Is China Just Another Bubble?

Many speculate China is a bubble.

Well, bubbles (e.g., stock market and real estate) everywhere.

Again, in terms of their buying U.S. treasuries and being a cheap manufacturing producer, did China have any other option?

I’m not defending China’s policies including its pegged currency policy. China’s policies and moves should be understood in the global context (both economic and political) and its internal dynamics.

Why is China buying the massive amount of gold and other commodities around the globe? Why are they loosing taste for the U.S. debt?

Why are many Western companies moving their manufacturing operations and R&D to China? Is this just because they want to exploit the China boom while it lasts?

Many parts of the world (debtors and creditors alike) seem to be interconnected in an endless loop.

The bottom line is: the structural problems hidden behind asset inflation should be taken care of, instead of finding some bubble to blow. Then grow from a sound platform. Looking for growth based on speculative bubbles and the bad debt cannot go on forever.

“May the Lord bless you, and make his face shine upon you, and be gracious to you, the Lord lift up his countenance upon you, and give you peace.”

Num. 6:24-26

Spending Capital Wisely Would Determine Future Prosperity

One gets amazed by the U.S.’s staggering capital spending.

The key question is: how well has this capital been spent? Has capital gone into future productivity (e.g., new technologies that would create future jobs)? Or has it been wasted on a bad decision?

For instance, after the property bubble burst, Japan continued to spend its capital to prop up real estate prices. Now it gets stuck in bad investments.

It’s ironic that the U.S. seems to follow the same road that Japan did 20 years ago.

The problem facing the U.S. and Japan is much deeper and far more serious than it appeared to be. Many countries are not safe from this issue.

Shoring up the fire industry wouldn’t solve the problem.

Those countries that would spend its capital wisely would prosper.

China's Buying Spree Continues

With $2 trillion surplus, China keeps purchasing foreign firms.

A Chinese conglomerate, Zhejiang Geely Holding Group reached an agreement on Sunday for the purchase of the Volvo subsidiary cars off of the U.S. automaker, Ford.

While Ford paid $6 billion to acquire Volvo in 1999, Geely, based in Hangzhou, agreed to pay $1.8 billion for Volvo to Ford with Chinese banks providing the funding.

Such a move should be understood in the larger context of China’s building its technological capacity over the long haul, moving up the value chain.

Asians Seek To Boost Financial Ties

Ten ASEAN member nations including Korea, China and Japan launched a regional fund this Tuesday. The CMA (Chiang Mai Initiative) Multilateralization Agreement is intended to act as a safety net for member countries in case of liquidity shortage.

The member countries are poised to strengthen regional financial capacity. The fund would address the balance of payment and short-term liquidity problems in the region through currency swap transactions.

Again, Asians are looking inward. Of course, China plays a big role in this.

Diminishing Productivity of Debt in the U.S. Economy

Look at the chart in the following link and draw your own conclusion.

http://jessescrossroadscafe.blogspot.com/2010/03/debt-saturation-in-us-dollar-economy.html

Does the U.S. have no more bullets left?

Former Samsung Chairman Returns after Pardon

Former Samsung group chairman Lee Kun-hee has returned to the helm as the chairman of Samsung Electronics after an absence of 23 months. Lee was forced to step down in April, 2008. At the time, he was charged with tax evasion and breach of trust in a perceived bid to ensure his son’s eventual takeover of the Samsung Group. He was convicted of tax evasion three months later and was handed a suspended three-year sentence. The Korean president issued a pardon three months ago.

According to the Samsung spokesman, the company decided the leadership of the group’s former chairman was needed to take the upper hand in the changing global market.

Lee said that within 10 years all products and businesses representing Samsung might disappear.

Will Samsung find new growth engines under his leadership?

Does this signal that in the midst of a global economic crisis, Korea can’t afford to take economic restructuring effort including revamping its skewed industrial structure?

Why Is Sustaining Productive Capacity Important?

When Korea started as a humble OEM provider, it took on labor-intensive manufacturing jobs, using cheap wages, although the profit margin was thin. Yet, it has accumulated not only competitive high-tech production competence but R&D capacity over the years, becoming a newly industrialized nation. China is following the similar path.

Manufacturing has been the backbone of the Korean economy. It has generated not only a technological base but a climate for other businesses to flourish.

However, as I pointed out before, many Korean firms have moved its manufacturing operation overseas including China and Southeast Asian countries for several reasons.

