Any capitalist nation must embrace the process of "creative destruction". Progress is made by allowing the new to replace the old. If people lose their jobs at MySpace, then it's not a problem because people are being hired at Facebook. People who use social-networking sites now have an (apparently) better service and nobody is calling for the government to save MySpace.
There has been a lot of talk about a double-dip recession recently by people like Paul Krugman and Nouriel Roubini, how to define it, and what it means. What is missing from these discussions is the most obvious question of all: why won't the economy recover?
Capitalism is supposed to be self-correcting - or so we've been told - and a recession like the one we've had is supposed to be that reset button. So why aren't businesses hiring?
I'm going to try to answer that question in the simplest way possible.
There are two primary reasons why the economy isn't recovering, one reason is cyclical, the other is secular.
This is a work for serious minds that want to right this ship of state. But his book reads, for an economist or the inclined, like an in depth tell all about the Hollywood producer studio star system machinations would read for a movie fan. The free market free traders should be very afraid that you read it.
The economic crisis has the country flailing.
That's not a controversial statement. Since early 2008 the federal government has been trying various, and expensive methods, of jump-starting the economy and propping up the housing market. Since December 2007 the Federal Reserve has created an alphabet soup of programs to stabilize the credit markets.
So far all of these attempts to stabilize the economy have had mixed results at best. Trillions of dollars have been spent and yet the economy is still crippled. Why?
The problem is that the people in charge are asking the wrong question. They are asking, "How do we get back to where we were before this crisis?" The question they should be asking is, "How did this happen?"
Unless we understand what happened and why, we will never be able to fix the economy.
Hundreds of years ago the Incas would sacrifice virgins to appease their Volcano God.
The Gods and methods of sacrifice may have changed, but the tradition remains.
Like the Incas of old, we find ourselves helpless against forces we do not understand. The foundations of our economy shake and falter in terrifying ways.
In our desperation for answers we turn to High Priests of Economics who tell us these evils have befallen us because of our sins. We must sacrifice the innocent to the Volcano God or it will destroy us all.
The High Priests of Economics never explain exactly how these sacrifices will fix the economy, nor do they mention that the sins in question might be their own. Yet we still rush to offer up our children's futures through unpayable debts while never considering that there might be better alternatives.
As the leaders of the industrialized world converge on Pittsburgh later this week to "commit to a framework for sustainable and balanced growth" (as President Obama has put it), perhaps a nail in that frame could be the forgiveness of the debt burden saddling many of the world's poorest countries.
President Obama's stimulus plan will not work. He is focused on the big picture while ignoring the small ones the make our economy work. Only local value added economies work. Economies based primarily on making money on money rather than making things do not and are burning out. President Obama does not even mention the history of Free Trade failures. Free Trade and Globalization means centralization. This means all the good and bad are centralized. All the bad that was controllable in de-centralized ways are now out of control.
The cause of our economic crisis is primarily about Free Trade that moved our production of the things we use and eat to other parts of the planet. The crisis is about cheaper imports meaning cheaper wages, underemployment and unemployment.
Greetings folks to this special election installment of Manufacturing Monday! Today the big economic figure we're going look at will be the ISM survey on Manufacturing, but afterwards I want to share a bigger story. Now I understand most of us, if not all, are either voting for Barack Obama and/or straight Democratic ticket. But why? Well we can cite environmental reasons, the GOP simply don't get climate change. We can cite civil rights reasons, one need only look up Guantanamo on the map. There's the war in Iraq and America's current imperial ambitions. But we also can cite economic reasons.
Man oh man, if there ever was a prime example of a revelation of the greatest flaw in libertarian economic theory, it had to be Alan Greenspan's speech. For those not in the know, the former Federal Reserve Chairman spoke before a Congressional committee yesterday. Long one of the grand proponents of laissez fair capitalism, his decisions, ironically, probably has lead to the complete discrediting of such economics.
"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief," said Greenspan, who stepped down from the Fed in 2006.
Amazingly, in the past several months I've been called a racist 3 times, more than anytime in my life! The first time was when the Jeremiah Wright thing broke out and I defended the guy, I was called bigoted against whites. Then, just the other I was called first "pro-Black" then "racist against whites" because I favored Barack Obama over that walking museum piece from Arizona. Now, today, the conservative economic blog site, Carpe Diem, is labeling people like me racist for demanding things be made in this country!
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