“Do you not know, my son, with how little wisdom the world is governed?”
Axel Oxenstierna
Swedish statesman Count Axel Gustafsson Oxenstierna af Södermöre wrote that to his son Johan in 1648. Young Johnny was anxious prior to taking on an important European job. The wise Oxenstierner Senior pointed out that the world was–and it still is–run by people a lot less switched on than most of us assume.
I’m afraid it’s been all downhill in the intervening three centuries. I wish I’d cottoned onto it a bit earlier myself.
“And each of these perspectives comes to the same conclusion, which is that our global economy is out of control and performing contrary to basic principles of market economics.”
Economics 101 from the few who understand
Around the world, those in charge are making a total cock-up of economic management. Here in New Zealand Alan Bollard who we pay $600,000 p.a. declared the recession over in 2008; John Key, and Bill English have been regularly predicating their rosy outlooks upon perennially over-optimistic forecasts of the aforementioned Dr Bollard. They’ve all been peddling fantasy ever since the financial crisis started in 2007. Here on this Just Wondering page I’ve posted snapshots from people who really understand what’s going on.
When the meltdown started in 2007 there was a cry around the world of “Why did nobody see this coming?”.
Well some switched on people did, including–if you’ll forgive my immodesty–this writer. Nobody listened to them, in fact they were derided, abused, and sometimes fired. They were of course correct and If you’d like to know what’s really happening here are some of the people whose views were, and still are, of value:
Bernard Hickey at Interest.co.nz, in particular, his Daily Top Ten links from around the world. The readers’ comments from informed followers of Interest.co.nz are well worth reading too.
Paul Krugman at the New York Times was awarded the Nobel Prize, in part for warning us what was going to happen. He was ignored, derided, and mocked. He was also right.
Nouriel Roubini, aka Dr Doom, also accurately predicted the current mess.
Thomas L. Friedman, another New York Times writer, has won 3 Pulitzer Prizes for commentary. His book, Hot, Flat, and Crowded is a must-read.
Australian academic economist Steve Keen also sounded the warning. Some of his views are in opposition to Paul Krugman’s, but on the big picture they’re on the same page. They’re having a bit of a spat. It’s worth trying to understand the rift.
Professor Richard D. Wolff is onto it. bill Moyer hosted an excellent interview with Dr Wolff. Watch it right here on mistywindow.
Specifically–but not exclusively–for Kiwis: Colin James, Gareth Morgan, and Jane Clifton are always worth listening to.
An excellent article by David Korten. It’s about Wall Street, but the basic principles apply albeit to a lesser degree throughout the Western world:
When Bankers Rule the World
…the business purpose of Wall Street bankers is to maximize their personal financial take without regard to the consequences for others.…
…we need to recognize that the deception that Wall Street promotes through its well-funded PR machine rests on three false premises…
- We best fulfill our individual moral obligation to society by maximizing our personal financial gain.
- Money is wealth and making money increases the wealth of the society.
- Making money is the proper purpose of the individual enterprise and is the proper measure of prosperity and economic performance.
…it’s time for action to bust the Wall Street banking trusts, replace the current Wall Street banking system with a Main Street banking system, and take back America from rule by Wall Street bankers.
Read the full article here, and pray that people get off their backsides and do something about it. That means you.
Dr Doom warns us again…
We didn’t listen to Nouriel Roubini before…
Maybe this time
Dark, lowering financial and economic clouds are, it seems, rolling in from every direction: the eurozone, the United States, China, and elsewhere. Indeed, the global economy in 2013 could be a very difficult environment in which to find shelter. … the risk of a double-dip recession next year is rising … China, its growth model unsustainable, could be underwater by 2013 … US and Israel unwilling to accept containment of a nuclear Iran by deterrence, a military confrontation in 2013 would lead to a massive oil price spike and global recession … while the cloud over the eurozone may be the largest to burst, it is not the only one threatening the global economy. Batten down the hatches.
