially a U.S. crisis, but spread abroad by the sale of toxic financial instruments. The rest of the world got into trouble by trusting Wall Street. In response to the crisis, government budget deficits have exploded in the U.S. and in the EU, particularly in its financially weaker members. Thus the initial crisis has planted seeds for two new crises: rising government debt and inflation.

A third crisis will occur when confidence is lost in the U.S. dollar as world reserve currency. This crisis will be much worse than the financial crisis. It originates from the offshoring of U.S. manufacturing, industrial, and professional service jobs. Jobs offshoring was initiated by Wall Street pressures on corporations for higher earnings and by performance-related bonuses becoming the main form of managerial compensation. Corporate executives increased profits and obtained bonuses by substituting cheaper foreign labor for U.S. labor in the production of goods and services marketed in the U.S. For the first decade of the 21st century, the U.S. economy has been able to create net new jobs only in domestic nontradable services, such as waitresses, bartenders, sales, health and social assistance and, prior to the real estate collapse, construction. These jobs are lower paid than the jobs were that have been offshored, and these jobs do not produce goods and services for export. Jobs offshoring has increased the U.S. trade deficit, putting more pressure on the dollar’s role as reserve currency. When offshored goods and services return to the U.S., they add to imports, thus worsening the trade imbalance.

The U.S. dollar still survives as reserve currency because there is no apparent substitute, the Euro having its own problems. If the dollar is eventually abandoned as reserve currency, then the threats to the U.S. economy and to the related economies are extreme. Yet, neither the governments, nor the media show any awareness. Instead, the public is provided with spin about recovery and with higher spending on criminal wars that are hastening economic ruin.