The U.S. case has demonstrated what would happen if a country lost its productive capacity. It is highly likely that when manufacturing jobs are offshored, R&D may be eventually gone with them. Keeping higher-paying product design jobs, while outsourcing lower-paying manufacturing jobs, doesn’t seem to be working.

Again, production and innovation is the gist of a healthy economy.

Offshoring manufacturing jobs should be also understood in the overall context of economic prosperity and even national sovereignty. For one, the stagnation of wages has been caused largely by shrinkage in the manufacturing sector. Further, the global capitalists would continue to move manufacturing operation to a low cost producer nation.

National interests, corporate interests and individual interests may have to converge for the economic sustainability and social well-being. Sensible policy decision making, smart strategic corporate move, and enlightened individuals would sustain and prosper a nation. Of course, greed and rottenness should be purged out of the system, which may be the hardest part.

China Expects to See a Record Trade Deficit in March

While the U.S. is blaming China as a currency manipulator, China expects to announce a trade deficit for March.

What would a trade war with China accomplish for the U.S.?

From China Daily:

The country will probably see a "record trade deficit" in March thanks to surging imports, Minister of Commerce Chen Deming said on Sunday, while warning that Beijing will "fight back" if Washington labels China a currency manipulator.

Speaking at the three-day China Development Forum that ends on Monday, Chen said: "I believe there will be a trade deficit in March" - which will be the first since May 2004.
After China's exports rebounded in December, US legislators and economists have been demanding the Barack Obama administration label China a currency manipulator in a US Treasury report due out in mid-April, which will make it possible for Washington to slap duties on Chinese imports.

"China's trade surplus with the US has been turned into a key excuse by American economists to pressurize the Chinese government to revalue the yuan," but, ironically, the calls have been growing stronger even as the "surplus keeps falling", Chen said.

"It's not rational (for China) to revalue the yuan, as it would hurt both Chinese exporters and American consumers."

"If the (trade) issue is taken to the WTO, China will respond actively," Chen added.

"China, of course, wants to buy more to balance trade, but it is a pity there are so many things that we cannot buy from the US. The US has set restrictions on exports three times, and it added several categories in 2007, such as computers, aerospace technology and digital machine tools," said Chen.

Nobel laureate and economist Joseph Stiglitz told China Daily on the sidelines of the forum that many other factors, such as restrictions on high-tech products, rather than the exchange rate contribute to the US deficit with China. He called on Washington to relax the curbs to balance trade.

http://www.chinadaily.com.cn/china/2010-03/22/content_9619515.htm

Meanwhile, William Black explains ten steps to reform the U.S. financial sector in a four part video series.

http://therealnews.com/t2/

Will Japan Collapse?

Many, both in the East and in the West, have raised a concern over Japan’s government debt problem. As I pointed out before, Japan’s debt to GDP ratio is about 200%.

In the meantime, foreign Firms started to pull out of Japan due to the continuous decline in domestic demand. Some are closing their manufacturing operation and shops. For instance, Michelin plans to shut down its plant; instead it will be building a factory in India.

According to the Bank of Japan, FDI in the country dropped by 55.7% last year compared to 2008. Moreover, the number of foreign companies listed on the Tokyo Stock Exchange has dropped from 127 to 15 over the past 20 years.

Japan seemed as the force of the future back in the 1980s. What has happened since then?

In order to comprehend the root causes of Japan’s sovereign debt problem, one has to look into the dynamics of many variables: its deflation and national stagnation for the last 20 years, its political system and economic structure, policy choices, and the bubble it has experienced.

The irony is that the U.S. seems to be following Japan’s path in terms of growing sovereign debt and policy undertaking to contain it.

The following article from Japan Times discusses Japan’s sovereign debt crisis.

From Japan Times:

Now the doomsday prophet is making another terrifying prediction: Japan is likely to be devastated by a snowballing public debt that will bankrupt its government and trigger catastrophic hyperinflation.

Compared with Greece, Japan's gross government debt is far worse, at 181 percent of gross domestic product — the highest among the developed countries. Greece's debt-to-GDP ratio is 115 percent.Japan's present debt-to-GDP ratio is only comparable with what it was at the end of World War II. At that time, the only way the government could reduce the debt was through hyperinflation, which wiped out much of the people's wealth with skyrocketing prices.

