*[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
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
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
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
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.
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From: "Yahoo Group" <ashwani.vasishth на gmail.com>
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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