Special Report: Is America the sick man of the globe? [View All]

[CLANG]

http://www.reuters.com/article/idUSTRE6BF28720101216

"The recession merely revealed a reality that has been with us for a long time. We faced a growing gap in education and skills that we tried to fill with debt and credit, which gave us the illusion of growth."

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.

That in turn created lop-sided trade imbalances, with the U.S. invariably in the red. The U.S. trade deficit with China, for instance -- a nation that tightly controls its imports -- hit a record of $268 billion in 2008 and could reach $270 billion this year.