The professor argued that a more drastic increase in tax revenues will be needed to save Japan from going insolvent, a crisis he says would wipe out much of the value of JGBs and trigger a domestic financial panic."The possibility is high that panic like a run on banks would break out. People would try to withdraw their money, but banks would go insolvent because they wouldn't have enough assets anymore," Sakuragawa said.

http://search.japantimes.co.jp/cgi-bin/nn20100319f1.html

U.S. High Tech Firms Move R&D to China

Some major U.S. high tech firms are moving not only manufacturing operation but their R&D from the U.S. to China. What would be the consequences of those actions?

Although the U.S. high tech firms claim that they would retain their R&D capacity in proprietary technology within the U.S., history has shown that the gradual transfer of technology occurs due to the intricacy between manufacturing and R&D. It is ironic that Chinese engineers who has obtained the best training in the U.S. has moved (would move) to China to work for the U.S. high-tech firms. Many of the MNCs abroad are subsidized by the U.S. government

The issue of technology transfer should be understood in the overall context of economy. For one, the U.S. is a debtor country while China is a creditor nation. The relevance of rising creditors shouldn’t be dismissed as history has demonstrated. Further, the international currency regime seems to be changing.

The U.S. may not stop the flow of capitals and the eventual technology transfer. As a matter of fact, the U.S. may be overwhelmed by its consequences of technology transfer.

The great game seems to be on.

From the New York Times:

For years, many of China’s best and brightest left for the United States, where high-tech industry was more cutting-edge. But Mark R. Pinto is moving in the opposite direction.

Mr. Pinto is the first chief technology officer of a major American tech company to move to China.

In addition to moving Mr. Pinto and his family to Beijing in January, Applied Materials, whose headquarters are in Santa Clara, Calif., has just built its newest and largest research labs here. Last week, it even held its annual shareholders’ meeting in Xi’an.

It is hardly alone. Companies — and their engineers — are being drawn here more and more as China develops a high-tech economy that increasingly competes directly with the United States.
A few American companies are even making deals with Chinese companies to license Chinese technology.

General Motors has a large and growing auto research center in Shanghai.

Intel has opened research labs in Beijing for semiconductors and server networks.

Now, Mr. Pinto said, researchers from the United States and Europe have to be ready to move to China if they want to do cutting-edge work on solar manufacturing because the new Applied Materials complex here is the only research center that can fit an entire solar panel assembly line.

Small clean-energy companies are headed to China, too.

NatCore Technology of Red Bank, N.J., recently discovered a way to make solar panels much thinner, reducing the energy and toxic materials required to manufacture them. American companies did not even come look at the technology, so NatCore reached a deal with a consortium of Chinese companies to finish developing its invention and mass-produce it in Changsha, China.

Applied Materials has greater challenges, including fighting technological theft, a chronic problem in China.

But none of that changes the sense that tectonic shifts are under way.

www.nytimes.com/2010/03/18/business/global/18research.html?pagewanted=1

Korea Poised to Invest in Mobile Phone Industry Again

According to the Ministry of Knowledge Economy of Korea, the government plans to spend 760 billion won (roughly 670 million USD) in mobile phone industry by 2015. This initiative is geared toward upgrading Korea’s wired and wireless network system, developing diverse software and key components which have been mostly imported.

The Korean government heavily subsidized the mobile industry before as I discussed in prior posts. Many lessons can be drawn through this experience. Will this administration take the lessons and reflect them in the upcoming endeavor?

Many questions can be raised on this undertaking, and of course, again, the devil lies in the details. Some sample questions may be:

-Who has benefited from the government-led R&D intervention most?
-Without a fundamental change in the Korean higher educational system in a high-tech area, how will human capital that will develop core components of mobile phones and software get properly trained?
-How have GRIs contributed to this?
-Can the government R&D investment be better spent in other areas?
-How is the state of the world economy different from that during the previous period in which the Korean government heavily invested in the mobile phone industry? We are in the middle of the worldwide economic downturn and many of the advanced economies are not in a buying mood due to several factors.
-How would this endeavor help to boost much needed job growth?

Korea has faced a technology trade deficit due to the lack of the propriety technology despite Korea’s impressive progress as a technology powerhouse. Strengthening software capacity and reducing imported parts and components have been long overdue. Efforts have been made without a great deal of success. Again, will it be different this time?

