Although the entire release is worth reading, I found the following excerpts to be particularly notable:

Forty-four percent of Americans believe it is likely that today’s youth will have a better life than their parents, even fewer than said so amid the 2008-2009 recession, and the lowest on record for a trend dating to 1983.

also:

Gallup uses the same question other survey organizations have asked intermittently over a longer period of time. Selected trends from CBS News, New York Times, and Roper Organization polls reveal that Americans currently express greater pessimism about what the future holds for today’s youth than any of these organizations found in surveys from 1983 to 2003. The most positive result occurred in a December 2001 CBS News/New York Times poll in which 71% said American youth would have a better life than their parents.

also, from the concluding paragraphs:

Confidence in the traditional American dream — that each generation can work its way up in the world and have a better life than the previous generation — appears to be slipping away. Americans are less likely to believe this to be true today than at any time on record, including during the worst of the recent economic crisis.

Fewer than 4 in 10 high-income Americans — who presumably have the greatest access to opportunity and resources to gauge what the markets will do going forward — believe today’s youth will be better off than their parents. This level of pessimism may also reflect the massive destruction of wealth that high-income Americans experienced from the economic meltdown.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1325.69 as this post is written

An online caption of the article reads “Next year the federal government begins the phaseout of traditional incandescent lightbulbs, giving us yet another enlightening example of politicians short-circuiting free markets.”

In the article, Steve Forbes says “This prohibition of the standard lightbulb is justified on the grounds that it will save energy. Well, if that were true, don’t you think consumers would figure it out for themselves?”

The article goes on to challenge the safety and comparative longevity of the CFLs vs. that of the standard incandescents.

My comments:

In my opinion, it appears, from an “all things considered” basis, that the regulatory “phaseout” of incandescent bulbs is a prime example of not only overregulation, but also (and more importantly) economically counterproductive policy.

The purported economic and environmental benefit of CFLs over incandescents seems at best nebulous, and, at worst, dubious – which some may view as duplicitous.  As Steve Forbes alludes to in the aforementioned quote, it would seem that if CFLs were as beneficial as claimed, consumers would heavily favor CFLs and incandescents would eventually (naturally) disappear from the marketplace.  Instead, we have regulation to force incandescents from the marketplace.

Milton Friedman spoke at length on the issue of harmful regulation in his “Free to Choose” television series, especially in Volume 7, “Who Protects the Consumer.”

I am sure that many people view this incandescent bulb phaseout as inconsequential, as it may seem trivial in the larger “scheme of things.”

If this represented an isolated example of economically counterproductive regulation, it wouldn’t be of great concern.  However, when such regulation proliferates, its existence should become a major issue of concern.  This is so for a number of reasons.

In the article “America’s Economic Future – ‘Greenfield’ or ‘Brownfield’?” I mention the issue of policies that are inherently economically counterproductive.  Of these economically counterproductive policies, I wrote:

“There exist innumerable examples of these types of decisions; and their aggregate negative effect on the nation’s well-being (and strategic position) should not be underestimated.”

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1303.13 as this post is written

His latest “Chairman’s Letter” in the Berkshire Hathaway 2010 Annual Report contained some interesting comments regarding the American economy, both past and future.  Here are the excerpts I found most notable:

“Money will always flow toward opportunity, and there is an abundance of that in America.  Commentators today often talk of “great uncertainty.” But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain.

Don’t let that reality spook you. Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective.

We are not natively smarter than we were when our country was founded nor do we work harder. But look around you and see a world beyond the dreams of any colonial citizen. Now, as in 1776, 1861, 1932 and 1941, America’s best days lie ahead.”

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A Special Note concerning our economic situation is found here

SPX at 1321.82 as this post is written

This law serves as a good example of an important issue I wrote of in my May 2009 article “America’s Economic Future – ‘Greenfield’ or ‘Brownfield’?”

