Lance
Josh Adams
fooser
davenate
Mike O
Reading on Walden Bookstore
goesdownbitter
jack3566
Garnet SpyThe current meeting of the G-8 opens Monday, July 7th in Japan. The stakes this year are the highest ever as the economic turmoil caused by the bursting of a world-wide housing bubble coupled with crude oil prices at record highs has created commodity inflation and even food shortages in some of the poorest nations. The G-8 however is an anachronism and a remnant of colonialism and empire building that is best consigned to the ash heaps of history.
The leaders of eight of the largest economies make up the G-8 from Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States. The actual largest eight economies in order are: the United States, Japan, Germany, China, United Kingdom, France, Italy and Spain. Canada is ninth and Russia 11th. Brazil is 10th and India 12th and it’s obvious that a G-12 is much more realistic. But then that would look too much like the United Nations Security Council and that is an unwieldy way to solve international problems.
The actual powers claim to be the various Central Banks who set the base interest rates in an attempt to manage both inflation and growth, but in reality, it’s the markets and the huge sums of cash chasing profits that control the world economy. The United States economy is as large as the next four countries combined and as large as the next 10 countries combined after that. Yet because of the non-existent fiscal prudence exhibited by the federal government, the new economic model of consumerism that makes up 2/3rds of the U.S. GNP is teetering on the edge of bankruptcy.
What happens next depends on a lot of factors, but the primary one will be, will the United States accept the end of the American Century or will we go down swinging and take the rest of the world with us?
Sincerely,
Filed under: Economics, Geopolitics, News, Politics | Tagged: G-8
I’m really sorry everyone, there was a great thread on this post and somehow we must have deleted all the comments. Was trying to edit and must have clicked the wrong button. :(
Really, really sorry. Won’t happen again. We’re not used to a multi-author blog, hard to figure out what you can and can’t do.
I was able to find a cached copy on Google that has six comments in the thread. I think that was all, but not sure.
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1.
rhbee, on July 6th, 2008 at 8:29 pm Said:
I say we go down swinging unless that meme of frugalism that seems to be drifting through the web and down the staycation streets and out into the young voter’s minds that are looking to Obama to jump start a national reinvolvement in sustainability does tsunami us right back into the thick of things as a real world leading nation. Nah. Too idealistic. Things fall apart. But would that your brief but accurate precis’ could be taken to heart by some of those great eight.
2.
Mike O, on July 6th, 2008 at 8:35 pm Said:
I expect overall consumerism to fall 30-40% over the next few years. The current downturn will only cause an overall enlightenment that the Baby Boomers are far slower than their parent were to realize. It’s not the one with the most toys wins.
When people need to rent storage spaces to put their junk that their 4000 square foot house doesn’t hold, eventally you start figuring out you don’t need every latest and greatest gadget. That goes for cars, electronics, software, everything. We’ll keep our cars until they wear out (I always have), only replace that TV when the old one breaks, and make do with a three-year-old IPod. We’ll be using used and unsold giant SUVs for boat anchors, since scrap weight is all they’re now worth. I do not feel sorry for anyone that has one; they were maximally stupid from the day the fad started.
The economy will take a big hit, but mainly overseas, since most of our junk is built there anyway. But it was coming; downturn, energy prices, or not.
3.
tnemily, on July 6th, 2008 at 9:43 pm Said:
Mike O, I bet you’d agree with me that there’s nothing sweeter than a paid-for car! We got the last one to upgrade for our youngest and plan to keep it until it runs into the ground…our other car is an 8-year-old Civic and we won’t get rid of that until we have to!
Consumerism run-amok is hurting our country…I’ve felt that way for awhile now.
4.
gospelnous, on July 6th, 2008 at 9:58 pm Said:
“.The actual powers claim to be the various Central Banks . . . but in reality, it’s the markets and the huge sums of cash chasing profits that control the world economy.”
While I tend to agree with your underlying premise here, either I’ve misinterpreted something or it’s a bit muddled. If you look at individual nation-states on a case by case basis, the degree of power a central bank exerts on any respective country depends primarily on the strength of the economy, but is affected by any number of other contributing factors (government, U.S. aid, trade balance, etc.).
To accurately assess the role a central bank is playing, you really have to look at the larger, overall picture. In Pakistan for example, the State Bank (SBP) has raised discount rates while the economy falters. This may be perfectly justified under the conditions, but I can’t help but wonder to what extent political deal- making influences such decisions. To that extent though, ‘confidence’ in the central bank’s policies have a direct effect on its related markets.
It’s rather obvious to me that while the Bush administration’s bullying of Iran may score a few morale boosting points with those seated in high places, the real costs measured in terms of currency are actually to our detriment.
Thus, as I’ve contended all along, the issue is essentially one of poor leadership; the bill for which we’re already paying dearly.
5.
Carnival of Politics, on July 7th, 2008 at 1:12 am Said:
I’ve always struggled with whether consumerism is good or bad.
At the most fundamental level the capacity of the economy should depend on what everyone combined is able to produce.
6.
goesdownbitter, on July 7th, 2008 at 3:21 am Said:
As for the Central Banks having little control, case in point is Iceland that did everything right.
Prudent fiscal policy. Alternative energy sources. Avoiding the sub-prime mortgage markets. Strong economic growth funded by foreign investment looking for above normal returns in the Nordic Tiger.
Oops!
Inflation Feb. 2003 1.7%, last August 2007 3.9%, Current inflation 12.7%.
Interest Rates were at 2.8% from Feb. 2003-May 2004, in Aug. 2007 at 12.75%, Current rates 15.5% Policy Rate.
Iceland’s economy is held hostage by foreign capital sloshing in and out of the world market. Compared to the United States it’s a tiny country but many of the same forces are at work.
As for the American economy taking a downturn and all that ‘junk’ being built overseas, remember who sells all that ‘junk’. Imagine a country of empty stores. Step back a bit and look around your neighborhoods and business districts. How many stores rely on selling the consumer imported goods? How many employees work in those stores? Think about the consequences of a society that no longer consumes ‘junk’.
Thanks for all your great comments.
You missed some: I think Lance responded to the following: I pointed out that I haven’t had a car payment in 5 years, no credit card interest charges for 23 years, and could have bout either of my las two houses with cash, but just opted for big down payments for tax putposes. I’m hoping eventually more people will get it through thier heads that there are major advantages to living below their means. While government can encourage otherwise, we all can take personal responsibility and choose fiscal frugality.