What is Wrong With the World Economy?

The short answer to this question is "politics". The larger answer is all of us.

The average consumer has never seen a lower price they did not like. This is part human nature and part necessity. We all think we have to have the latest "thingy" or "gadget" on the market or we are not as cool as the other guy. This has lead us down the road of debt many of our parents told us to never go. That is into over consumption of those things we really do not need to make our lives full and meaningful.

You see I, as well as many others, have spent money we don't have - to buy things we don't need - to impress people we don't like.

In this manner we have all essentially made it necessary and possible for manufactures to move plants out of the US and Europe in order to give us the things we think we need at prices we think we can afford. This was all well and good for a while, but now it has come back to bite us in our collective @$$.

I would like to share with you a few selected quotes from an article which puts some numbers to what I am saying.

globalresearch.ca...

The author writes from his own perspective, but I don't think we can argue with his overall message.

As reported by Manufacturing and Technology News (September 20, 2011) the Quarterly Census of Employment and Wages reports that in the last 10 years, the US lost 54,621 factories, and manufacturing employment fell by 5 million employees. Over the decade, the number of larger factories (those employing 1,000 or more employees) declined by 40 percent. US factories employing 500-1,000 workers declined by 44 percent; those employing between 250-500 workers declined by 37 percent, and those employing between 100-250 workers shrunk by 30 percent. www.manufacturingnews.com...

The wage differential is substantial. According to the Bureau of Labor Statistics, as of 2009, average hourly take-home pay for US workers was $23.03. Social insurance expenditures add $7.90 to hourly compensation and benefits paid by employers add $2.60 per hour for a total labor compensation cost of $33.53.

In China as of 2008, total hourly labor cost was $1.36, and India’s is within a few cents of this amount. Thus, a corporation that moves 1,000 jobs to China saves saves $32,000 every hour in labor cost.These savings translate into higher stock prices and executive compensation, not in lower prices for consumers who are left unemployed by the labor arbitrage.

Some economists blame “high” US wages for for the current high rate of unemployment. However, US wages are about the lowest in the developed world. They are far below hourly labor cost in Norway ($53.89), Denmark ($49.56), Belgium ($49.40), Austria ($48.04), and Germany ($46.52). The US might have the world’s largest economy, but its hourly workers rank 14th on the list of the best paid. Americans also have a higher unemployment rate. The “headline” rate that the media hypes is 9.1 percent, but this rate does not include any discouraged workers or workers forced into part-time jobs because no full-time jobs are available.

All the while, the US government allows in each year one million legal immigrants, an unknown number of illegal immigrants, and a large number of foreign workers on H-1B and L-1 work visas. In other words, the policies of the US government maximize the unemployment rate of American citizens. Politicians pretend that this is not the case and that unemployed Americans consist of people too lazy to work who game the welfare system. Republicans pretend that cutting unemployment benefits and social assistance will force “lazy people who are living off the taxpayers” to go to work.

I would you would have enough interest in this to read the whole article. It may help you to see the dept of our problem. I think the solution rests in all of us to change our economic was before it all comes falling down.

I just hope we have not gone to far down the road of debted and it is not too late.

Agree with what you are saying, but as far as I am concerend it is too late and out of our hands. Its all manipulation by the elite.

Interesting video by David Icke on why the economy wil crash. 4 minutes on is really good.

For the last 70 years, the world depended on Amerika. The latter in turn, depended on printing artificial wealth out of thin air. There is nothing wrong with the world economy. We're simply seeing the illusory wealth (that shouldn't have existed in the first place) being shaved off. This is the true wealth of the world. And it ain't much.

But at least all those debt whores made possible the invention of the iPhone.

Individual debt is the result of follow the leader ..the US Government ..the World leader because it prints tokens and digits faster than any other nation! Solution? Because they/Goldman Sachs/central banks are so big, it might take force...

Declaration promoting to declare Martial Law

This is a declaration that the best solution to save this nation (& the world) will be a declaration of Martial Law. By this I do not mean a Police State, rather a temporary military dictatorship. This is the non-alternative way out of this unrealistic multiple bubble-utopia mentality and widening corruption that is causing this once leading nation to pop, thereby disintegrating before our eyes.