Is China Flexing Its Muscle with the U.S., or the Other Way Around?

Will China revalue the Yuan?

China seems to have been aware of the game MNCs and the Anglo-Saxon banking cartel have played. They know what has happened to Japan after the Plaza Accord. They seem to know well the consequences of their revaluation of the Yuan. Why have they depreciated the Yuan in the first place? They might revalue the Yuan eventually, but probably not on the U.S.’s terms.

Both countries have engaged in the debt-fuelled growth; both have huge problems in the banking sector. Both sides have some serious imbalances.

The international currency regime seems to be slowly changing. The chosen policy choice of the U.S. is quantitative easing. The thing is that regardless of China’s move, the U.S. seems to be going to face a catastrophe, given the high level of debt.

Both countries would suffer initially, yet who appears to come out of this with relatively minor scratches? Who would have more severe repercussions?

What would be the long-term prospects of two countries?

In a word, who holds the better set of cards?

The Western media outlets are bashing China for currency manipulation.

Krugman is taking on China, calling for stronger action for the Yuan.

From the New York Times:

Tensions are rising over Chinese economic policy, and rightly so: China’s policy of keeping its currency, the renminbi, undervalued has become a significant drag on global economic recovery. Something must be done.

http://www.nytimes.com/2010/03/15/opinion/15krugman.html

Another piece by Ambrose Evans-Pritchard in the U.K Telegraph, arguing China is badly overestimating its power.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7442926/Is-Chinas-Politburo-spoiling-for-a-showdown-with-America.html

In the meantime, the U.S. Congress has unveiled a bipartisan Senate bill which would pressure China to raise the value of the Yuan against USD or face still trade penalties.

Worrisome Growing Unemployment among Korean Youngsters

According to a report by Statistics Korea, the country’s jobless rate among people from 15 to 29 reached 10 percent in February, the highest in the past decade. The number of unemployed people surpassed 1 million for the second consecutive month, bringing Korea’s jobless rate to almost 5 percent last month.

Hope for Humanity, Moral Leadership, and the Enlightened Masses

Many of us understand what has been going on in the world in the midst of this economic debacle. For example, wealth has been wasted through the boom bust cycle. Some countries significantly lack fiscal discipline, heading for a disaster. We also understand what the root causes are. The fundamental question would be: how are we going to change things?

What matters most in changing things might be the actions taken by those who run the economic systems. Yet, do they base their actions on public interests to benefit the public, not a chosen few? Are those in charge eager to follow a path that would work?

Above all, humanity should be restored on the global economic scene and manifested in public policies.

Have the masses looked around at what has been going on? The robust economic system should be accompanied by corresponding sound political structure. How would the masses oversee the systems to ensure they run as it should be?

What role have the media outlets and the educational system played in this? How are we educating the next generation?

Concerns over Budget Spending and Sensible Policy Choice

Many countries have intervened and undertaken massive stimulus efforts. Yet concerns over a sustainable fiscal track remain, as many countries face deficit conundrum. Some countries are facing even default risk.

The bottom line would be: how is each country spending its stimulus money and whom does the economy serve?

Those who use the massive amount of stimulus money productively (e.g., investing in robust economic and job growth), instead of being diverted to endless bailouts and other useless spending, would head for a solid economic recovery.

History has taught us that excessive government interventions including stimulus measures could distort the whole supply and demand balance and generate the intended and unintended consequences. Simply put, they do more harm than good

Any country should opt for short term pain for long term gain. And yet, would internal political dynamics allow that to happen?

When a political system of a country is corrupt, which is manifested in public policies to serve the special interests, the global forces could easily wipe out a nation’s economic fundamentals. The U.S. is a case in point.

The Myth of Globalization, Mess in the U.S. & Korea’s Economic Growth Engine

Globalization has generated different consequences for the advanced and emerging economies. Globalization has also affected not only the manufacturing sector but the financial regime. MNCs have formed speculative bubbles around the globe. They could make a country tumble. They could keep competition away from a specific industry. A country has to deal with the tyranny of this global financial force. China seems to have been fully aware of that in the wake of the Asian financial crisis no matter what goes on internally.

In the case of the U.S., globalization has got it into a mess in a way. A lot of its productive capacity has been offshored in the name of globalization. By replacing financial engineering with manufacturing under the pretense of globalization, the U.S. has enriched the few at the expense of the rest. Massive bubbles such as housing have kept the U.S. economy going, while incomes have fallen. Throughout this process, there has been merger of the corporate with state interests. The U.S. is still the number one consumer in the world along with the world’s reserve currency. Yet its economy is teetering on the edge of a cliff.

