” . . . Except that Americans now own a large part of the world economy. There is no “offshore’ anymore. . . . ”

I would say China pretty much owns the USA. China need only call in its loans and the yanks would have to go to war or start digging up Wall Street for a veggie patch.

The so-called bubble economy was not in fact such a bubble. All the procudtion actually produced. Mankind produced numerous house, mansions, boats and yachts and ships, ferraris and suv’s and corollas. Everyone was gainfully employed and things were ctually physically made. It was a reality. A physical reality that still exists today.

I think it should be borne in mind that if anything the bubble is on the downside. Now. ffs, houses are selling so far below the cost of replacement that if anything is surreal it is this current ‘value’ placed on houses. Over the longer term value must equal cost. At the moment it is more out of wack than it was on the upside.

I have read endless tributes to Wal-Mart from “libertarian economists,’ who sing Wal-Mart’s praises for bringing low price goods, 70 per cent of which are made in China, to the American consumer. What these “economists’ do not factor into their analysis is the diminution of American family incomes and government tax base from the loss of the goods producing jobs to China. Ladders of upward mobility are being dismantled by offshoring, while California issues IOUs to pay its bills. The shift of production offshore reduces US GDP. When the goods and services are brought back to America to be sold, they increase the trade deficit. As the trade deficit is financed by foreigners acquiring ownership of US assets, this means that profits, dividends, capital gains, interest, rents, and tolls leave American pockets for foreign ones.

Not of course to be outdone, any bungle the Yanks can do, we can do better:

http://www.stuff.co.nz/4860134a13.html

Only the Greens opposed the FTA with China.

Paul Graig Roberts is is an economist and a nationally syndicated columnist for Creators Syndicate. He served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as the “Father of Reaganomics”. He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. He is a graduate of the Georgia Institute of Technology and he holds a Ph.D. from the University of Virginia. He was a post-graduate at the University of California, Berkeley, and Oxford University where he was a member of Merton College.

In 1992 he received the Warren Brookes Award for Excellence in Journalism. In 1993 the Forbes Media Guide ranked him as one of the top seven journalists in the United States according to Wikipedia.

He is also a lifelong Republican and one of our foremost spokespersons in our quest for a new and independent investigation into the events of 911.

He is very much of the opinion that stupidity and ignorance are not what is driving the economic collapse. Why don’t you google his name and educate yourself a little now that you have read one of his pieces.

“our best hope is that the rest of the world is even less competent and even in deeper trouble”

That is an interesting opening for debate.

I would like to point your attention towards point 2 you bring up; the fact that there is apparently a natural cycle. Sort of like what goes up must come down and there is nothing you can do about it. A mysterious financial force of nature. Something none of the smarty pants who regulate our financial world know how to deal with. And above all something we just have to endure and live through.

That doesn’t sit well with me. This is for various reasons

1/ Money is man made. It is issued somewhere, somehow and for some reason sometimes more money is issued that there is in existence and based on mathematical issues that have no bearing on real world wealth and all of a sudden for some reason that money disappears.

2/ When that money disappears it is always the poor and the middle class who get poorer and the upper class and the rich get richer. (A generalisation but you get my drift)

3/ When the world drifts into a recession and god forbid into a depression it always seems to coincide with wars and destruction based on strange ideologies which leave entire continents destroyed in their wake and millions upon millions of people dead.

4/ The only people who never seem to be affected by this somehow unmanageable financial cycle are the people managing our financial world. They just get richer and richer.

You see if these financial giants where like us they would be, like us, fallible and there would be, like in our lives, sometimes unpleasant consequences if they made stupid decisions.

You grow to fast in your business and get over extended you might go bankrupt, you cheat on your partner he/she kicks you out the door, you cheat on your tax return and they find out you get done, the list is endless.

When you’re a banker and I mean not your average commercial banker who lends some money to a business and hopes to see that money back with some interest but one of your really big behind the scenes Money Masters that never seems to happen.

One case in point is for example something that happened with Merrill Lynch and the LTCM hedgefund, the first fund too “big to fail“. (Accidentally the collapse of this hedgefund was the reason that John Key had to fire hundreds of his colleagues earning him the name of the “Smiling Assassin”)

the LTCM hedgefund was heavily involved in manipulating the Asian Currencies and the Russian Rouble causing both the Asian and the Russian Crisis and when it collapsed as a result it was bailed out by amongst others Merrill Lynch under supervision of the Federal Reserve.

One theory as to why this happened was stupidity and greed but another is that the LTCM hedgefund was used to break the independence of the Asian currencies (Which where bailed out by the IMF with serious conditions attached to it and which by many in those countries is experienced as a form of colonisation) and the Russian Rouble (Russia also had to accept IMF aid and equally heavy conditions). This opened up those currencies to massive speculation and made Wall street very happy thank you.

