Those loony Brits over at the Economist are at it again trying to tell the world that the American economy is on the comeback trail. This seems to be a recent theme the Economist feels like pushing (maybe they are secretly in the tank for Obama, lol) because readers might recall this blog covered a similar story from the Economist a few months back. Anyway, here is a brief list of accomplishments that try to prove their point.
1. Household debt is down from a pre-crisis high of 133% to 114% now, it was around 100% in 2000.
2. Houses in America are now some of the most undervalued in the world at 19% below value.
3. US banks are in far better shape than those in Europe because the Treasury forced US banks to deal with their bad loans from the start. “Citigroup alone has flushed through some $143 billion of loan losses; no euro-zone bank has set aside more than $30 billion”. It is unfamiliar to hear that government officials actually dealt with a problem head on instead of kicking the can down the road, 3 cheers to whomever is responsible.
4. Not only did US banks write off bad loans, they also have far better capital ratios than those outside of the US (once again thanks to the Treasury).
5. The trade deficit has shrunk from 6% to 4% of GDP, this at least in part is a by product of the FED printing all that money creating a weaker dollar thus making US exports cheaper.
6. Domestic energy production is way up, US net oil imports are expected to be at their lowest since 1995. The shale oil boom could eventually make America energy independent, but perhaps the most important news out of the development of shale oil is that it is proof America still works because the process was pioneered here where it has floundered in Europe.
After going through that list it is hard to argue with our good friends over at the Economist but as the original article said in closing whoever wins in November would be wise to take a hands off approach to the economy and let Americans do what they do best, take care of business.