An epic shift has occurred. Globalization has taken the reigns. Just look at the flow of wealth in the U.S. and the world. There has been a change in distribution of employment and unemployment worldwide. The disappearance of the middle class is a worldwide phenomenon. The wealth has become concentrated in so few hands. The silent coup continues while many economies are showing signs of cracking.

If globalization has helped to increase the size of a country’s middle class, that would be a positive thing. Has globalization helped jobs to expand and wages to rise?

Otherwise, one has to ask what in the world globalization is doing to its economy. What is driving globalization? Who is benefitting at whose expense?

To some extent, globalization has helped Korea to build its industrial base as discussed in prior posts. However, many Korean corporations have moved its manufacturing overseas due to global wage arbitrage and other benefits. Korea is losing its manufacturing as well. What would be economic engines left in Korea? A service economy? Look at what’s been going on in the U.S.

The world economy is in the huge credit bust recession. This is no ordinary cyclical recession.

Korea seems to have fared O.K. for now, but there does not seem to be an engine to have yet appeared that will bring Korea to the next level. No tree grows large without deep roots.

Wall Street Banned from European Government Bond Sales

From Guardian U.K.:

European countries are blocking Wall Street banks from lucrative deals to sell government debt worth hundreds of billions of euros in retaliation for their role in the credit crunch.
Goldman Sachs, JP Morgan and Morgan Stanley have exploded in wealth and power over the past decade. In their glass towers in Canary Wharf, or in Goldman Sachs' European headquarters on Fleet Street, reception rooms regularly welcome prime ministers, world business leaders and multibillion-pound investors.

"The power of big investment banks was a factor in the banking crisis, and it's up to regulators and customers to stand up to them, and not picking them is one of the ways," Augar said.
But the power accumulated is too large to wane, the author said. "I doubt this will last," he said. "The US investment banks will be back in Europe before too long because they are very powerful and they have a very big footprint in Europe."

The EU is also trying to curb US financial power by creating its own monetary fund – a replica of the Washington-based IMF.The need of a European fund has emerged during the Greek crisis, as European politicians have insisted financial troubles should be resolved at home.

http://www.guardian.co.uk/business/2010/mar/08/us-banks-european-bond-trading

From Jesse’s Cafe:

Regrettably, once again US corporations, the Wall Street banks, are busy alienating the world against America's interests through their unethical and shockingly predatory business practices. It will be interesting if Asia and South America pick up this theme of banning the Wall Street banks on ethical considerations from doing certain types of business in their regions.The imbalances, flaws and conflicts of interest in the US financial markets are a genuine shame, and may yet cripple the economy once again. And the unwillingness of the reform President to do anything about it is even more shocking still. What is he thinking?Congressman Alan Grayson (D-Fla) recently said , "There is a growing feeling on the part of Democrats that the president is getting bad advice from people who have sold out to Wall Street."

http://jessescrossroadscafe.blogspot.com/2010/03/ugly-americans-wall-street-excluded.html

Korean Economy Expanded 0.2% in 2009, Yet Concerns Remain

According to OECD, its preliminary growth figures disclose that Korean economy expanded 0.2% last year. Although this figure may seem impressive, given that G7 nations have underperformed with the U.S. marking an economic contraction of 2.4% and Britain, Germany, Italy and Japan shrinking by 5% last year, many concerns over Korea’s overall economic outlook remain.

Korea’s Finance Minister, Yoon Jeung-Hyun recently raised concerns over the self-sustainability of the private sector and the significant household debt levels in the country.

In the meantime, the Korean government has reportedly decided to limit the number of foreign workers working in Korea to the current level, while there has been a shortage of low-income bracket labor workers. A few years back, the Korean government decreased the number of foreign workers allowed to work in Korea due to grim job prospects in Korea. However, many Korean workers are not willing to take physically demanding hard work any longer despite rising unemployment.

Is the Current Administration of Korea Poised to Revamp its R&D System?

The Knowledge Economy minister of Korea said in a recent interview that he has been aware of the problems in Korea’s R&D industry since he took office last year. He added that Korea’s R&D industry is on a downward trend due to a lack of competition and its state of complacency.

