The Fall of Capitalism
When the USSR fell, all the headlines screamed the Fall of Communism. Today, after a week into the mess that is Wall Street, the high priest of Western-style capitalism aka globalization, there is not a single headline that says so: Fall of Capitalism. Interesting observation, don't you agree?
Last month, a friend of mine emailed me a talk given by a Chartered Accountant (CPA, US style) and I promptly emailed him wishing that he wrote a book on the subject. He promptly emailed me a copy of his book published more than a year ago titled Global Imbalances and the Impending Dollar Crisis, published August 2007.
His premise was simple enough. He shows the ridiculous consumption of the US (consumer debt) factored with huge trade deficits. He explains the "Savings Glut" as described by Ben Bernanke and how Asian savings have fueled capital markets in the US as many Asians believed that they would get better returns from a "solid" bet like the US than their own countries. This prevented improved infrastructure in their own countries, rather supported US to improve Uncle Sam's. Uncle Sam built more homes than actually improve his bridges and roads.
My friend temporal from Desicritics referred us to a blog by Spengler; using the imagery of America being a huge casino. As much as that is quite valid, he errs in believing that the "locals" fund the casino. The Asians and others have funded it thus far. However, these very Asians saw the wastefulness of Wall Street and slowly removed their money from there. This has led to a severe crunch in available credit for the MBAs to play with and we are now seeing this "Crash".
The Japanese were happily buying homes, especially here in California, Southern California to be more specific and for the past few years, even they have stopped "investing" in the US housing markets.
Let us face it, capitalism promises a "higher quality" of lifestyle that is the greatest myth perpetrated in the world. Yes, it is true that more people are "enjoying" consumer benefits like Televisions and Computers today than ever before in human history.
However, when we see this "material prosperity" against the background of ecological stress and global warming, we need to revisit the "idea" of "higher quality" of life. Yes, the Ambanis of the world can afford to build multilevel fortresses and import their water supply from the Alpine region, but they still have to deal with the filth and squalor lining the streets of Mumbai when they go to their parties.
As for the outright swindling that was legitimized as salaries and bonuses in Wall Street for decades, much of it will be found safe in a Swiss account, no questions asked. Do check out the website www.transparency.org for greater details on how much of national wealth have been stashed away in tax havens around the globe.
The dumb taxpayer, is left with getting double whammed- once for "investing" and once again for "bailout". It does not matter where he or she is from. All these "international" investors have ensured that there is no "caste system" where money is concerned.
I am beginning to believe in a people's economy, aka black money.
The Fall of Capitalism
- » Published on September 26, 2008
- » Type: Opinion
- » Filed under: