Admiral Pedro, minister in Ladonia cabinet do not agree with minister of finance, Mike Arman concerning the economy crisis (but we have no crisis in Ladonia, there it is business as usual). Here is his comment:
“I agree with you regarding the exploitation of Climatic Change by the Scientific community, the Media and the polititians as well as business men.
However beside all what you mentionned regarding the Financial crisis, regarding the exageration of the media, I would like to outline certain points regarding the actual situation:
In previous financial Big crash, 1929-1933:
1. Gold was backuping the US$$$.
2. The US government was not involved in a draining war in two countries in the middle east and asia.
3. The US government vaults were full of money.
4. The US government did not have trillions in debt.
5. The US State had a positive export/import balance.
6. The private financial system did had enough cash.
Compared to the big crash of 1929-1933:
1. People did not have credit cards.
2. People did not have a credit lines.
3. People did not have a credit histories.
4. People did not owe in the same measure than now, their houses, their cars, their internet cable connections, their gas supplies, their electricity, their insurance companies, their credit line on their credit cards, their student loan for their children, their last vacations in barbados, their purchases in Kohl’s, Macy’s, Sears, Home Depot, etc….
Compared to the situation of 1929-1933:
1. Todays US$$$ backbone is gone:
* American Home Mortgage, Wachovia, Bearn Stern, AIG, Lehman Brothers have collapsed to mention some of them.
* Citygroup, Bank of America are on the verge of collapsing.
* The 9 Major Banks of America are on an extremelly bad shape unable to collect the money that was in circulation in the market one year ago.
Note: I am choosing America (USA) examples because as you said the tiddle wave is going to be big.
Compared to 1929-1933.
1. Today if you go to Wall-Mart to buy an American product, a big part of the benefit goes to China.
2. Today Global Market allows for a piece of American software to be sold into America, a big part of the benefits goes to India.
3. Today to produce an American good, part of the benefit goes to Saudi Arabia, Iraq, Venezuela, or Mexico, etc…
1. Today the backbone of American manufacturing is dead.
2. Today the backbone of the American Financial system is dead. Somebody tried to warn about financial systemic risk but too late.
3. Today American Auto industry is dead.
4. Today American Credit institutions are dying.
There are four fronts to face in the actual economic situation:
1. Draining war that was lost since it started. Remember Iraq has an excedent of 80 Billion US$$$ a year and USA has invested in a dead cause Trillions of US$$$ in Iraq.
2. Public Debt is enormous.
3. Private Debt and the collapse of the entire American financial backbone.
4. Reactivation packages for the dying economy.
You mentionned that Capitalism is not dead. I cannot agree or disagree with you because I cannot predict the future, I only can look a the fact and notice that something went very wrong, not only because of the deregulation of the markets.
You have to admit that if this is Capitalism, causing dispair to people that lose their homes, their jobs and not only that their future because their credit history is messed up for the rest of their lives, you have to admit that there is something very wrong with the way Capitalism is playing.
Let’s review the candidates for bankrupcy for 2009:
Rite Aid about 100,000 employees, Claire’s Storesabout 18,000 employees, Chrysler about 55,000 employees, Dollar Thrifty Automotive Group about 7,000 employees, Realogy Corp about 13,000 employees, Station Casinos about 14,000 employees, Loehmann’s Capital Corp about 1,500 employees, Sbarro about 5,500 employees, Six Flags about 30,000 employees, Blockbuster about 60,000 employees, Krispy Kreme about 4,000 employees, Landry’s Restaurants about 17,000 employees, Sirius Satellite Radio about 1,000 employees, Trump Entertainment Resorts Holdings about 9,500 employees, BearingPoint about 16,000 employees.
I prefer not to talk about American Express, Visa and Mastercard, because they also are in the verge of collapsing.
I understand that there is no econimical system that is perfect, however Capitalism is probably one of the most imperfects because it makes people to live of illusions and makes people to be materialists.
I understand that a macro economic view to the problem may seem quite healthy because the system cleans up and allow the fittest to survive, BUT we are talking about real people that are affected, people that breath, eat, live, have children and are going to lose most of what they have.
My point in a previous post was that even if a person is in a good economic situation and has a credit history of 764 points, if it loses it sole way of income, he/she is doomed.
There is another aspect about Capitalism that is more perfidious and no one is talking about. It is the delays in development and progress it causes to society in periods like the one we are facing. Maybe other economic systems are not as performant in terms of development, but in the long run, if only the ones having enough capital to access progress inovation (in example health care or education), then the system is wrong and faulty. It clearly stinks.
As I mentionned previously, my wife received from Harvard University an email from the President of the school, announcing that all new project in research and development are now stopped for an unknown period of time, this is due because of the school has lost 30% of its revenue. All new approved scientific projects are now cancelled. The President of Harvard notified also that they are retiring 1600 people from the school, and also many professors have now joinned the Civil Administration, called by President Obama, to help to resolve the actual situation. The President recommended that any new student in way to pursue a scientific carreer should look into an Humanity one.
Harvard University is not alone. We received also notifications from other Universities in Massachusetts in the same line.
Another significant difference between the 1929-1933 situation is that the American government invested (real money they had in vaults), back then, into cutting edge technological investigation and reseach and development.
Today we are going to pursue investigation into fighting the global warming swindle and pour trillions of thin air money into a very polluant technology to struggle angainst climatic change. Pouring inexitant money backed up by thin air into that industry is that the solution? Is it the solution to increment the amount of people working for Homeland Security? Just to recall that Homeland Security the only thing that they create is Burocracy.
I explain. We went last week to the Social Security offices to request a SS Number for our kids (11 and 14) . The Civil Servant asked “Do they have a work permit in the US?”, “No” we replied, so he explained they needed a work permit. We asked but they are 11 and 14!!!??? “Yes Madam, you need to apply for work permits for them!?” ok that cost 340US$$$ for each of them. Well he mentionned the following “It is the reason WHY the UNITED STATES OF AMERICA is the MOST POWERFUL country in the WORLD!!!”. Full period. Our response, “In Europe we don’t call that POWER, we call it BUROCRACY!”.
Personally I agree with you regarding the split up of USA is not going to happen and possibly the extreme right wing is using the actual situation with populist concepts to take advantage.
However you would probably admit that the actual situation, if they belong to what is called a healthy Capitalist mechanism ***scheme***, are completely wrong. Mainly because of the proportions of the crisis, which I do not think is exagerated.
If I look back to myself now and think about all the things I have purchased, even in food, it doesn’t make sense at all. Recently I have realized that I am able to survive with a good quality healthy meal costs me 1.75$ per meal (including hot food with fruits and electricity), and this allow me to be fit too. I admit it is bad for the economic system I live, but isn’t healthy econimy based on SAVINGS instead of CREDITS?
From the moment when to cope with production you need to created WANTs/MUSTs instead of NEEDs, there is a problem.
It is why I believe Capitalism is very ill.
I am not promoting another type of economic system because I do not know what would work best for Humans, however something or many things went wrong in this pyramidal scheme.
It is significant that two companies are making good money actually; Wall-Mart and McDonnalds.
Also it is important to take into account people delusion about the system itself that pushed them to consume and to believe that everyone could become rich by buying a house. A system that is physically and technically ruinned.
Since the concept of Toxicity could be taken into account into an Econimic system, then the system is no good.
Would you eat Toxic food, knowing that it is allowed to produce legally toxic food?
Personally I won’t.”