Ship of Fools

US policymakers have ignored the fact that consumer demand in the 21st century has been driven, not by increases in real income, but by increased consumer indebtedness. This fact makes it pointless to try to stimulate the economy by bailing out banks so that they can lend more to consumers. The American consumers have no more capacity to borrow.

With the decline in the values of their principal assets--their homes--with the destruction of half of their pension assets, and with joblessness facing them, Americans cannot and will not spend.

Why bail out GM and Citibank when the firms are moving as many operations offshore as they possibly can?

It is very difficult for Americans to compete in America. Foreign companies have distinct advantages over Americans in America. American companies are taxed and regulated by government and are forced to build factories in foreign lands to evade them. Foreign companies are lured to America with tax shelters and exemptions and lucrative incentives from state governments. Indeed, we are aboard a Ship of Fools.