I am beginning a writing and word of mouth campaign of informing various Patriot groups, websites and blogs to consider a temporary military rule, rather than fear and/or fight this change. They have been lead to believe, by certain "thinkers"/suggesters/leaders/propaganda, that any form of dictates are evil (..Much as negative propaganda anti-New World Order hype is spread). This, so the usury/debt system that has been in place for hundreds of years, in the West, can be perpetuated via fear thereby locking-out genuine 'Change.'
China is one nation which creates its Yuan into existence without the usury charge. It should not take a genius to figure out which competing national systems will gain on the other. However, since the Chinese will end-up with great amounts of $$, due to the FED printing & printing with nothing backing the $$ except promises to pay with rapidly decreasing in value other $$ or bonds, they will eventually want to collect property and seize mineral assets instead. Some will look at that as an act of war, but the truth remains, only the owners of the central banks & their many underlings will actually win [as is always the case under debt creation]! You see a smaller example of this going on in Libya today, where Qaddafi was developing into existence an asset---including gold---backed currency, usury-free, as an example to be followed Continent wide. Goldman Sachs, etc., with enforcement by NATO & the "Rebel Forces," in effect, invaded the most democratic country in Africa and is attempting to over throw it. And what is their excuse? .."to make it safe for democratic rule" as in the West! Please, everyone is not being fooled.

As the US military makes a hasty retreat from its war waging efforts in Iraq, Afghanistan, and Libya, it can shift its job deployment over to tackle my 4th (changing the direction of the educational system in the USA) of only a 4 step plan of re-starting/revitalizing the usA; and to a lesser degree that of the 2nd step (official recognition and functioning of an already existing but rarely admitted two-tier set-up/classification of Americans: civilian vs citizenship=those who need a Big Brother. I give a brief rundown of this on my Facebook account and more in my 2nd book, 'ENSLAVEMENT 2011?' available as an e-book on www.lulu.com (The first few pages can be read free by clicking under the photo-cover of my back-side on that website.)

I am sure if you realistically look at the Bigger Picture, this is a non-alternative choice [the only sane direction], in that there is no other way to combat the implosion which is taking place. Even chief of the private Federal Reserve, Ben Bernanke, has this past week come out and stated that the recovery is not taking place as expected (something anyone with any wisdom has known for years)!
It is mathematically impossible for a usury debt-based monetary pool to last, as the interest payments on that debt always eventually outdistance the loans. For a usury pool to work, there would have to be created a 110% or 105% of $$ depending on what the given interest rate is. If only 100% is created on the books, as the interest is paid-out, that money pool becomes short. More $$ must be borrowed to make-up the shortened money supply. Thus, the interest amount gains over the original principle! A nation digs itself deeper and deeper into a hole. Usury only benefits the owners of a central banking system and their trickle-down pecking-order minions.
An asset based non-interest bearing money/$ must be returned as originally outlined in the U.S. Constitution for this nation to become balanced. This would be in conjunction with a jubilee forgiveness year being called on most bankrupting loans. Each of my 4 steps must be implemented together for this to work.
A bubble system, no matter how regulated, always pops. It is simple math. The bubbles in derivatives, student loans, job availability, commercial real estate, post-tramatic stress disorder, etc. etc. have yet to burst.

Please pass this on up the chain-of-command; right up thru the top into the civilian world, whether it be corporate[/lobbyist] rule or the remaining civilian uS Constitutional side. I know there has been increased in-fighting at the top even before 9-12-2001, when financial disclosure was to take place.

Former Governor Jesse Ventura has stated that the only way to save this nation would be through a dictatorship.

Duncan Phelps
gov'nor of 51st e-state of mind

Like you OP proves there is NO relationship between the wages of workers and the Global Economic meltdown.

The Global Economic Meltdown has only one cause, that is the Global Elite wanted it to occur at this time in history in order to consolidate the world’s wealth and power into the hands of the few.

What isn't mentioned in the article is the long term effects of inflation upon prices and wages.

Due to inflation, which is an attribute of Fiat currencies and consisting of the constant devaluation of one's currency, prices will always climb simply due to the fact that the Dollar is consistently losing value....for each one that is printed/issued and/or placed into circulation.

If your standard of currency, aka the dollar, is losing value relative to the cost of materials necessary to manufacture your product then of course your costs are rising.

Since the cost of materials cannot be reduced because they are priced by nature and the laws of supply and demand. They only option businesses have, is to raise their prices, or reduce their labor costs.

