The debt crises

"Mainstream economists failed to anticipate the crisis, not because it was an unpredictable `Black Swan`, but because false pre-determined beliefs meant they ignored the cause of the crisis: banks lending too much money to finance speculation rather than investment."

So says Professor Keen who successfully predicted the crisis. Millions of young Americans are getting themselves into student debt in what seems like a hopeless cause.

 The following article is from the Guardian (2011) but it is still relevant today:

 "Western Europeans and Americans are about to suffer a profound shock. For the past 30 years governments have explained that, while they can no longer protect jobs through traditional forms of state intervention such as subsidies and tariffs, they can expand and reform education to maximise opportunity. If enough people buckle down to acquiring higher-level skills and qualifications, Europeans and Americans will continue to enjoy rising living standards. If they work hard enough, each generation can still do better than its parents. All that is required is to bring schools up to scratch and persuade universities to teach `marketable` skills... "

"But the financial meltdown of 2008 and the subsequent squeeze on incomes is slowly revealing an awful truth. As figures out last week from the Office for National Statistics show, real UK wages have not risen since 2005, the longest sustained freeze in living standards since the 1920s. While it has not hit the elite in banking, the freeze affects most of the middle class as much as the working class. This is not a blip, nor the result of educational shortcomings. In the US, which introduced mass higher education long before Britain, the average graduate's purchasing power has barely risen in 30 years. Just as education failed to deliver social democratic promises of social equality and mobility, so it will fail to deliver neoliberal promises of universal opportunity for betterment..."

"We are familiar with the outsourcing of routine white-collar `back office` jobs such as data inputting. But now the middle office is going too. Analysing X-rays, drawing up legal contracts, processing tax returns, researching bank clients, and even designing industrial systems are examples of skilled jobs going offshore. Even teaching is not immune: last year a north London primary school hired mathematicians in India to provide one-to-one tutoring over the internet. Microsoft, Siemens, General Motors and Philips are among big firms that now do at least some of their research in China. The pace will quicken. The export of `knowledge work` requires only the transmission of electronic information, not factories and machinery. Alan Blinder, a former vice-chairman of the US Federal Reserve, has estimated that a quarter of all American service sector jobs could go overseas..."

https://www.theguardian.com/commentisfree/2011/feb/28/education-jobs-middle-class-decline

It will be interesting to see if Donald Trump keeps his word and sets about getting America back to work rebuilding its crumbling infrastructure.