Monday, September 1, 2008

Economic Detox

While contemporary headlines bode poorly for the U.S. economy, I see them as signs of hope...

I keep hearing high-pitched alarms about the weakening U.S. dollar, inflation, energy prices, the housing market bubble burst. We all see the ugly face of the these conditions.

Global trade has been a bitter (but necessary) pill for the U.S. Perhaps the Clinton-detonated U.S. economic nuclear winter (of global trade, NAFTA, etc.) is finally starting to give way to a new economic springtime in the States.

In the late 90's US market, there were a lot of excesses in the technology sector. Then the bubble burst. When the dust settled, we (the US IT industry) found ourselves disenfranchised by our sponsors... corporate America beat us with our own job hopping. U.S. Engineers hopped off to the coolest new startup, and rode their high salaries into the dirt, while enduring companies went lean, mean, and foreign. We had become so expensive, we were sucking our own project ROI's completely out of sight. By hooking foreign talent pools, the ROI's were visible again.

Nearly a decade later, look what's happening around the world... Many foreign IT job markets are falling into the same salary inflation trap that the U.S. market fell into... They are going through the same inflation we experienced. Their prices are rising.

Combine their salary inflation with our salary stagnation and a weakening dollar, and what do you get?

A leaner, meaner domestic competitor.

In a sense, it's like that in many sectors of the U.S. economy.

So let the U.S. dollar weaken... It means that America can go back to being product producers (rather than mindless consumers) in the global market!
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