External view of the US economy

While the phrase “see the forest through the trees” is an overused cliché, it is admittedly an accurate way to describe the difficulty of seeing ones self from within. In the case of an individual, we can use a mirror or third party to give us feedback about ourself. In the case of observing our nation, the opinion and analysis from international sources can provide insight into points of view we might be missing, dismissing, or diluting because of out own sense of patriotism.

If you follow a sports team, you can recognize this phenomenon by noticing how often the bad calls made by umpires or referees go against your team. Have you ever found yourself feeling that the officials are making errors in yourteams favor? Some kind of coincidence? Of course not, it is just that our own “home team” bias keeps us from seeing the reality in a rational point of view. This is why the icon of legal justice is depicted wearing a blindfold, so that she cannot be influence by knowing whom she is passing judgment on.

So let’s break free from our home team mentality for a moment, and take a look at our economy from an outside point of view. It does not mean you are less patriotic, simply realistic. In fact, I believe that honestly observing the condition of your country, to find areas of weakness which can be improved is highly patriotic.

Let’s see what our economy looks like in the eyes of foreigners, right or wrong.

The Economist today features an article which notices the enduring credit crunch, with a few mentions of issues affecting the US. “The credit crunch has not disappeared. The number of banks on the Federal Deposit Insurance Corporation’s “at risk” list has been increasing, not falling. In many countries commercial property is enduring a rise in vacancies and defaults, in a slow-motion replay of the housing crash. Private-equity groups still have to roll over debts they incurred in the boom of 2006 and early 2007.” “Developed countries are hardly likely to default on their bonds. But creditors are still at risk if they are repaid in a devalued currency. Countries that appear to have lost control of their finances could see their exchange rates suffer.” “When a stone falls into a pond, the ripples persist for a while. The credit crunch was a whopping great boulder.”

From Russia, Pravda analyzes the catalyst for “US doom in 2010.” “…this economic train wreck that has been on an acceleration course since mid 2007…” “Nothing has actually changed in the US economy since the absolute collapse and nationalization of the US banking firms, and along with it the British banking houses, of 2008. Indeed, in America, the exact same games that brought down the private banks are still being played by the now government owned (or is it that they own the government…that is for another thesis) entities and this is called now called recovery.” “The TARP fund is being paid back in one of two ways: 1. unspent TARP monies are being given back to the government (note I do not say owners, since the tax serfs will never ever see this cash again) and this is called recovery or 2. The banks are selling new stock through new IPOs to pay back the debt, which in turn dilutes the value of the old stock which is held by the government, thus giving with one hand and mugging with the other, again, this is called recovery. None of the other US economic indicators have improved, especially when DC’s fluff and out right lies are removed.” “The hangover that will be felt, first by the Americans, than by anyone who owns their debt, pretty much everyone, on January 2011, will make every other year of the past 1,000 seem like a warm spring day.”

In Canada, a financial writer notices the absurdity of the governments pressure on banks to lend more freely. “U.S. bankers now have their marching orders. They’re supposed to fight a recession caused by lax lending with even more lax lending. If that sounds odd to you, join the club. Bankers seem to be risking scorn no matter what they do. Lend money to anyone who asks? You’re a villain preying on gullible consumers. Lend money only to the best credit risks? You’re a greedy no-good who is delaying the economic recovery.” “The level of household debt to income is higher in the United States than in Canada, yet U.S. banks are being scourged for being too tight with their lending policies, while Canadian banks are being implicitly cautioned for being too loose.”