Insomnia (insomnia) wrote,

Ignore that giant sucking sound...

I know that economics isn't exactly an easy read for most people, but I'll try to make the premise of this post really simple. The "economic rebound" the U.S. is experiencing isn't sustainable, and the end result is likely to be some serious pain.

The economy is being kept afloat by deficit spending and the devaluation of the US dollar, which will buy us a little time to continue acting like happy little consumers, but that's not sustainable, because both exports and foriegn investment in the U.S. aren't keeping pace with U.S. money flowing overseas... and where the money flows, jobs go. The war in Iraq is just making this problem worse, and decreasing confidence in overseas investment in the U.S.

Meanwhile, Europe, which has seen the Euro climb sharply in value in comparison to the dollar, is already hinting towards efforts to prevent the Euro's sharp increase in value, fearing that further increases in the Euro will reduce European exports by making their goods less affordable, especially to people in the U.S. No telling how all this instability will play out, but it could get ugly and painful.

More of the niggling economic details are available here and here.

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