Around 2.6 billion dollars is slated to be spent on converging separate R&D projects into one large-scale project. In an attempt to share the responsibility half of the money is set to come from the government while the other half will come from the private sector.

Again, the devil lies in the details. Almost every administration has tried to revamp Korea’s national innovation system. Will it be different this time? Time will tell.

Is Korea Emerging as a New Role Model for Japan?

Among the advanced economies, the U.S. and Japan face the massive amount of sovereign debt. In the case of the U.S., the world’s largest economy, there is $110 trillion debt and it is exponentially growing. Japan, the world’s second-largest economy, is the world’s most indebted nation (some 200% of GDP).

Facing fiscal crisis due to growing debt and sluggish economy, Japan is looking into Korea for the lesson to learn.

Business daily the Nihon Keizai Shimbun published an editorial last Thursday entitled “Let’s Learn from Rising Korean Companies in the Global Market.” The article emphasized that Japan should “humbly learn from how Korea with a population less than half that of Japan penetrated overseas markets and achieved growth.” Some Korean manufacturers have outdone Japanese firms both in price competitiveness and quality.

At the recent Vancouver Olympics, Korean figure skater Kim Yu-Na won a stunning victory against Mao Asada of Japan.

The Disappearance of the Middle Class

I posted on the rapid disappearance of America’s middle class before. A Similar story in many parts of the world.

The National Statistical Office of Korea announced today that Korea’s income group structure is showing a rapid change from a middle class-strong jar shape to a poor class-strong pyramid shape.

What Can We Learn from the U.S. Economic Debacle?

Many things got the U.S. into the mess it is now in: greed, corruption, ignorance, complacency, failed policy, and so on. The U.S. is facing over $100 trillion in debt and still counting. We may have to worry about deficit problems as quite a few countries face sovereign debt problems, yet one of the most significant lessons we can draw from the U.S. experience may be the deterioration of its manufacturing base.

The U.S prospered from the 1950s to the 1970s largely because it was the only industrial power left standing after WWII. The U.S. had shipped much of manufacturing out of the country for several reasons as discussed in prior posts. While some Asian countries have been platforms for globalized production (for instance, Japan exports $60 billion of autos and auto parts to the U.S. each year and 70% of Wal-Mart’s products are made in China), the U.S. has engaged in crony capitalism. The U.S. has borrowed, spent and created massive credit expansion. This deindustrializing process in the U.S. has hampered its job foundation. There have been no jobs to take the place of the manufacturing jobs that are lost in the U.S. This also means that the U.S. has been losing one of its most critical competitive edges, innovation since innovation is based on the robust production capacity. (I’ll address again how the emerging economies including Korea and now China and India have accumulated its production and design capabilities on another post).

A country shouldn’t replace financial engineering with manufacturing operations in the pursuit of short term gains, period. The case of America shows us that if a nation loses its productive capacity, it would be a basket case. As Elizabeth Warren notes in many occasions, the U.S. middle class has been subjected to a dismantling.

Furthermore, instead of addressing the root cause of the problems, the U.S. is propping up the economy by employing various means for the time being.

Perhaps another lesson to be learned is that sophisticated checks and balances should be in place to make sure that the system is not gamed.

The U.S. should beware that the international currency regime is changing as many countries are choosing to protect their reserves in anticipation of the USD devaluation.

For the U.S., time seems to grow short to act upon its problems.

Business Not Investing and Household Not Saving Up

A similar situation everywhere. Korea is no exception.

Korea is no longer seeing the usual trend of households saving up and businesses getting loans for investment. According to the Bank of Korea, savings by businesses recorded their largest expansion ever last year. Household credit, on the other hand, is on the increase as families still suffer from reduced income.

There Are No Drivers of Economic Recovery: A New Jobless Era in the U.S.

In order to have an economic recovery, there should be several fundamental changes (e.g., financial sector reform and a balanced budget). Yet, above all, the economy can’t recover without jobs. That’s why unemployment matters so much. High structural unemployment would threaten civil society.

The following two articles discuss the grim picture of jobless America with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits. A new jobless era in America will likely change the life course and character of a generation of young adults and ultimately affect American politics, its culture and the character of American society for years to come.

http://www.nytimes.com/2010/02/21/business/economy/21unemployed.html

http://www.theatlantic.com/doc/print/201003/jobless-america-future