by Nick Carey (Reuters)
URL: http://news.yahoo.com/s/nm/20101216/bs_nm/us_usa_economy_special
Editorial comment: This story hits home, well, because I've lived in Michigan and I want the best for my home team. It's a beautiful place with a great history and a resilient people. The only thing that I wish this story had mentioned was the liberalization that fostered the disastrous housing bubble, i.e. the threats to the bankers from the Reno DoJ.
Excerpt:
"The whole country is now seeing the story that Michigan has been living with for a long time," said Diane Swonk, chief economist at Mesirow Financial.
After World War Two, unskilled blue-collar jobs in manufacturing -- typified and in many ways defined by the auto sector -- became America's easy path to the middle class. As U.S. manufacturing declined, starting in the 1980s Congress and successive administrations focused instead on the financial sector and relied on debt -- its own and that of the U.S. consumer -- to foster economic growth.
At the same time, U.S. companies faced a growing competitive challenge, largely from Asia -- both in terms of manufacturing prowess and lower wages and legacy costs -- that hastened the nation's exodus from the sector.
At the other end of the spectrum, deregulation and a laissez-faire attitude toward financial institutions culminated in the housing "boom" that former Ohio Attorney General Richard Cordray (who failed to win reelection in November) has aptly described as a "Roman orgy" of debt.
The subsequent downturn, the deepest and longest since the 1930s, merely exposed the extent of the hollowing out of America's manufacturing sector. By one estimate, since 2003 up to 20,000 manufacturing plants have shut down. The trend is leaving the country with a legion of unskilled workers stuck on long-term unemployment benefits.
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