Fiat currencies are inherent to inflation and are what historically have lead to their historical worthlessness throughout history.

And also as to why stable currencies have historically been based upon tangible assets/commodities such as silver or gold. Such as the Swiss Franc.

As long as our currency is solely based off of debt, and lacking of any inherent stability, this trend of spiraling prices and wages will only continue.

This too is why the Federal Reserve and it's issuance of worthless debt based Dollars needs to end. For we are borrowing money to pay off what we have already borrowed in the past.

Until we end this cycle we will only prolong this economic hemorrhaging of our Dollar and the subsequent US economy.

PEACE

reply to post by hdutton


Nope, the answer to your questions is called Derivatives. Heck the guy who sold it to the exchanges to implement is still running the show. This is what destroyer the economy. It's called over extending yourself beyond normal means. Currently there is over 250 trillion dollars worth of exposure in Derivatives by Bank of America and 4 others. There is now way any of them can cover it. The entire world economy is at a point now where economics and any other scholarly way doesn't work, so throw out the books. You just go with it now and forget the rules. The rules don't matter anymore, so make it for yourself.

but, many in the society, couldn't live well enough to keep the economy chugging alone without manufacturing those debts for the rich elite to gamble on, so well.....there's more wrong than just the gambling....
why do so many in the population have to go into debt, just to keep the economy above water to begin with???

falling, stagnant wages, higher unemployment, sick societal values, and a cost of living that is always getting higher!!!

well, there's things that could be done to boost the income of those lower wage earners, there's things that could be done to lower the unemployment rate, gov't policies (and the crappy economy) hold at least some blame for those sick societal values, and there is things that can be done to lower the cost of living....

gov't manipulation played a role in bringing them into being, they can and should have a role of incorrecting the mess that they've helped create!

What is wrong with the economy, it's the fascist debt system.

Banks get to gamble and win they win they make a profit, but when they lose, they shift the losses on the taxpayer.

The only way out of this is an international default where the banks, and only the banks, take the loss. If a particular bank can survive, then it gets to continue doing business, if it can't, it gets seized and liquidated.

Originally posted by TWISTEDWORDS
reply to post by hdutton

 

Nope, the answer to your questions is called Derivatives. Heck the guy who sold it to the exchanges to implement is still running the show. This is what destroyer the economy. It's called over extending yourself beyond normal means. Currently there is over 250 trillion dollars worth of exposure in Derivatives by Bank of America and 4 others. There is now way any of them can cover it. The entire world economy is at a point now where economics and any other scholarly way doesn't work, so throw out the books. You just go with it now and forget the rules. The rules don't matter anymore, so make it for yourself.

You are aware that these derivatives are basically insurance policies on debt.

The value of these derivative is the "supposed value" of the debt to be covered.

If this value can not be shown to be supported by the true value of the debt covered, a fraud has been commited through it's sales. Like if the same mortage were included in more than one package when they were sold.

If one dirivative can be shown to have been sold by fraud, then all are called into question.

If they are shown to be fraudulent they would be worthless and payment would not be made by the insurer.

The whole system will fall and all the debt could be wiped off the books. Unless all the participants are prosecuted. This would have to be done in order to retain any of the debt on the books.

The only ones who will lose under this senario are the wall street bankers and they know it.

This is what Paulson was referring to when he told Bush "there would have to be marshall law if congress did not save Wall Street".

Thus the bail out.

But remember this was only in 2008. I am really talking about the last 40 years of our own bad economic habits.

doing what one has to survive is not a bad habit, it's a classic built in instict!!
and there has been alot of borrowing to survive going on also!
why???

reply to post by Vikus


Trouble is that people who have money deposited with that bank loose their money too. alright if its not you or me.

reply to post by ispyed
actually, unless your account is above something like $250,000 or so, the gov't insures that the money will be paid you (although, the might go to extreme measure to not give it to ya)....
so it is you and me, and joe blow down the street that pays......either through taxes, cuts in gov't programs, loss of national parks and other resources, or inflation.

Originally posted by hdutton

Originally posted by TWISTEDWORDS
reply to post by hdutton

 

Nope, the answer to your questions is called Derivatives. Heck the guy who sold it to the exchanges to implement is still running the show. This is what destroyer the economy. It's called over extending yourself beyond normal means. Currently there is over 250 trillion dollars worth of exposure in Derivatives by Bank of America and 4 others. There is now way any of them can cover it. The entire world economy is at a point now where economics and any other scholarly way doesn't work, so throw out the books. You just go with it now and forget the rules. The rules don't matter anymore, so make it for yourself.

