Will the 2010s be another decade of back-sliding?

How many jobs were created since 2000? None.

We’re back in the USA after 15 years of living in Europe. Bethesda is one of America’s wealthiest suburbs. Money from all over the nation rolls this way. The playing field is tilted in Bethesda’s direction.

I was sitting in the Starbucks, having a cup of coffee,” Elizabeth reported. “One man next to me was on the phone. He was talking about some deal he had done with the US Army in Afghanistan. It sounded as though he was very happy with it. The man next to me on the other side was on the phone too. He was a jollier fellow, talking loudly about how much money he had made. I thought he was a stockbroker or something like that. Then, I realized he was talking about a contract with the government.”

While the rest of the nation has suffered a setback over the last ten years...the Washington metropolitan area has boomed more than ever. Real estate prices are down...but less than other areas. And when we looked for a house to rent, we expected to be able to name our price. We thought it would be a buyer’s market. Not so. Nice houses in Bethesda are still being sought after. How so?

Wars...bailouts...boondoggles – this area loves them. Federal employees’ earnings keep going up...and a higher portion of the US national income goes to Washington.

“Aughts were a lost decade for US economy, workers,” says a headline in the Washington Post.

“For most of the past 70 years, the US economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different.”

What was different about it?

There was zero net job creation in the first decade of this new millennium, compared to healthy job growth in each of the previous six decades,” continues the report. “No decade going all the way back to the ‘40s had job growth of less than 20%.”

How many jobs were created since 2000? None. Not a single one, net.

If new jobs are not being created, you can’t expect working people to do very well. And they didn’t.

“The Aughts were the first decade of falling median income since figures were first compiled in the ‘60s. And the net worth of American households – the value of their houses, retirement funds and other assets minus debts – has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.”

Bummer.

The Aughts were a nasty decade for investors too. Bloomberg reports that the value of all the world’s public companies was a bit more than $60 trillion at the end of 2007. Stocks were cut in half in ’08. In ’09, after the March low, the bounce began. They recovered roughly half of what they lost to end 2009 with a total value of about $45 trillion.

Bummer again.

What went wrong? According to the Post account, economists are scratching their heads wondering. What a bunch of morons!

Long time sufferers of the Daily Reckoning already know what went wrong. GDP figures were positive throughout almost the entire period. But they were phony...they were a fraud. They just measured the rate at which Americans were ruining themselves – by buying things they didn’t need with money they didn’t have.

It was obvious to us and anyone who bothered to think about it for two seconds that you can’t really get rich by spending money. It’s NOT spending that makes you rich. It’s savings. You have to save and invest...so that you can produce more. Everybody knows that.

But economists don’t work for ‘everybody.’ They work for the government. Or Wall Street. Both sectors have a keen interest in making people think what isn’t so. ‘We live in the greatest, most flexible, most dynamic economy the world has ever seen,’ said the politicians. ‘Yeah...and it will only get better,’ added Wall Street.

But it was a fraud. It didn’t get better. It got worse. And now, Americans pay the price. Ten years of work...and they’re poorer than when they started.

But heck...it’s a New Year. We’ll look ahead. What’s coming up? Another ten years of backsliding? Or ten years of real growth? Better? Or worse? We’ll bet on the backsliding... keep reading.

More news from the UK...

Theo Casey, a stock picker from our London team sizes up the year ahead:

“The City’s predictions on 2010 are in and the consensus looks like so…

• Stocks will rise 9%
• Oil will level at $80
• Gold will pick back up to $1,200
• And Brazil (at 11/2) will win the World Cup

“Of the above, I can only agree with the Samba boys going all the way in South Africa. The rest of the forecasts look a bit too good to be true. I think that the next 12 months will be flat for financial markets. There is no easy money left to be had. Gains on the market will come from hard graft. A strict adherence to value investing principles and a ruthless selling policy are the only way to play the game.

“With that said, in a market with over 50,000 tradable investment ideas, there’s always going to be opportunities. So, despite my concerns, continue to buy in this market until either: a) A serious policy mistake (i.e. the Bank of England raising interest rates), or b) a double-dip in economic activity.

“The Bank of England is expected to keep interest rates at 0.5% this week. And, economic activity has only just turned positive in the UK. So, with both fears at bay, what should you be investing in? Pay attention to the banks, miners and drug stocks...”

Theo continues in the latest issue of The Right Side. If you’re interested in receiving this free investment email, click here to sign up.

And more thoughts...

***Another Bloomberg report tells us that Goldman Sachs is stealing our glory.

“Goldman Makes ‘Call of Decade’ by Promoting BRICs

Dec. 31 (Bloomberg) -- Goldman Sachs Group Inc.’s forecast that Brazil, Russia, India and China would eventually eclipse the Group of Seven countries economically has been described as “the biggest market call of the decade.”

The... so-called BRIC countries have risen more than emerging markets as a group since Nov. 30, 2001, when Goldman’s global economics team first assessed their prospects in a study. The comparison is based on MSCI Inc.’s benchmark indexes.

MSCI’s BRIC Index soared 367 percent through yesterday to surpass the 22-country Emerging Markets Index by 134 percentage points, according to data compiled by Bloomberg. The MSCI World Index, a gauge of 23 developed markets that is also depicted in the chart, gained only 17 percent during the period.

Jim O’Neill, who still runs the global team, first made the case for the four countries in a paper entitled “Building Better Global Economic BRICs.” The firm elaborated in follow-up reports published in October 2003 and December 2005.

Brazil is the best-performing BRIC stock market since November 2001, based on a comparison of MSCI country indexes. India, China and Russia followed, in that order. Each of them rose more than the emerging-market gauge.”

Will the BRIC economies continue to be the best performers in the next decade? Darned if we know.

*** Getting back to the US...will the next 10 years be a great period...or another awful one?

Our guess is that it will stink. On page 9 of the Washington Post is one of the reasons why.

“GM shows that it’s playing the Beltway game,” says the headline.

GM is owned by the government. Still, it is beefing up its lobbying staff in Washington (more money to the DC area!) in order to guide its new owners to the right decisions.

Not surprisingly, the lobbyists are former politicians, such as John T. Montford, former senator from Texas. Montford knows how the Beltway Game is played. It is a game that Washington wins and the rest of the nation loses. But he isn’t explaining that to his bosses in Detroit. But that is how the Beltway Game works.

The Aughts were ruined by Wall Street. Washington will ruin the next decade. It will take the lead in spending money it doesn’t have on projects it doesn’t need.

Mr. Montford is a parasite. He toils not, neither does he spin. He’s probably been a parasite all his life, for all we know. The newspaper says he was a senior AT&T executive. Some executives are useful contributors to society. Some aren’t.

But the point is, there are more and more Montfords all the time. Those fellows in the Starbucks...39 million people on food stamps...AIG executives...much of Wall Street...most of the federal payroll. Instead of competing actively in the world economy – providing good and services to honest people who are willing and able to pay for them – these people depend on government.

And now, the whole US economy depends on the government too – just like the Japanese economy. Now we need (or so we are told) big spending from Washington or the economy will stop growing. But the ‘growth’ we are seeing now is not real growth – it is growth in government spending.

And like all government spending, it rewards parasites, not the people who actually add wealth.

Until tomorrow,

Bill Bonner
For The Daily Reckoning

P.S. You can read more thoughts from Bill on the UK debt crisis, the housing market, gold, oil and much more – all absolutely free.  Simply click here to get The Daily Reckoning straight into your inbox each week day.