if even GM falls, what we would essentially have is two countries tied inside of one national border, but with one being an almost economic basket case. The Midwest, where I'm from, is going to take a hit no matter what. The question becomes how bad? The West, particularly California, will take a hit because a lot of tech goes to heavy industry from things like chips found in cars to computers in R&D. The South, well something tells me that in light of the economic tornado that would be a collapse of GM ( and I would say Chrysler), would give the Southern governors the leeway to insure that unions don't take hold down there. Newt Gingrich said on Fox News that he had talked to some governors and ideas of free trade zones like you see in China were mentioned. It wouldn't surprise me if that happened in places like Chattanooga. 

You won't get the trade barriers that have been mentioned on this site.  Not so long as retailers are tied to the hip to Asian distributors.  Something is going to happen, I can't put my finger on it, but it's going to be big and dare say destructive.  Either the consumer stops spending on foreign made goods, or the availability drops or the price becomes prohibitive. 

"Conditions today are essentially the same as during the great depression. I talked about this in Humpty Dumpty On Inflation. When I wrote that piece, I listed 15 conditions one would expect to see in deflation and the score was a perfect 15-15. I recently added a 16th: bank failures. Click on link to see the conditions table.

"Those who stick to a monetary definition of inflation pointing at M2, M3, MZM, or base money supply, as well as definitions that involve prices are selecting a definition of inflation that makes absolutely no practical sense.

"It is the destruction of credit, coupled with the fact that what the Fed is printing is not even being lent that matters, not some Humpty-Dumptyish academic definition that has no real world application!

"I have long been arguing that we are in deflation based on the following definitions: Inflation is a net expansion of money and credit. Deflation is a net contraction of money and credit. In both definitions, credit needs to be marked to market."
--Mike Shedlock
http://globaleconomicanalysis.blogspot.com/2009/02/fiat-world-mathematic...

I absolutely agree that vocational training has been marginalized in the american public school system. However, I don't know what you mean by mainstream "teacher's union" education establishment. Shop teacher's are union members just like English teacher's. Do you seriously think they wanted to eliminate their own positions or that their union wanted to lose them?

I am not an expert on the history or evolution of education in America, I admit that. I know that shop was part of high school when I attended in the 60s and I remember asking my counselor if I could take a couple of wood shop electives as a senior. He discouraged it because I was in an "academic" curriculum. I've never forgiven him.

I would bet $$$ to donuts that federal funding restrictions have almost everything to do with the demise of votech in our present system. And as manfrommiddletown mentioned, the pursuit of creating an education aristocracy at the local level, just hastened the process.

Veblen called it at the turn of the last century, and it's still spot on now.

This is part of the reason that manufacturing is in a funk.

And we've exported our machine tools industry, so we have to pay the Europeans and Japanese for machines that make industrial products.

Consider the way that auto/metal/wood shop and tech school training has been marginalized by the mainstream "teacher's union" education establishment. It has long been viewed that learning a trade--like machining--was too "blue collar," and even now many of the mechanical folks entering M.I.T. have had to learn their trade skills offsite from public/private schools. So, yes, just like the top managements of Auto, Print News (and the other failing U.S. industries), the education establishment is not without blame in 'facilitating' the offshoring of U.S. manufacturing.

But the real risk is that the Fed mis-times pulling back on liquidity and tightening balance sheet in a timely and sufficient matter. It would not be the first time Fed mis-timed its change in policy and positions but the magnitude of the position will make a mistake very huge.

I heard or read it this way (maybe even on EP): imagine holding a basketball underwater but when you release that ball it shoots up with great force. I think what all those people Pettifor refers to are implicitly saying that they don't have any confidence that the Fed will time this thing right.

that line from Mellencamp's song "Jackie Brown"

Is this your grave, jackie brown?
This little piece of limestone that says another desperate man took
Himself out.
Is this your dream, jackie brown?

But, by itself, these suicides are comparable (a little bit under) US figures. This is probably on top of "normal" suicides however.

I took a look at articles.

This is for the last year, not all at once.

Still horrible, but not as dramatic.

It's Youngstown not Jonestown.

This is a state the size of Alabama

"Over dinner at a prominent newspaper the other evening, journalists mused over the threat of inflation. They were not the first to do so. Many people, some of them influential, are warning of the threat of inflation.

"Prominent amongs these are commentators and journalists, even economists, that do not understand the nature of bank money. They invariably confuse it with the tangible stuff that appears as notes (printed) and coins (minted). As a result, they believe that what the Bank of England is doing is printing billions of these notes. Naturally such a misconception leads them to assume that we are threatened now by the sight of Mervyn King pushing a wheelbarrow stashed with billions of pound notes around the City of London - followed by the spectre of inflation.

"If ever you meet up with such a scaremonger, here’s a counter point to put to them.

"Money and debt is being destroyed. Some call it de-leveraging. Others call it debt write-offs. Or debt cancellation. Bankruptcies invariably involve debt destruction - because bankrupts do not pay back their debts, so they get written off. The point is that money/debt is being destroyed in vast uncountable quantities.

"Sudden Debt has helpfully provided some examples of truly remarkable debt destruction. The Ford Motor Company is planning to ‘eliminate’ about $10.4 billion of debt. In other words, they are trying to remove the debt from their books. “Ford will pay 30 cents to 55 cents on each dollar of debt, depending on the type of note. Ford’s debt is trading publicly at about 20 cents on the dollar” according to the New York Times of the 4th March, 2009.

"In other words, 45 - 70 cents of every single dollar of debt owed by Ford is to be destroyed, or ‘eliminated’. $10.4 billion of the stuff. Indeed Ford is being generous. Creditors would lose 80 cents of every dollar if they dealt directly with the market in Ford debt.

"Similarly in Spain, the bank Santander is selling its shares in Compania Espanola de Petroleos SA - a large oil company, for less than half the closing price of CEPSA shares. The reason for this? Santander desperately needs the cash, and so the bank is destroying half the value of the shares it owns in CEPSA. (Bloomberg, 25 Feb. 2009)

"The destruction of money/debt is best described as deflation. Deflation of the vast credit bubble that was blown up over the last three decades.

"What the Bank of England and other central banks are concerned to do, is to replace the debt being destroyed, with new money. The trouble is, that the amount of debt being destroyed is so vast, that to replace it would require even vaster injections of new money. Right now, the central banks and Finance Treasuries are just not keeping up with the amount of debt being destroyed. Indeed they do not even know how to count it, or assess the amounts outstanding.

"As long as they don’t, for so long will we not have even the remotest threat of inflation. Instead we will be faced by a far worse fate: a sustained and destructive debt-deflationary spiral."
--Ann Pettifor
http://debtonation.org/2009/03/qe-and-the-debt-deflationary-spiral/