By the way you are aware that John Key’s speciality was the Asian financial market and Over-The-Counter derivatives or OTC’s don’t you and that at the time of the events with the LTCM he was both the head of foreign Exchange and the European head for Bonds and Derivatives and that after he successfully aided and abetted Merrill Lynch in their endeavours with the LTCM he was invited as one of only four advisors to the Federal Reserve of New York for the Foreign Exchange committee.

A position held three years previous by Robert Rubin, (AIG Trading)

Another major player in this hedgefund was, by the way, a man called George Soros, the same man who just paid $ 30.000 to help finance a debate about New Zealands drug laws prepare Kiwi’s for financial intervention by big money now that the Election law has been repealed. (I bet him and John Key are old mates seeing as they both know a lot about speculation in Asian currencies.)

Seeing as there were no consequences for the banks involved in the LTCM hedgefund stupidity is not what comes to the fore in my mind.

According to this article it was the first time that Alan Greenspan and the Federal Reserve of New York bailed out a group of banks and a hedgefund sending a message to the banksters that no matter how hard they gambled they’d always be bailed out.

Interesting eh?

and don’t forget that old double-shuffling, honey-fugling, hornswoggling and skullduggery”.LOL.

Perhaps I needed to be more explicit. To look at this as simply a banking/credit/borrowing problem seems to miss the greater predicament: that a lot of the borrowing (including what Easton mentions) is just “papering over” some fundamental imbalances.

I’m not suggesting that any of Easton’s reasoning is wrong, but that it only describes a part of the problem we are facing.

What I find more disconcerting than the banking crisis is that a fair proportion of the growth (in incomes and employment) may have been fueled by “financial steroids” peddled by these bankers.

Even if the banks were all fixed and started behaving themselves, and if NZ found some new overseas lenders, then we would still have a big problem.

“The bald fact is that the combination of ignorance, negligence, and ideology that permitted the crisis to happen still prevails and is blocking any remedy. Either the people in power in Washington and the financial community are total dimwits or they are manipulating an opportunity to redistribute wealth from taxpayers, equity owners and pension funds to the financial sector.”

Which is it? Dimwits or manipulators?

How better to manipulate while appearing a dimwit. Sound familiar?

The reason Easton doesnt come up with a workable answer is that he doeasnt ask the important question. He doesnt address the question as to why such a huge amount of finance was invested in assets which proved to be worthless. Capitalists normally invest in real assets to produce value (employing workers to create the value). How come all of a sudden they invest in assets which have a vastly overinflated value compared to their cost of production?

The only feasible explanation is that the productive system seized up and the surplus capital had to find new outlets to make a profit. This capital was invested in buying and selling existing assets thus driving up their value out of all proportion to their actual value. The bubbles that resulted were bound to burst. Should we pay for this speculative crisis? No! Let the bastards that made their profits out of driving up the prices of housing and who are ducking for cover and putting the cost of their crisis on to the backs of workers pay for it.

The uprisings in Greece, and Gaudeloupe, and the big strikes in France and Italy are only the beginning of the refusal of workers to pay for the çapitalists crisis. We will not allow them to sack us, criminalise us, shoot us, and otherwise shit on us because it is their rotten system that is falling down.

Auckland Protest against the 90 day Act where the bosses are lining us up a cheap labour reservoir for their Jobs Summit plans to save their skins by flogging ours…

Aotea Square Saturday 12 noon.

Years ago Rosa Luxemburg said we face a choice between socialism and barbarism. Recently Istvan Meszaros said: barbarism if we are lucky.

Here’s a Marxist talk by Meszaros on the current crisis if anyone is interested:
http://welcometotheneworldisorder.wordpress.com/2009/02/25/istvan-meszaros-the-new-crisis-of-capitalism-30mins/

Given that the miracle turned out to be old fashioned prestidigitation, I’m not sure what your point is.

(captcha is on fire: whether margins)

Yes they have. And it’s not over yet (Eastern Europe…)

My point above (which seems to have fallen on deaf ears) is that while the bankers had their feet planted on the credit “accelerator” the masses enjoyed the ride and lapped up that credit like there was no tomorrow.

If the bankers had been conservative (drove the economy like granddad on his way to lawn bowls) then a large part of the economic miracle of the past decade would never have eventuated.

The problem now is that even if the money is there; nobody wants to borrow it. If there’s a credit crisis then why haven’t those annoying telemarketers pushing cheap and easy loans put down their headsets for good?