From “A Global Perfect Storm”
Read the full story from Dr Roubini right here on Project Syndicate.
Here’s a big part of the problem
Vast quantities of money are sloshing around in the system. Interest rates are very low but neither businesses nor governments are borrowing for investment in growth and productivity and are therefore not creating jobs. It’s a deadly spiral. Less jobs, less spending, less business income, less jobs …
It’s just crazy. The US government could be borrowing at just over 1% to fund productive investments. It’s a no-brainer. Similar story here in New Zealand and all through the Western economies. Instead of being used productively the money’s being ploughed into government bonds. As a result, bonds around the world are at record low yields – except in Spain :).
It’s lunacy.
See here at CNBC:
Mom-and-pop investors, and not the Federal Reserve, have been the ones most responsible for driving the mad dash to government debt … benchmark 10-year Treasury yield to record lows, most recently to 1.56 percent …
And here’s another reason for the mess
If you want business to flourish, you must ensure that the consumer can afford to buy your products. Henry Ford understood that. That’s why he developed the production line, built the model T Ford, paid unheard of wages to his workers and ushered in a 20th Century industrial revolution. The 1% don’t understand it. It will be their undoing, but unfortunately they’ll take you and me down with them unless we all wake up very, very soon.
This theft by the most well-off from the people doing the actual production happens in cycles and every time it results in financial meltdown. If you thought the people running the world’s governments, financial institutions, and big businesses knew what they’re doing think again. They haven’t read their history and they’re doomed to repeat it
See the quote at the top of this page.
A view from the UK
Benedict Brogan, the Deputy Editor of The Telegraph is no fool. He wrote on June 12, 2012:
…the Chancellor’s adventure has been turned into a test of endurance. He is trapped by the economic crisis raging all around him, powerless, upended, clinging on while external forces batter Britain. The economy has sprung leaks and may yet sink…
… the mood among ministers and officials confronted with the euro crisis and our teetering economy is to imitate Munch’s The Scream: hands to head, mouth opened in a howl of despair. Certainly behind the scenes the feeling of worry, bordering on fear, is palpable. The prospect of an economic cataclysm terrifies the upper reaches of the Government. In public it is all confident smiles, but in private they are dead scared. …
Read his full blog post here.
We Move Along Toward the Bang Point – Lacy Hunt
Dr Hunt knows what he’s talking about. Pity nobody in charge listens.
“Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule – and both commonly succeed, and are right.”
H L Mencken
Here’s what really happened
If you want to know why you’re faced with at least a decade of economic woe and probably 20 years of lost economic advancement you should watch this video and the remaining 3 parts. It’s a total of 3 hours but I guarantee that it will change your whole view of politicians, economists, and your future.
If you thought the people running the world knew what they’re doing you’re about to be disillusioned:
You can watch Part One in higher definition here on YouTube.
Part Two
Part Three
Part Four
Why did nobody predict the mess?
They did.
As I pointed out here, we were told by:
Nobel Laureate economist Dr Paul Krugman;
by Dr Doom, Nouriel Roubini;
by people of integrity right here in New Zealand: Gareth Morgan, Colin James and Rod Oram.
See the links to these switched on folk and others near the top of this page.
On my old blog @ MyWitsEnd I foresaw trouble. Not because I’m an economics expert, but because I listened to those who knew. Here’s what I said in So where to from here? before the meltdown in January 2008:
Housing is overpriced around the world. Bad debt is endemic, building and construction are in decline. The US Fed chief gets it all wrong or doesn’t know when to keep his mouth shut. “What housing crisis?” he said. And he predicted that no more financial organisations would collapse after Bear Stearns. If you watch the movie above you’ll know why that was unbelievably naïve at best, criminally incompetent at worst.
Things are going to get worse. You can’t have major structural woes in the US without worldwide problems.
If you want to know the real story. Stick around.
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raving on 