Consumer Power

It has taken many years for America to transform from a producing nation, to a consumer nation. We now produce nearly nothing. America strives on innovation and intellect instead of labor. In other words: 1) Americans have ideas. 2) These ideas are produced in other countries. 3) Americans buy. It’s a circle that has somehow existed for quite some time.

The problem is that due to this current economic downturn, Americans are no longer buying. Without anyone buying, production in other countries is beginning to slow at an extremely fast pace. The “Big 3”, are no longer the only ones hurting; Toyota has nearly hit a brick wall. Producing countries, such as China, are putting pressure on the American Economic system. America was the anchor to the world economy, and it has slipped.  

Obama is planning his first overseas trip as president to discuss economics in London. He will be faced with an immense amount of pressure. American economics, as we know it, will be put to the test. Government intervention seems to be Obama’s personal belief when it comes to solving economic problems. This, Geithner’s “Newer Deal” and the G-20 meeting this Tuesday sounds like a recipe for economic change.

What are we to expect, not just from this upcoming meeting, but in the near future? The world’s goal will be to minimize the effects of American capitalism (if we can still call it that) upon the world. In fact, many countries would love to see a total nationalization of America’s largest banks. Obama will most likely have to defend as to why a complete nationalization did not take place. One of China’s many goals is to make sure their investments in American loans do not go unpaid. China spent the entire Bush administration buying up old American debts. This will be a large focus for the Chinese. America’s goals, according to what Obama has been preaching, will be to become less reliant on others and bring jobs back to America. These goals will be accomplished by trade tariffs.

Most likely, this meeting will be an over announced and over rated exchange of pleasantries in a room full of demagogues. Get excited.