Bubble and Meltdown - Jobs again

I haven't added to this thread in awhile but nothing much has changed so I can pick up where I left off. We are back in an election cycle so the conversation about policy is pretty much over. For the next 11 months the conversation will be about politics and personality not policy.

Much of the political discourse on jobs and the economy is not focused on what is actually happening.

1) US jobs are being lost due to automation and globalization. Nothing can stop this trend.
2) The largest percentage of US GDP is consumer spending. It is about 70% and it is growing very, very slowly.
3) Businesses do not need tax breaks to create jobs they need demand for their products and services.
4) The biggest uncertainty that businesses faces is not tax policy or the health care insurance reform. The biggest uncertainty is whether there will be demand for their products and services. On the global basis the biggest threat to demand is the Euro crisis. European governments are adopting "fiscal reforms" and "austerity budgets" that will likely result in a recession in Europe in 2012.
5) US consumer spending can only increase on a sustainable basis when personal income increases. The credit bubble allowed consumer spending to increase but spending more than you earn is not sustainable.
6) Accumulation of wealth and income in the US hampers job growth.
7) The conversation about the POTUS "managing the economy" or "creating jobs" is surrealistic. The federal government is powerless to do either one.

So what it the way forward?

A slow recovery. Eventually consumer spending will increase as people who work continue to first pay down their debt and then slowly increase spending. I expect unemployment to be over 8% for years and years.

The US fiscal problem will eventually be sorted out by:
- increasing taxes especially on the affluent
- inflation
- massive cuts on defense spending
- reducing health care costs by expanding on the health care reforms already passed
- economic growth

This will all take time.