Are Americans blind, deaf, and averse to logic? The US wants to move the economy out of the recession by spending. But the US is broke! So, where is the astute, logical, realist analysis of the real situation of the US – as opposed to the emotional, imagined, desired situation of the talking heads – in all of this? America lives in the past, and refuses to see the present!

• Now, the US has a debt amounting to 355% of GDP. As New York Times writes today: “This is a crisis of excessive debt, which reached 355 percent of American gross domestic product … It cannot be solved with more debt.”If you ponder that number, it means that at an interest rate of 5%, the US will be spending about 17.5 percent of GDP just to pay interests on its debt. One sixth of everything produced in the US, that is. Every sixth house, every sixth car, every sixth Microsoft Office program!
• As well, the economy is shrinking fast. Which that means that in the near term, the GDP-base for paying those interests will be smaller, and the proportion higher.
• Also, every economic indicator is pointing down – consumer spending, house sales, industrial orders, unemployment, corporate earnings, you name it.
• And, the US will get very little assistance from increased demand in overseas markets. The economies of US’ major trade partners are heading in the same direction. Demand is shrinking rather than expanding.

This is the real situation (New York Times):

With inventory accumulation gone, the economy will contract in the first quarter at more than a 5 percent annual rate, Mr. Gault said.

Employers reduced their corporate investments in computers, office equipment, machinery and other capital goods by an annualized 19.1 percent in the fourth quarter.

Trade fell, as Americans bought fewer Asian-made televisions and computers, and global demand for American goods and services ebbed. Exports in the fourth quarter declined 19.7 percent while imports dropped 15.7 percent.

And now, in this situation – with the US now, as opposed to in it glorious past, being in reality a relatively poor country that has borrowed much too much in the past – the US is planning to spend more billions of dollars to speed up the recovery from the crisis. If this spending is to be considered as an investment, when will it be recovered? What is the probability that an investment of one extra trillion will be recovered any time during the next 10 years? Very, very small, I think.

America and Americans are impatient. They want things to happen fast. They want a quick fix when things go wrong. And they want it, even demand it, yesterday. Somehow I think the quick fix of this crisis simply isn’t there. And I think hard work and patience is called for. The only card left to play for the US currently, I think, is to redistribute wealth in order to increase consumer demand. Part of that is actually to let businesses fail, so that shareholders and owners lose money. Not to shore up failures in a vain hope that they will some day, hopefully, recover.

See also: Citibank – let it roll

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