The year would draw to a close in a few days from now. Infact, not just the year but the decade would also draw to a close. Hence, it is only apt that we look back and analyse some of the biggest hits and misses of the decade gone by.
In this write up, let us focus on the latter.
Indeed, if there is one big failure that towers over the rest, it has to be the crushing of the American dream. The Big Apple was clearly the most successful economic experiment of the twentieth century.
However, it has taken just one decade of the twenty first century to erode almost completely, whatever economic might the US of A stood for. Although one can say in its defence that it is still the biggest economy going around and its currency is still holding strong against most of the other major currencies of the world. But these factors are more a testimony of the weakness of other developed economies than the strength of the US.
One need not go beyond the amount of debt (both current and future) that the US economic juggernaut has amassed over the years to understand that it is really resting on some very weak knees. One that can give away any point in time.
How did things come to such a pass in the US, one might ask? Well, there have been many arguments and counterarguments given by experts all around.
However, a gentleman named Mike Shedlock has shrunk the list of what is wrong with America to just two basic problem areas. And we are completely in sync with what he has to say.
The two problem areas being discussed are public unions and defense spending.
It should be noted that the US has built a worldwide system of more than 1,000 military bases, stations, and outposts. This was being done in order to enhance US national security. However, on the contrary, it has done the opposite and has provoked conflict and has also created insecurity.
It should be noted that the US defense budget in 2009 stood at US$ 711 bn. To put things in perspective, this is bigger than the combined military spending of China, Japan, India, Russia and the remaining NATO members. And this is not enough. If one takes into account off budget items, the amount could easily swell to US$ 1.3 trillion. And yet, inspite of this massive overspend, there is no major effort to rein in the same.
Second on the list is the problem of public unions. Every year, intense lobbying goes on in the US by union members for unreasonable wages and benefit packages. And politicians, who are quite keen to preserve their vote bank, happily play along. The end result? Huge wastage of the economic resources of the country.
Of course, there are other factors that have contributed to the economic downfall of the country. But we believe that these two are amongst the biggest. And how well the Government deals with these two issues and how soon, will decide the fate of the US economy in the coming decade. However, one thing is sure. The next few years are not going to be easy for the world's largest economy. Quite a few negative surprises could be in store. We will have to wait and watch as to which ones.