Is the U.S. economy doomed? Have the chickens finally come home to roost, exposing us as a country with little real substance and little real wealth? We don't make much stuff, and even some of the stuff we do make, like motor vehicles, we make at a massive loss. Just check out the share prices of General Motors
We don't have much in the way of natural resources, including energy resources. All we've got is consumerism -- it accounts for roughly 70% of our gross domestic product. We can spend money, and lots of it. That's our lot.
How have we afforded our mass-consumerism? Credit, and lots of it. Whether it has been credit card companies like Capital One
Party over, oops
But the party is now well and truly over. Our greed has been exposed. The greedy banks and mortgage brokers who were peddling loans to people who couldn’t afford them have been hammered. The greedy consumers who bought the latest electronic gadgets and SUVs on credit are finding out the hard way that they have to pay back their debts.
It gets even worse. It's a nasty downward spiral. The credit has stopped. Consumers have stopped spending. When Best Buy
Because consumers have stopped spending, the whole economy has gone into a nose dive. Jobs have been slashed, and not just at retailers. It's across the board. Every company is looking to cut costs. As unemployment rises, and the risk of unemployment rises, more houses go into foreclosure, more people stop spending and stop consuming, and the economy keeps tanking, and tanking, and tanking.
Dragging the rest of the world into recession
Being the biggest economy in the world, for the time being at least, we are also dragging the rest of the world into recession. Japan is there. The U.K. is there. Most of Europe is there. China is not there, but their economy grew at its slowest pace in five years in the third quarter, and that was after at least 67,000 factories across China closed in the first half of the year.
It's a gloomy, depressing situation. It's especially disturbing when you realize that it's a man-made disaster, and one that could so easily have been avoided. It’s especially depressing when you struggle to see how we can get out of this mess and rise again to be the world’s true economic power. How can a country built on consumption truly have a growing and prosperous economy?
What can we offer the world?
There are no easy answers. The Obama administration’s answer is likely to be a combination of increased stimulus payments and tax cuts for the low and middle classes, and massive infrastructure spending on things like roads, transport, and education.
Those measures might help us avoid an even deeper and an even longer recession than we're currently staring at. But it still doesn't solve the problem of our over-reliance on consumerism.
So how can we fight back? What have we got? Can we competitively make and export real goods, like motor vehicles? Can we grow and export more and/or import less produce? Can we produce more oil so we can import less?
There are plenty of people, including Peter Schiff and Jim Rogers, who say no. They have been and continue to be willing to bet against the U.S. dollar and the U.S. economy, Rogers recently saying, "The U.S. is … a rolling bankrupt."
The one shining light
Right now, it's easy to be pessimistic. There are no obvious answers to our current economic woes. We could be in the early stages of a slow and painful economic descent, one from which we will never recover to our previous highs, including those of our stock market.
The one shining light is the great resilience and ingenuity of the American people. We've been in recessions before and recovered. We have a "can-do" attitude. We are generally positive and generally optimistic. Believe me, when you compare this attitude with that of other countries and cultures, it is a true competitive advantage, and one not to be underestimated.
Pure belief will get us through
I can't give you anything more than "I think it will all work out in the end." Nor can Warren Buffett. In his oft-quoted New York Times op-ed of a month ago, all he could give us was "… most major companies will be setting new profit records 5, 10 and 20 years from now." No mention of the trade deficit. No mention of our unhealthy dependence on consumerism. Just belief. Pure belief that everything will be OK.
In the short-term, the doomsayers and short-sellers rule the roost. In the long-term, the recession will pass, and collectively, through optimism and a "can-do" attitude, we'll work out a way to make the U.S. economy the pride of the world, again.
Fool contributor Bruce Jackson doesn’t have an interest in any of the companies mentioned in this article. American Express and Best Buy are Motley Fool Inside Value recommendations, and the Motley Fool also owns shares in both of them. Best Buy is a Motley Fool Stock Advisor recommendation, too. Bank of America is a Motley Fool Income Investor recommendation. If you're looking for stock recommendations, try any of our Foolish newsletter services free for 30 days. The Motley Fool's disclosure policy has a "can-do" attitude.