State of The Economy

While American car manufactures were working at a fraction of capacity, Japan’s superior manufacturing companies have been busy turning out some clunkers. And have taken a large bite out of American wallets to boot. Toyota has recalled Priuses to repair faulty brakes, just after a recall on exccelerators on other models.

During the past few years, Americans have been mortified with the idea that they have failed at jobs they were always good at, such as creating jobs, building, manufacturing, growing, and getting things done. In the last couple of years America’s opportunities seemed to have faded away. So now the shoe is on the other foot. Japan who had such a competitive advantage in manufacturing is not so able after all.

After Japans fiasco it’s likely that Ford ,which has already been doing better than domestic rivals, will be beneficiary of the Toyota debacle. Of course Europe has an advantage over Americans. They provide healthcare for their citizens and don’t leave those down on their luck to fend for themselves. Because of that Europe has taken the economic down turn in stride without the mass foreclosures, bankruptcies, and  unemployment the U.S. has.

But now Europe seems to be coming undone by its less healthy members. Supposedly a single monetary policy for the 16 countries that use the euro was to help less able members and allow action in times of trouble. In practice it was the opposite. The policy allowed Greece to push the solution to it’s problems into the future, says, Daniel Gros, director of the Centre for European Policy Studies. ” It turned out to be a fair weather construction.” There is to be no aid and comfort from Europe’s central power. Ireland, Greece, Portugal,and Spain were told to forget about the bailout.  The U.S. by swallowing it’s bitter pill quickly looks the better of the two. The dollar is looking better compared to the euro in the last few months.

Despite being strapped with pay outs to big banks, unemployment, foreclosures, and the inability to deal with healthcare, the U.S. economy grew at a 6.2 percent annual rate in the last quarter. These numbers show that we might not be so bad off after all.

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