You are aware that these derivatives are basically insurance policies on debt.

The value of these derivative is the "supposed value" of the debt to be covered.

If this value can not be shown to be supported by the true value of the debt covered, a fraud has been commited through it's sales. Like if the same mortage were included in more than one package when they were sold.

If one dirivative can be shown to have been sold by fraud, then all are called into question.

If they are shown to be fraudulent they would be worthless and payment would not be made by the insurer.

The whole system will fall and all the debt could be wiped off the books. Unless all the participants are prosecuted. This would have to be done in order to retain any of the debt on the books.

The only ones who will lose under this senario are the wall street bankers and they know it.

This is what Paulson was referring to when he told Bush "there would have to be marshall law if congress did not save Wall Street".

Thus the bail out.

But remember this was only in 2008. I am really talking about the last 40 years of our own bad economic habits.

You are wrong on this so here you go...


[

The latest quarterly report from the Office Of the Currency Comptroller is out and as usual it presents in a crisp, clear and very much glaring format the fact that the top 4 banks in the US now account for a massively disproportionate amount of the derivative risk in the financial system. Specifically, of the $250 trillion in gross notional amount of derivative contracts outstanding (consisting of Interest Rate, FX, Equity Contracts, Commodity and CDS) among the Top 25 commercial banks (a number that swells to $333 trillion when looking at the Top 25 Bank Holding Companies), a mere 5 banks (and really 4) account for 95.9% of all derivative exposure (HSBC replaced Wells as the Top 5th bank, which at $3.9 trillion in derivative exposure is a distant place from #4 Goldman with $47.7 trillion). The top 4 banks: JPM with $78.1 trillion in exposure, Citi with $56 trillion, Bank of America with $53 trillion and Goldman with $48 trillion, account for 94.4% of total exposure. As historically has been the case, the bulk of consolidated exposure is in Interest Rate swaps ($204.6 trillion), followed by FX ($26.5TR), CDS ($15.2 trillion), and Equity and Commodity with $1.6 and $1.4 trillion, respectively. And that's your definition of Too Big To Fail right there: the biggest banks are not only getting bigger, but their risk exposure is now at a new all time high and up $5.3 trillion from Q1 as they have to risk ever more in the derivatives market to generate that incremental penny of return.

250 Trillion Exposure

Well there you have it. The problem with the World economy is having money in itself and class division. There is no economic justice and equality. There is no need for capitalism anymore. Everyone can live in wealth and abundance. We just need to work over to that kind of system.

(Coming soon!)

reply to post by TWISTEDWORDS


I read the article from your link and feel I must ask.

At what point am I wrong ?

I was attepting to illustrate the usage of dirivatives in this case and the effects of any of them being shown to be connected to a fraudulent transaction.

I found this diffinition of dirivaties :

Derivatives allow risk related to the price of the underlying asset to be transferred from one party to another. Derivatives can be used to acquire risk, rather than to insure or hedge against risk. Thus, some individuals and institutions will enter into a derivative contract to speculate on the value of the underlying asset, betting that the party seeking insurance will be wrong about the future value of the underlying asset. Speculators look to buy an asset in the future at a low price according to a derivative contract when the future market price is high, or to sell an asset in the future at a high price according to a derivative contract when the future market price is low.

The facts around these banks continuing exposure to them brings about another question.

I thought I had heard the purpose of the TARP was to relieve the banks of their exposure to the badd assets which they had "on their book."

This should have been akin to the government bailout buying up these assets and thus paying off the indebtedness of those who owed the mortages involved. This should have satisfied the terms of the dirivatives holder against the event of non-payment. If this be the case how can a bank still claim this exposure and foreclose on the mortage which the tax payers bought?

It was reported that the TARP monies were paid thrugh AIG to various "counter-parties". If the assets had been bought up at taxpayer expense how did these "counter-parties" who held the dirivatives, basically insurance against loss from the non-payment of the mortages, become due any payment of monies?

If this be the case, as reported, it begins to look like some one may have gotten money for reasons which were not fully disclosed. This could be thought of by some as fraud or even outright theft.

I really wish I knew more about all this, but I have to depend on what I read in the papers and hear on the other media.