Interesting interview on the global economy

[Fransisco]

Not to worry, they now have Barack the saviour to make things right.

[parsley]

jensend,

For all your despisals, and berating the USA:

1. Socially
I don't think so. Would you sooner have China set up nuclear weapons on Labrador? And you speak manadarin? C'mon. We are neighbors in more than location.

2. economically

China has a lot, lot, lot of poor people. Poor minded. They think poor. They wait to be told what to do. Much the same as East Berlin. It will take generations to dilute that mindset let alone change it. We are a G8, and the mindset is a can-do. It is the most important characteristic for creating wealth.

3. militarily
G'8's are not hopeless. Neither is Israel. And you're a bit feisty, I've noticed! I don't think you will line up G'8's and put one bullet through 10atatime. An we do have strong allies. Pars

[jensend]

parsley i didn't say the americans are weak. they are not the dominant power they once were and are fading if you do any amount of reading. they have alienated all their allies except for whatever lapdogs they can intimidate. socially i doubt the americans have been so divided since the civil war. relatives were down at their wintering refuge for the american election and they said emotions were really running high and racist comments weren't uncommon. economically the usa does not have much influence over where their dollar will trade. interest rates at zero leave them no room to maneuver and it looks like a lot of american wealth offshore has been liquidated and the proceeds repatriated so it leaves the dollar looking pretty heavy (especially with inflating the money supply to bail out any and every one). militarily the only bullet they have left is the nuclear option and even harper might be offended if that's used. they are stretched thin so n. korea and even iran have more leeway to operate. israel is a loose cannon. if the israelis decide to go nuclear their nation will be wiped off the map in a month. they are a small enclave amongst enemies they have done their best to antagonize (i'm sure you'll disagree but get out and travel a little). in short the america of today is not the america of the sixties.

[cottonpicken]

More people speak english in india than the us,china soon to follow.

China saves,produces,lives frugaly,as oppossed to us glutens.

China does not need the us in the longer term,just like the us didnt need them at the start.

They have over 4 times the number of people and most are young.

There are another 2 billion people in the area.

They skipped the industrial revilution and have all the latest technology.

It is now considered "glorious" to obtain wealth there.

Their market system is much more capitalist than ours.

If every household went out and bought a toaster tomorrow there would be no more copper.

The titanic wasnt suppose to sink either,and if you think there are enough life rafts to go around with this situation,think again.

But commoditie rich western canada is poised to benefit.

I said this years ago,but i know us westerners will be flying into luxury ports of call off the great lakes while bilingual lawyers and bankers out of toronto and montreal take our bags to our rooms that were once theirs.

Dont believe me?

http://www.leaderpost.com/Three collapse would catastrophic Minister/1081502/story.html

Ontario is toast.

The situation is like a pressure cooker,years and years of "fake" wealth have built up to produce a powder keg situation.

Does anyone here ever stop and think about the local neighbour who "just couldnt make a go of it",but produced enough calories to feed a city every year worked like a dog,and risked his and his families capital?

And by contrast some pencil or paper pushing relestate agent or car salesman makes a fortune?

The pendulum has swung and has just changed directions.

[Fransisco]

In some ways China is more capitalistic, in others not so much. They have yet to adopt the rule of law, and there is corruption everywhere with public officials. This is a potential powder keg with a down turn in the global economy. It's a lot harder to grease your local beaurecrats during a recession and more people will be asking why do we have to do it in the first place.

[jensend]

http://ca.youtube.com/watch?v=ljbI-363A2Q

if the rate of change keeps accelerating as indicated in this video i would expect things to eventually get pretty chaotic. are we getting close yet?

[Fransisco]

As to the Mideast, if the Arabs put down their guns there would be peace. If Israel put down her guns there would be genocide.

[parsley]

Had some experience with our Chinese student.

Only a few get picked to attend University. He didn't know what an oven was. He had never driven a car or even a motorbike. He had no idea of conveniences, or how to make them work He was dazzled by materialism. Arrest is arbitrary in China. There is no rule of law. He intended to leave his wife and child, so he could stay in Canada. Quite a few are muslim. Entirely different value system. Few on AV are ready for this lifestyle. Pars

[liberty]

Peter Schiff has an excellent article in the December 27th Wall Street Journal:

http://online.wsj.com/article/SB123033898448336541.html

This is my favorite quote, especially the part about stimulus packages being the economic equivalent of miracle weight-loss programs:

"It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can't be repaid. However, this is precisely what we are planning on a national level.

I believe these ideas hold sway largely because they promise happy, pain-free solutions. They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise. The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice."

[TOM4CWB]

Liberty,

This attitude... is as wrong as the folks who would throw away our manufacturing infrastructure, and just give it up to India and China.

We will have to pay... for generations... and we will pay.

The simplistic attitude exposed here... is a part of the problem as well.

How can we afford to transition to a 'green economy'?

We will have to work for it... produce it... and pay for it.

The pain we are going through now... is the beginning of the down payment... that CAN take us to a new system... that is sustainable... if we choose to conserve and actually plan for a ZERO growth economy in the developed world.

[liberty]

"The pain we are going through now... is the beginning of the down payment... that CAN take us to a new system... that is sustainable... if we choose to conserve and actually plan for a ZERO growth economy in the developed world."

I'm not sure what the "new" system that Tom is talking about here actually is....he seems reluctant to come out and define it.

In any case, I'll define what I mean by economic growth: an increase in the division of labor. Growth is all about creating more output per unit of input through the employment of labor-saving tools and capital. Capital arises as a result of savings and investment, and deferring consumption.

This process is like that of a farmer who forgoes several vacations or a new house so that he can save up for a new combine. The new combine's increased productivity expands the profitability of his farm, eventually allowing the farmer to build a much better house in the future. That is the payoff for hard work and saving.

Today's economy is like a farmer who spends the proceeds of his crops on vacations and a new house, while allowing his machinery to deteriorate. At some point, the productivity of his farm will decline to the point where he is broke. We are close to that point today.

The root of our economic mess lies in over-consumption and a lack of savings and investment; i.e. spending money on consumer goods like houses, TVs and SUVs that generate no income on their own, but in fact consume resources in order to sustain them. At the same time, not enough people are saving in order to provide funds for capital investment anymore.

It's a myth to suggest that capitalism is an unsustainable system. As I noted above, capitalism works to gain more units of output per unit of input. Think of the miniaturization revolution as it applies to computers. Today's desktop computers have more data processing power than old IBM mainframes that take up the space of a house. Consequently, the computer revolution allows us to use less resources, not more. Had central planning determined the course of the IT revolution, we'd likely still be wasting huge amounts of resources on archaic mainframes.

In the case of depleting resources, capitalism, through the price system, provides incentives (profit) to find alternatives to resources whose supply is decreasing. Free markets are precisely what is needed for a sustainable system.

[Fransisco]

Well said Liberty!