posted on Mar, 30 2009 @ 01:52 PM
This is rather long and I hope not too...I think it's a good description of where we're heading and wanted to share with y'all:
It's Show Time For Mr. Obama
by Dr Joe Duarte
March 30, 2009
Tough Week Ahead For The Markets
As president Obama heads for the G-20 meeting in London, one thing is clear, this will be a tough gathering of world leaders as ideological,
philosophical, and economic techtonic shifts seem ready to reach points of maximum stress.
It was supposed to be a meeting where world leaders agreed on more stimulus and figured out ways to improve the world economy. But if weekend reports
are correct, this will be a very contentious affair with the potential to rattle the markets, and in the longer term to cause more problems,
especially a rise in protectionism.
Perhaps the current feeling in the global community is best encapsulated in a New York Times editorial by Nobel Prize winning economist Paul Krugman
who, on March 5th noted: " among people I talk to there’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words
with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding
Krugman added: "Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks
in the press. This trial balloon is quickly shot down by informed commentators. Then, a few weeks later, the administration floats a new plan. This
plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again."
In other words, as Krugman noted, nearly a month ago, little progress was made. And now, as the White House has finally made its move on General
Motors, the markets seem to be taking it a sign of worse things to come.
But, that's not all there is to it. Krugman points out something more, the centerpiece of the bad policy initiatives as 'top officials in the Obama
administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are
really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go
It's almost as if you wish for something long enough it will happen, without you actually doing something to make it happen. But by talking about it
so much, you actually get people believing it. And when the pie in the sky scheme falls apart, the fall is harder than if you saw things as they were
and took your pain up front, while actually coming up with a workable solution from which to improve things in the future.
As Krugman correctly pointed out in early March, with regard to the Geithner bank rescue plan: "by using taxpayer funds to subsidize the prices of
toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down
to where they’re needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don’t need or
deserve to be rescued."
And his conclusion: "officials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial
institutions," in our opinion, is dead on.
In fact, we think that it's been Krugman's constant harping on how much bad policy is coming out of Washington these days that has led to a turn in
the views of European leaders, such as Angela Merkel with regard to spending more money on stimulus plans and bailouts, as well as the controversial
remarks made by Brazilian president Lula da Silva last week, where he blamed the world's economic meltdown on men with "blue eyes and white skin."
Now, Krugman has turned it on even more. In today's op-ed piece for the New York Times, titled "America Tarnished," he alludes to the fall from
grace of former Treasury Secretary Robert Rubin and former Federal Reserve Chairman Alan Greenspan, as a symbol of what's happened to America, as it
too has fallen from grace. Aside from lamenting on the dynamic duo's fall from grace, Krugman refers to America as "the Bernie Madoff of
economies," notig that "for many years it was held in respect, even awe, but it turns out to have been a fraud all along."
But he's not just blaming America, as he notes: " in fairness we have to say that the United States was far from being the only nation in which
banks ran wild. Many European leaders are still in denial about the continent’s economic and financial troubles, which arguably run as deep as our
own — although their nations’ much stronger social safety nets mean that we’re likely to experience far more human suffering. Still, it’s a
fact that the crisis has cost America much of its credibility, and with it much of its ability to lead," ominously adding, "And that’s a very bad
TO be sure, Krugman has his own views, and many are centered along leftist leanings. Yet, he does make several points that are true. And he has been
consistent in his criticism of the current administration, which he backed in the election.
But, what Mr. Krugman and the White House have been ignoring is something at the macro level that Sarkar described in his seminal writings, where he
described "Social Determinism."
As that theory is applied to economics, there are four stages in the social cycle, the laborer stage, the military stage, the intellectual stage, and
the acquisitor stage. It is the latter that is most important at the moment.
When acquisitors, those people whose personality and behavior is all about the accumulation of wealth, are in control of the society, money is the
ruling dynamic in the culture. And as long as everyone is participating, things go well. Think back to the 1980s and much of the 1990s. Everyone was
Yet, as an acquisitor stage matures, wealth disparity develops, with the rich being so rich at its peak that the poor will never be able to catch up.
It's at that time when the rich are increasingly rich, and the poor are irretrievably poor, that bubbles burst.
When the bubble bursts, markets crash, people lose jobs, and wealth evaporates. So what follows? A laborer stage, where disorder rules, and where
lawlessness and crime are prevalent. Eventually, a military stage follows, where governments crack down, personal freedoms are lost, and some sort of
Some societies don't move beyond these stages. Look at Iraq where laborer and military stages seem to follow one another. Other countries do
progress, as the U.S. did after the Great Depression.
What's the bottom line? We are in the middle stages of the transition between an acquisitor stage and something else. It's that something else that
could change all of our lives forever, whether we lean left, right, or don't lean at all.