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     Admin Board Administrator Username: Admin Post Number: 21 Registered: 08-2003 |
The 'Global' Economic Meltdown The economic meltdown is caused by two holes (in the bucket). In reaction to it, the management geniuses (in the USA) seem to be moving one of the holes to the opposite side of the bucket, leaving the second hole as it is and, as elsewhere in the developed world, approx. 90% of which now seems to be bankrupt, are imposing a third hole. After WW2, Europe was in rubble, Russia and China communist, South America feudal and Africa ... africa. The US was in comparatively good shape economically and militarily. They featured an inflationist economic model and the remainder of the capitalist world effectively entered that bucket or boarded that ship, adopted to it and adapted it, almost all in fairly full measure (with Germany showing some reserve or good sense, having a fear of hyper-inflation since the 1920s). In the last approx. 10 years the USA has gone to hell in an express train in inflating its economy. Money, at near zero interest rates, has been available pretty much without limit, and without regulation of how it is invested. This facilitated development of various new forms of derivatives, derived from derivates, derived from derivates ... The basic substance of these became increasingly clouded and probably hollow and, apparently, they thereby became more easily propagated and indeed appreciated. Investment in anything else - such as industrial solid wealth production - became uncompetitive and soon there was precious little substance to the economy. It is increasingly a shell, which must collapse. Now, with the hollowness ever more apparent, we find that the private sector which so embraced that availability of finance have become extremely shy of borrowing- -investing, at least in the developed world economy. However, government - the public sector - has taken up the slack and is borrowing and applying trillions to keep the shell in form or inflated, by means of those, whoever they are, who have reflated the markets. So, effectively, the hole has been moved from one side of the now much busted bucket to the other. Simultaneously, over the last approximately 10 years, communism having collapsed, trade with those recently communist countries and emerging economies such as India, Mexico, etc., opened up. Billions of people who work for such as a bag of rice per month came onto the market - effectively boarded en masse the developed-world ship. To remain competitive, industry has had to outsource capital and know-how, at a rate far exceeding their production, from the heretofore developed capitalist countries, which were sailing on the US ship, to those cheap labour countries, thereby causing a further diminishment of Western World industry as the means of wealth growth - whatever the reason(s) for this policy. So, that hole in the bucket continues to pour out - run down - resources. It would seem prudent that opening up of trade to countries with far bigger populations and on far lower incomes should be done at a rate that does not ruin developed regions (and perhaps ultimately the newly 'centrally planned capitalist countries' and others, too). Indeed, it may even be prudent to have a very gradual opening up of trade with them, while the developed world's best science is made available to them (with perhaps a 5 or 10 year lag from development). This graviation of capital to financial vehicles away from industry coincides with the heamoraging of finance and know-how to emerging countries. These apparently soft-option, economically illiterate policies, as, for example, in the case of the lack of policy or regulation of the banks seems to be (mis)informed by what I see as infantile philosophical premises (such as those of Ayn Rand-ism in conjunction with cultural- -traditional Bronze Age-ism (the Randism riding the religious right donkey)), may have stark consequences for the world. So, these are the two holes which I see as causing the economic meltdown. Most of the talk is about where to get more water/finance to put into the bucket, with little attention to plugging the holes. And, a third hole is being added. The crew add a new hole: In the old days, in large part, when a business went bankrupt it was liquidated, thereby perhaps paying perhaps 10 cents per 100 cents to its creditors- -shareholders, and was then sold, probably at a bargain price, to someone who was perhaps working to more sustainable principles, thereby getting back to solid ground and the confidence and moral reinforcement that inspires to get on and build prudently. Nowadays, the opposite procedure occurs: prudent principles are being commandeered, through taking on debt and greater taxation, to support the shell untill it, by some hazy logic, becomes solid 'again'. This is a third hole. So, it seems to me the situation is as if a ship hit two icebergs and the crew, in reaction, made a third hole, to, in their 'innocence', somehow reflate the ship. The community are then commandeered to hold up the ship until it somehow becomes whole. Anyone want to anticipate durable recovery and borrow to invest accordingly? (I should think not many). Of course if money is given to people then they will spend or invest it and prices of goods and property will inflate, until final exhaustion occurs. I should think that while these holes remain, the bankrupt developed world can only become more damaged with each passing day. Though the alternative of adjusting to the cost of years of wasted investment, together with the upaid-for standard of living that accompanied it and the plugging of resources heamoraging to emerging economies should itself involve much turmoil within nations and between nations. There is some hope that from the recent abundance of equity swashing around the developed world for some years would come 'a miracle' - a scientific breakthrough - that would save things, indeed lead to an age of abundance. But, if it is to happen before adjustment becomes necessary, it had better come soon. All of this is happening in the context of what I see as infantile foundation (philosophy) concepts inherited from the Bronze Age. Perhaps we are facing something of a coming home, a return to a physical Bronze Age, which at least would be more in accord with our intellectual concepts than out technological world. Very few in our modern hussle and bustle world seem interested in checking if the have their head up their ... and those who specialise in the field don't have the necessaries to facilitate change. |
