When a motor vehicle stalls out it is often because the engine has been overloaded. Parts and components have become worn down – or gummed up. Fuel and electrical systems misfire or no longer fire at all.
Sometimes all it takes is a quick and inexpensive fix to get things up and running again. Replacing the fuel filter or spark plugs is all that’s needed. Other times, like if the head gaskets are blown, the fix is expensive and tedious.
Just to replace the head gasket, the upper half of the engine must be removed and reassembled. But even that won’t solve the problem. To really fix things you need to repair what caused the head gaskets to blow in the first place.
Simply installing new gaskets will not fix the problem…they’ll just blow again. Understanding and fixing what’s making the engine overheat is also necessary. Yet, regrettably, it may be too late.
Severe engine damage may have already been done. In these instances, it’s more economical to just scrap the car than rebuild the motor. Though, if you must, you can grab some coat hangers and duct tape and Mickey Mouse another hundred miles or so out of the motor before it totally melts down.
A Decade of Slow Growth
The point is, the U.S. economic engine is severely overloaded. Every quick fix and shabby effort has been made to keep the weighty shebang up and running. Four trillion dollars of quantitative easing, seven consecutive years of zero interest rates, operation twist, TARP, TALF, trillion dollar deficits…all with little avail.
The problem, in short, is the economic engine is running hot yet the productive growth is running cold. Debts and legacy costs have stacked up over a half century of increasing centralized government planning. For whatever reason, population growth has flat lined since the turn of the century. Moreover, productivity has been lethargic over the last decade.
“The U.S. is in a straitjacket,” declares Jeffry Bartash at MarketWatch. “Sure, the economy has been growing steadily at a 2 percent clip since a recovery began in mid-2009. But the U.S. is expanding well below its historic growth rate of 3.3 percent. And it hasn’t topped the 3 percent mark in a decade — the longest barren stretch in modern times.
“What’s at stake is the very future of America. Without faster growth the U.S. can’t create enough jobs for those who want to them, and Americans will have to get used to much smaller increases in their paychecks. The middle class could shrink and poor would be even worse off.
“Governments from Washington on down won’t be able to do much to cushion the blow, either. They’ll find it harder to balance budgets, pay bills, maintain entitlement spending and make badly needed investments in roads, bridges, scientific research and other endeavors critical to the economy.”
Are You Prepared for a Slow Growth Economy?
If this trend of the last decade continues, several things will happen. Living standards will decline. Social welfare programs will come up short. On top of that, infrastructure will crumble.
These are not the scenarios we are familiar with in America. Of course, certain areas – like Detroit – fall apart from time to time. Though they usually transform, recover, and gentrify. This time the entire economy may slip and backslide for decades to come.
In the past, opportunity has generally been plentiful and available. It may have taken relocation or acquiring a new skill or training. But with some effort a person could generally count on improving their lot in life. This may not always be the case going forward.
Certainly, we are confident the U.S. economy will find its footing again. But it may have to fall a great distance to touch down on a solid foundation to rebuild upon. Getting there will take a protracted period of slow growth. A full overhaul will be needed. This will take time…and inflict pain.
It is advisable to prepare now, if you haven’t already, and plan accordingly. Reduce debt. Hold some cash outside the banking system. Acquire several streams of income. These are all good places to start.
As an aside, the stock market boomed yesterday. The DOW ran up 241 points. What does it mean?
Nothing, really, other than a one day reprieve from the cold hard realities facing the stock market.
for Economic Prism