The US deficits and the Euro deficits represent THE FAST TRACK for improving and shortening the time required to build the web of exchanges (stock) that assure parity in a the world economy. Econometrically speaking, there is little substitution effect, even. If you draw a global picture of all the support provided to nations that are not functional and whose citizen's lives are at the bottom of the barrel, you will find the capital flowing into those to supply improvements pales incomparison to the effect, world wide of our developed nation's deficits AS APPLIED ACCIDENTALLY TO IMPROVE THINGS. Deficits are like filling an ice tray with filtered water. The water is good and it gets to every cube freezing location ultimately by over coming the barriers no matter how high they may be. tHE GLOBE BECOMES FILLED CAPITALIZATION WISE. Africa is in contrast to the Asian island nation states. Deficits replace the funtion of the World Bank , etc as well. Deficits represent the capital for funding the development of the globe in a fast track manner that would not have been achievable otherwise. The stock held corporation will emerge as the structural unit and the electronic world that is preceding it will be the global "policy making" and standard of efficiency. This will fit into the developing definition of a LONG TAIL orientation of businesses now that such efficiencies are attaining utility. Read about long tail as the books are published. The fact that this on going process is "unkown" (see the ET commentary here), not planned for in any way, not part of current national and international policies and not supported by hardened theories is quite the usual for modern society. Check the 1985 Nobel prize as a collateral example of these four items Worldwide, individual and family wealth (tangible and intangible) will be built through this deficit mechanism. By the numbers, you can see several of the econometric factors (4 major categories as usual) surfacing as isolated icebergs. As time passes these will become mountains on techtonic plates of economic continents that will resemble population centers of the globe. Deficits and electronics afford decentralization too. The two driving divisions are molecular (autos, T shirts)) and non molecular (out sourcing services) products and services. 1. Cottage industry becoming incorporated 2. Containerized freight and ports (foreign management is best) 3. machine tools and tooling for manufacturing (chip industry) 4. Declining power requirements 5. matrials design (nano tech) (replacing oil with renewable bio mass) 6. education and skills acquisition (engineering world center has shifted to Asia by a factor of 2 already) 7. stock exchanges. 8. financial centers 9. technological replacement (renewable) of extracted resourses 10. recycling. There are downsides as well. Globalization has caused irreversable planetary damage that society will have to adapt to. 1. health quality limitations. 2. new global port system. 3. agricultural relocation. 4. weather protections. Perhaps, adding this dimension will be helpful to those participating in the thread. Probably not since is cancels out most of the commentary. I just jotted these notes down; the people I circulate with are different than most people get to connect with. Most of this stuff here is about 30 to 40 years old.
Coincidentally perhaps, 30 to 40 years ago was when the US govt defaulted on their gold backed currency and the worldwide rot started setting in. A look through the history books shows that all attempts to force people to use fiat money has always been accompanied by furious rewriting of the academic textbooks. But every single previous paper currency without exception has failed and ended up worthless. Perhaps this time will be different.
I had to read that post twice and hit the net for this: http://www.thelongtail.com/about.html My issue with the hypothesis is that the deficits are ultimately callable, and in the calling, the system falls apart. Not sure things are going to be that rosy.
Excellent commentary all... .................................................................. At some price every asset works... ................................................................. What a contrast between the IMF and Goldman Sachs... Goldman has become a worldly capitalistic force... Consolidating the exchanges...coordinating and forming capitalistic wealth on a worldwide basis... When the Chavezs of the world understand the money that socialism leaves on the table...they will come aboard... ............................................................................. Every currency is now going to be evaluated more like a stock... If there are strong growth prospects along with its leverage...then money will follow...If there is stagnation and no hope for improvement...then money will leave... The demand supply will be in unison worldwide... .................................................................................... Thus the USA is just another stock that pays a dividend...ie if one believes that future growth is stronger than another country then less of a dividend will be needed.... If the US is viewed as over leveraged with little growth prospect...then watch out below...and look for interest rates to soar... On the other hand...if new promising industries are developed that will give huge growth such as the development of viable alternative energies.....then less interest will be required for demand to rise...depending on the rate that leverage increases or decreases... Since most countries now have huge debt positions...then this is the game... ......................................................................................... What I would like to see is for each country to have a 10% consumption tax with free trade and no IRS equivalents.... I would like to see all militaries eliminated...what a waste of money and morality...Wars should be fought by economics...not weapons... ......................................................................................... Now watch the exchanges consolidate rapidly...as I have mentioned over 12 months ago... A stock capitalized asset is worth many times non capitalized assets...and this how the worlds economies can change quickly...thus making the socialized asset values look paultry in comparison...No economy wants to value its assets for less than they are worth... The time will come when all companies worth being public will have a shot at being capitalized...with the world being able to buy or sell its stock for less than 1 cents per share...at any time they choose...24 hours per day.... The Chavez influence will look like a rip off compared to what can be obtained through capitalization.... Each country will want to capitalize its assets.... Furthermore the developing markets will be folded in with a crowd that is already somewhat educated...and certainly willing to participate in a more stable game...than the recent Indian and Saudi fiascos.. Capitalism is a coming....to the world...to anyone that has a bank account....a smorgas board for professional traders.....
US Capitalism can still be saved.............. No other form of economics has been as successful as US model, so cutting $250B a year from military, federal, state bugets etc. will pull the ship from the slow fall.
Why not raise the taxes on the rich? Cutting taxes to win elections has ALWAYS been bad policy. Saw a bumper sticker: WHO IS YOUR PRESIDENT? A no brainer.
'libertad "Furthermore the developing markets will be folded in with a crowd that is already somewhat educated...and certainly willing to participate in a more stable game...than the recent Indian and Saudi fiascos.." could you explain percisely what are u talking about? what inidain fiasco...? what game?
Running total of cost of war in iraq.....it increases by roughly $2,000 i.e. 2 grand per second!!!!!!!!!!!! http://nationalpriorities.org/index.php?option=com_wrapper&Itemid=182
and presumably gold-backed currencies have brought the world decades of peace, growth & price stability, right? shame this isn't borne by historical evidence innit? how comforting it wld be...