Good Times, Bad Times: Just Where Is the Economy?

As the midterm elections approach, the Republicans chant "terrorism" and the Democrats cry "foul," while oil prices drop until the election is over. What happened to the economy?

Jim Jubak, over at MSN Money has an important analysis of the situation that takes a look at the big picture, the one that will play out over a number of future administrations. America, the world's biggest debtor nation, and China, the world's biggest creditor nation, passed up some statistical milestones.

For the first time in 91 years, the U. S. "paid more to its foreign creditors than it took in from its overseas investments." Meanwhile, "China's foreign-exchange reserves topped $1 trillion."

Jubak points out,

The two countries couldn't seem to have less in common: The United States owes an increasing debt, and China is piling up foreign exchange at a record rate. But in reality, both countries face the same problems: How do you balance consumption and savings in a rapidly aging world? The U.S. has gone way too far toward consuming without saving, especially considering the huge financial costs that result from the aging of the baby-boom generation.But China is out of balance, too. The country saves too much and often invests money foolishly. The country is aging even more rapidly than the United States, albeit from a younger starting point. And it has less infrastructure in place to support that aging population than the United States does.

This is news that will ultimately be every bit as important as what is going on in the Middle East.