While Eric Margolis’ entire comment in the Toronto Sun is a must-read, the following two quotes really hit the nail on the head:

More empires have fallen because of reckless finances than invasion…

If Obama really were serious about restoring America’s economic health, he would demand military spending be slashed, quickly end the Iraq and Afghan wars and break up the nation’s giant Frankenbanks.

Margolis is right.

As I have repeatedly shown, war is bad for the economy. According to a Nobel prize-winning economist, the head of JP Morgan and others, the Iraq war and the war on terror in general were huge factors in destroying our economy.
America is a dying empire, destroying the last of its resources to fight unnecessary wars. Instead of rebuilding our economy so that we can once again be a strong nation, we are wasting trillions fighting those unnecessary wars, thus guaranteeing that we do not have the economic resources to defend ourselves in the future from real threats.

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Gross Domestic Product (GDP) is our main measuring stick to determine economic growth. The calculation of GDP shows why imports can be drag on economic growth particularly since consumer spending (a 70% factor of GDP) is in the tank. Today, the Census Bureau announced that our trade deficit (difference between exports and imports of goods and services) grew in November 2009 to $36.4 billion. Not good news.

The calculation:

GDP = Consumer Spending + Gross Investment + Government Spending + Net Exports

Net Exports = Exports – Imports

Focus on net exports – exports minus imports. Since we are running a TRADE DEFICIT then we are importing more goods and services then we are exporting to the world. Again, not a good thing for economic growth as calculated by GDP. This TRADE DEFICIT provides a drag economic growth or a leak of economic activity.

Why a drag or leak? Well, if we are buying imported goods that means that money to purchase that product ultimately goes to the country that imported that good. That money doesn’t stay here in the U.S – within our economy. This economic activity essentially ‘leaks out’.

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Those industrial companies not yet acquired face looming bankruptcy where subsidized foreign competitors are able to sustain losses in order to out-price and out-service American domestics. Twenty years ago the U.S. trade deficit came mostly from oil imports. Today, the bulk of U.S. exports are hides and skins, metal ores and scrap, pulp and waste paper, tobacco and cigarettes, rice, cotton, coal, meat, wheat, gold, animal feeds, soybeans and corn (very few value-added products, formerly created by our capital intensive industries). The only high-tech goods of which the United States is a net exporter are airplanes and airplane parts, military technology and specialized machine tools. In 2000, the United States was a net importer even of spacecraft. We are racing to replace our factories with state-of-the-art supply-chains, shopping malls, and warehouses overflowing with foreign goods.

In place, we are becoming wholly dependent on consumer spending on foreign goods to sustain what is left of our economy. 70 percent of our GDP is comprised of consumer spending largely on imports or goods made domestically by foreign owned corporations. Only 11 percent of jobs in this country are in manufacturing, falling down from 20 percent in 1981 and 25 percent in 1970. From 1993-2003 the U.S. has shed manufacturing jobs at an average rate of 3 percent per year. Recently wages for warehouse and distribution surpassed manufacturing for the first time. It now pays U.S. workers more to distribute imported goods than to manufacture them domestically.

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