In that article I wrote of the need for policies to be thoroughly assessed with regard to overall economic impact, compared with whatever “societal good” the policy purports to accomplish.

A thorough discussion of the benefits and costs of this new lead-paint law would be exceedingly lengthy and complex.  However, I believe that this lead-paint law, if thoroughly analyzed from an “all things considered” standpoint – taking into account both “societal good” as well as economic impacts – would be found to be (far) suboptimal in many respects.  Of particular concern is that this is yet another law that disproportionately (negatively) impacts small businesses.

While one may dismiss this new law as one that is limited in nature and thus relatively insignificant, it is important to note that it is just one example among many in which inadequate overall analysis was conducted.   Cumulatively, these poorly analyzed policies are very significant in determining whether America’s economic future will be that of a “greenfield” or “brownfield.”

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SPX at 1064.88 as this post is written

Of course, this situation is not unique to the Chicago area.  Many states have a large percentage of their total jobs as government jobs.

While many might be indifferent to this situation – assuming that a “job is a job” – from an overall economic standpoint it is troubling on various fronts.

One such front that deserves special attention is that which I discuss in the “America’s Economic Future: ‘Greenfield’ or ‘Brownfield’?” article.

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SPX at 1161.65 as this post is written

As I have indicated in previous writings, we as a nation need to be more “strategic” in nature if we are to attain true Sustainable Prosperity.

One critical question that we should be asking, from a strategic standpoint, is what is the value of a recovery if it is not sustainable?  The answer is that there is very little if any value to such a recovery.  In fact, a very strong case can be made that there will be strong negative repercussions stemming from such an unsustainable recovery.

Another issue, from a strategic standpoint, is one of opportunity cost.  The opportunity cost of attaining a recovery that subsequently fails vs. a true sustainable recovery is enormous.  This is especially true in our current economic environment where many factors such as the national debt are at truly ominous levels.

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SPX at 1165.42 as this post is written

“Our single most important priority is bringing about economic recovery and ensuring that the next economic expansion, unlike it’s predecessors, is fundamentally sound and not driven by financial excess.

This is essential. Without robust and sustained economic expansion, we will not achieve any other national goal. We will not be able to project strength globally or reduce poverty locally. We will not be able to expand access to higher education or affordable health care. We will not be able to raise incomes for middle class families or create opportunities for new small businesses to thrive.”

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Our national goal to achieve a sustainable recovery (or what I frequently refer to as “Sustainable Prosperity”) has been and will continue to be a challenge, given various underlying fundamentals.

In order to achieve “Sustainable Prosperity” we will need to have a solid focus on planning our economic future and its dynamics.  Toward this end, I wrote an article in May of last year titled “America’s Economic Future – ‘Greenfield’ or ‘Brownfield’?” which can be found listed along the right-hand side of the home page.  That article, as well as others I have written, explores some of what I believe are pivotal issues that lack recognition with regard to our economic future.

All of my articles are also listed and summarized at this link:

http://www.economicgreenfield.com/prosperitybypencom-directory/

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SPX at 1075.51 as this post is written

http://www.economicgreenfield.com/2009/06/21/the-global-economic-future/

Additionally, from a practical perspective, from a time standpoint it would be prohibitive to attempt to comment on all global economic affairs that I consider relevant.

Although I focus on the U.S. economic condition, this is not meant to imply that the U.S. is the only country that faces an array of difficult economic challenges.  Much to the contrary – many countries currently face economic issues that are exceedingly problematical. 

It is very troubling that so many countries, especially those with large economies, are concurrently experiencing such difficulties.  Such a common and unified adverse condition will not bode well assuming severe economic weakness reappears.

Attaining Sustainable Prosperity is a global challenge.

