*[Enwl-misc] Feature: Are We Seeing the End of Capitalism As We Know It?

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Вт Ноя 4 14:36:19 MSK 2008


Has A Ponzi Scheme Destroyed Capitalism

Illustration Omitted:
  Chinese President calls for domestic demand boost: state media
China's President Hu Jintao has called for a boost in domestic demand 
to maintain the nation's economic growth in the face of the global 
financial crisis, state media reported Saturday. Hu said that 
governments at all levels should "strive to expand domestic demand, 
especially consumer demand," as he visited farmers in the northern 
province of Shaanxi, the official People's Daily newspaper reported.

"Currently, the fundamentals of our country's economic development 
are good," he told officials accompanying him on the visit on 
Wednesday and Thursday, according to the report. But he admitted that 
"prominent contradictions and problems" existed in China's economy 
due to the crisis. "We must maintain confidence, raise spirits, 
perfect our policies, strengthen our struggle," the paper quoted him 
as saying. Hu's comments come amid mounting evidence China is 
starting to feel the pinch from the global economic downturn.

The country's GDP growth slowed to nine percent in the third quarter 
of the year, the lowest growth figure since the second quarter of 
2003, and the growth of its exports has also decreased. The pace of 
expansion in exports in the first three quarters slowed down by 4.8 
percentage points from last year, growing by 22.3 percent to 1.1 
trillion dollars, official figures showed. Thousands of people have 
been laid off in recent weeks in southern China's export hubs as toy 
and other factories that have sold to the developed world have gone 
bust.

Amid such a backdrop, economists and government officials have called 
for a boost in domestic economic growth to cushion the impact of the 
crisis. Already, China has cut interest rates three times since 
September, and some analysts are expecting a fourth rate cut before 
the end of the year. Authorities have also decided to invest heavily 
in infrastructure, including 300 billion dollars into its rail 
system, as a stimulus measure. Keeping up robust growth is seen as a 
vital policy objective in Beijing. The government is eager to create 
enough jobs to keep unemployment down and prevent social unrest.

by Arnaud De Borchgrave
Washington (UPI) Oct 30, 2008

As Wall Street's subprime Ponzi scheme engulfed much of the world's 
economy, academics and learned journals are debating what the 
prestigious Council on Foreign Relations calls "the wholesale 
reconsideration of the capitalist model and free market economic 
orthodoxy."

In its daily analysis headed "Capitalism in Crisis," Lee Hudson 
Teslik writes that it was French President Nicolas Sarkozy who first 
said, "The all-powerful market that always knows best is finished."

The "laissez-faire" developed economies that kept their hands off the 
economic tillers have undertaken humongous economic interventions of 
historic proportion. CFR's daily appraisal said the United States, 
most countries in Europe, Japan and South Korea all have funded 
private banks through recapitalization. Some, including the United 
States, even took the more radical step of buying assets directly 
from private firms. A much broader swath of countries, said CFR, 
"have engaged in other forms of intervention that range from 
guaranteeing bank deposits to cracking down on short-selling to 
attempting to boost private lending markets."

Out-of-control executive compensation packages, $100 million year-end 
bonuses for top traders, $150 million golden parachutes for chief 
executive officers voted out by their boards for doing a crummy job, 
and $300 million yearly pay for unregulated hedge fund managers, all 
contributed to the image of Las Vegas on the Hudson. There is talk of 
limiting tax return deductions to $500,000 for executive salaries in 
the institutions that are now partly under government supervision. 
But Fortune 500 CEO annual compensation has been averaging $14 
million, including golf club dues, limo and driver, use of company 
jet, and other emoluments. And those limited by government fiat to 
half a million dollars a year are bound to find a way around the new 
restrictions. Or they wouldn't take the job.

The same hue and cry against corporate chieftains demanding 
U.S.-inspired financial rewards on the same level as sports and movie 
stars has broken out all over Europe.

Back in favor is John Maynard Keynes, the Great Depression-era 
British economist who argued free markets would not "self-correct" 
and that government would always be needed to ensure (1) market gains 
would translate into improved living standards and (2) topside 
excesses would not give capitalism a bad name.

Many financial experts believe the Nov. 15 summit of world leaders in 
Washington, sold by Sarkozy to Bush 43, should produce at least the 
outlines of a new financial architecture to update, possibly replace, 
the post-World War II Bretton Woods accords. But this will be a long, 
tedious negotiation with a deck stacked against the United States.

Sober second thoughts also have flowed from prestigious global 
publications -- e.g., The Economist and Financial Times, both British 
-- urging decision-makers not to throw the baby out with the bath 
water. Capitalism -- wild or tamed -- has brought great benefits to 
humanity. It also has played a critically important role in 
alleviating poverty in fiscally responsible countries. But that rule 
excludes much of the developing world.

The FT's Martin Wolf told CFR that "the effort to preserve 
liberalized capital markets faces a huge intellectual challenge, 
given the severity of the crisis. We're going to have to do a very 
credible job of explaining that we're going to do better in the 
future, managing the global adjustment on macroeconomics. But it's 
going to be very hard." The current system of international power is 
no longer an accurate reflection of current realities, let alone 
future ones.

The Organization for Economic Cooperation and Development says in its 
latest study the rich are getting richer and the poor poorer in most 
developed countries. And there isn't much the wealthy nations can do 
about it as they struggle to keep their heads above the rising tide 
of deficit financing.

The next president of the United States begins his first term with a 
current account deficit of close to $1 trillion. As Russia re-emerges 
on the global stage where China and India are strutting their stuff, 
the United States is much diminished. The failure of the Doha trade 
talks earlier this year was another manifestation of the shifting 
balance of power.

In his new book, "The Three Trillion Dollar War," co-authored with 
Harvard's Kennedy School Professor Linda J. Bilmes, Columbia 
University Professor Joseph Stiglitz says he was driven by "the 
suspected disparity between the advertised cost of the (Iraq) war and 
the true cost on the economy."

When White House Director of the National Economic Council Lawrence 
Lindsey said the war might cost $100 billion to $200 billion, this 
figure was dismissed, as he was, in favor of a $50 billion to $60 
billion estimate. "It was clear," says Stiglitz, Nobel Prize winner 
in Economic Sciences in 2001, in the Yale Journal of International 
Affairs, there was an agenda to keep the real tab concealed. He lists 
the high price of oil as having a depressing effect on the economy. 
"Deficit spending on the magnitude we have engaged in can't help but 
have a negative effect on our economy. At the very least, it led to a 
weakening of the dollar, which has led to inflationary pressures. ... 
"

Stiglitz also says the United States is fighting on borrowed funds 
from abroad, including China. "Since America's savings is down to 
zero. We have had to borrow from abroad. So although you cannot say 
the money that China is lending is going to Iraq per se ... this is 
the first war since the Revolution we have had to rely on foreign 
debt." Sleight of hand through some 26 separate bills for the war, he 
claims, have concealed true costs, notably the tens of thousands of 
contractors paid top dollar both at home and in Iraq.

Both Iraq and Afghanistan will continue to drain the treasury with 
life-long costs for some 20,000 wounded veterans. Wall Street's 
excesses have weakened America's standing the world over. So either 
we accommodate the new global power realities, or we slowly drift 
into a new world disorder.

http://www.terradaily.com/reports/Has_A_Ponzi_Scheme_Detroyed_Capitalism_999.html

***   NOTICE:  In accordance with Title 17 U.S.C. Section 107, this 
material is distributed, without profit, for research and educational 
purposes only.   ***



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Sent: Monday, November 03, 2008 3:13 PM
Subject: Feature: Are We Seeing the End of Capitalism As We Know It?




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