Since the global recession ended in 2009, it has been the fable that the world economy has been fueled by rising powers in the developing world led by China, India and Brazil. This is not entirely true. The real world economic engine is the USA with it’s huge buying power. Now, the US is petering out and all the other three are running into trouble. China’s manufacturing weakened in May. Australia and other Asian countries have come to rely on Chinese markets for their exports; however, this again is for production of products in the USA. At time the European economy has been on deck to pick up any US slacking demand…but that isn’t happening now. India is suffering even worse than China. Output from India’s factories has declined and it has seen 9.2 percent a year inflation since the start of 2010. The only encouraging area is the world’s 3rd largest economy, Japan; it grew at an annual rate of 4.1 percent in the first quarter of 2012 as it recovered from last year’s earthquake and tsunami. But a weak Europe could cause Japan’s growth will slow or even stall. In Brazil, the economy practically stalled in the first quarter of 2012. It grew at just a 0.2 percent annual rate from the final three months of 2011. On top of all this, oil prices are dropping, which isn’t helping the US economy as much as everybody thought, but it is significantly lowering the income of the middle east.
Why are we being punished? Because the US has no leadership, no promise, no faith, and no hope; the world’s money engine is in a “Purple Funk.” The politicians can talk all they want, the media can spew out all their biased crap, but the American people can see clearly now, we know better, we know what’s happening. The only reason the world economy hasn’t collapsed is the shoulders of the American people are broad enough to carry the whole world, they are clever enough to “work-around” the government, it’s regressive regulations, and the slide by the confiscation of money from it’s citizens. A quiet revolution is building in America, pressure is rising, the people won’t tolerate the status quo much longer, then there will be another Declaration of Independence…
How do we cope with this economic mess? It would be nice if the other economies (other countries) of the world would step up and offer some alternative solutions to the accumulation of wealth that are as good as capitalism…but that isn’t happening. The reason why capitalism works is because there is a reward for being the most efficient at delivering your product or service. It is profit. It is earned through competition. Those who are good at capitalism earn the most money, use it to expand and control the market…those that can’t, try, fail, and eventually disappear. The best survive and the weak fail. But there’s a tragic flaw in the system…it need multiple customers and multiple suppliers to work…it needs and feeds off of competition. What happens if there is only one customer, or if there is only one supplier, or if the profit motive doesn’t fit the construct of the enterprise? An example of this is health insurance. The profit motive doesn’t fit the health insurance business model. The customer buys protection from some catastrophic happening, and gets paid if the terrible thing happens. The insurance company makes more profit if it doesn’t pay the customer. So the motive is to insure mostly people who don’t ever get sick. So in this case, at least, we need an alternative model, other than profit, to offer an efficient product to the customer at the least possible cost.
I’m describing different scenarios that respond to incentives beyond profit or money. World problems are like that. Even world problems that aren’t fully recognized as such, still just country problems, can quality. Should people die if they are starving, and you have the food to feed them, but they can’t afford your food. I brought up this point in my video regarding jobs…Suppose humanity would be wiped out tomorrow by a nuclear holocaust unless we could buy the solution, and we didn’t have enough money to buy the solution. What would you say then? I’d say: “to hell with money…” give whatever it takes.
So, now we need to move into the world of “WHATEVER IT TAKES…” And for that, we need a new post.