SPX at 1140.78 as this post is written

http://www.economicgreenfield.com/americas-trojan-horse/

This article had to do with various facets of our national debt, many unexplored.  Here is an excerpt that I would like to further comment upon:

“The first of these concepts is that the financial markets have allowed us to grow and perpetuate our debt loads, absorbing this debt issuance at reasonable, if not low, interest rates.  While this continual absorption of ever-increasing debt at lower rates is counterintuitive, it has nonetheless occurred.  Why this counterintuitive event has occurred is largely unknown.  Although it appears to be a long-term market anomaly (a propitious one at that) it might also be a concatenation of short-term market anomalies.  The latter supposition is certainly a troubling facet to ponder, as it would likely make our ability to sustain such debt levels more tenuous.”

Here is a long-term monthly chart of the 10-year Treasury yield.  As one can see, the trend in yields has been down:

 Chart courtesy of Stockcharts.com

Various economists have recently stated the national debt is at roughly $6 Trillion, or roughly 40% of GDP.  They view the “danger point” as the national debt to GDP ratio of 100%, meaning that we can incur an additional $8 Trillion in national debt (to roughly $14 Trillion) before reaching the 100% level.  Given that $8 Trillion in additional national indebtedness would likely take a few years to incur, it would appear based off of this reasoning that we have some time before the 100% “danger point” is reached.  I don’t agree with these figures (IMHO the actual level of debt is far higher) as well as the line of reasoning.   No one really knows at what time or level the national debt hits a critical level.

It currently appears that the amount of the national debt is “tolerable” and is not causing undue concern in the markets.  Metrics that cause me to draw this conclusion include the subdued level of interest rates on government debt (as seen by the above chart), seemingly low price levels of the sovereign credit default swaps of the United States, and a general lack of concern shown by the public and Congress, despite ever-increasing deficits that appear to be heading for at least $1 Trillion annually for the foreseeable future.  It wasn’t too long ago that a $500 Billion annual deficit was considered exceedingly high.

However, is this national debt level really as “acceptable” as it appears?  Do we have a number of years at current deficit levels before we hit the “danger point?”  When we do approach the “danger point,” how long will we have before there are repercussions, and how serious will these repercussions be?

These questions are difficult to answer, as they appear contingent upon a number of complex, interrelated factors.  I have some theories as to how and when the “danger point” will be reached, as well as the repercussions.  However, these theories are still in the “formative” stages and thus I do not wish to explicitly specify a number or timeframe.

However, I will say that I am led to believe that the level of national debt, as well as our present propensity to accrue it, is not as “tolerable” as it may appear.  In other words, I believe the “danger point” and subsequent repercussions may be reached sooner than the consensus believes.

If this ”danger point” does present itself relatively quickly, of course it would have ramifications in many areas.  Stimulus-based deficit spending, as well as other deficit spending, could likely become prohibitive.  As well, other tangential effects could include higher interest rates.  Furthermore, there may be a sudden need to actually reduce significant portions of the national debt.

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SPX at 1087.27 as this post is written

First, I wrote, “There also appears to be a growing insensitivity to higher deficits and debts.”  This is alarming, as sums  of money that recently (as of 1-2 years ago) would have been considered exceedingly high are now seen as relatively low.  An example of this was the $150 Billion tax rebate  (stimulus) that was distributed in the late spring and summer of 2008.  At the time, an $150 Billion stimulus was considered very substantial.  However, with the stimulus and interventions that have been enacted since, this $150 Billion amount almost seems relatively small by comparison. 

I fear that we, as a nation, may be losing our perspective and comprehension of the sums involved here.  While spending, or committing, $1 Trillion and multiples thereof (or $1 Billion for that matter) has become rather commonplace during this period of economic weakness, one should be mindful of  the difficulty in earning (as in profit) these amounts of money.

The second concept I would like to expand upon is that of “Intellectual Leadership.”  I devote a paragraph in the paper to this concept.  The phrase is not one which is often heard, which is unfortunate.   Nonetheless, I think it is a very important concept, especially during this period.

SPX at 1007.37 as this post is written