-You can't out-smart stupid. The old saying about mouse traps applies to idiots and the careless as well.
-Greed and a lust for power will blind any one to the past.
The first statement shouldn't need too much explanation, and I might write about it later. The second I derived from chatting with my buddy and from reading Decline and Fall of the Roman Empire. I've been slowly chewing through Gibbin's seminal work for a little while now and it doesn't take a Ph.d to see (somewhat) startling similarities between the fall of Rome ans the past British Empire, and the US today. I don't mean to say there are a few... I mean to say that I could probably take a year or more and wright a good size book!
In the same vain is the credit crunch, or as I like to call it: Why over sized, poorly built houses, on absurdly small pieces of land are worth entirely too much money and the fools who can't afford them, but refinance to buy a car, the house, and pay off all of their creditors, buy taking on more debt assuming that they will always make more money in the future are going to cause another crash like 1929. (Thank you Dickens) The '29 crash, if I recall, was cause by bad margin debt. The current crisis is caused by bad loan debt. So really, it can be inferred than large amounts of bad any debt can collapse a modern economy. Additionally, the things that made the US wealthy in the first place have been "out sourced" to China and other countries. Much of our debt is currently held by people that DO NOT LIKE US! Long term, inflation is a reality. Inflation caused by bad monetary policy (Greenspan's "irrational exuberance" remark seems to make more sense now) and an extremely piss-poor energy policy making finished petrol. products skyrocket in price. Worst of all some people want to tax and spent our way to prosperity and that just wont work. Roosevelt's initiatives in the 1930's may have helped a few people sustain them selves and make it look like the government look like it was doing something, but it didn't create and wealth - it simply moved it around some.
Mad Ogre posted this on his blog on the 16th and it explains some thinking on the week dollar better than I can right now. Some say that it might be paranoia, but China does want to be a super-power and it could, theoretically, crush more than a few western countries economically in one fell swoop....
3-16-08: I was going to talk about the value of the dollar and the importance of keeping it strong. I was going to, but James has beaten me to the punch and has done a much better job of it:
“Dear George, Yep, it is all about the Dollar. Unfortunately, I’m not sure that the Dollar is really a problem which can be fixed easily, which might explain why none of the candidates in your seemingly-endless Presidential campaign have mentioned it. The problem, as I see it (slips effortlessly into Chief Economist role), is that the USA - like the UK - has steadily dismantled most of its wealth-generating activities over, oooh, say…the last 30 years or so. China is now America’s workshop. The USA now produces precious little that the rest of the world wants to buy except, perhaps for arms and cultural products such as music / films (with the latter at least being frighteningly easy to pirate).
Why then would anyone want to buy Dollars on world markets? Well, historically, the Dollar was seen as a really great “safety” investment, a chance to buy into the stability and power of the American economy, but again this strength has been frittered away. Nowadays, the Dollar looks like a really crummy investment. Part of the problem is with the limping US economy, but there is a branding problem too. Brand America has been trashed over the last few years - excretus est ex altitudine by GW Bush et al. The only people who seem to be interested are the Chinese who, I’m sure, are stockpiling Dollars primarily as a form of economic weapon. At the end of last year, the Chinese had about 1.5 trillion Dollars sitting in their bank accounts - that many US$1 bills would form a stack with dimensions of approximately 131x131x131metres. It’s a lot of money. And it is being accumulated for a purpose – it is a currency “nuke” which could annihilate the value of the US Dollar in a single move if it were released onto world markets, a flood of cash that would sweep America away. Remember the credit-crunch? Well, much of that is down to Chinese cash. The Chinese don’t do anything by accident and I am sure that the credit crunch was intended as just a trial run. Perhaps even more frightening, the money can be used to undermine foreign economies bit by bit by buying up strategic businesses through various investment vehicles, acquiring knowledge and influence in the process. I attach a link to an article I wrote on this last month. Yours, James St Albans, UK”
Thanks, James. You nailed it. Thank you for shedding some light on a drastic situation that is being completely ignored by the media. This is a National Security Issue just as serious as a rogue nuke. America will sink or swim based on the strength of the Dollar. If America sinks, lots of folks around the world will cheer it... and then they would realize rather suddenly that their own economy has taken a kick to the balls. With America falling, the rest of what is called Western Civilization will fall, and that will leave the door open for China to make a huge push into the rest of world. China is the boogie man that lives in our closets and under our beds. Don't forget that and don't minimize the threat that China embodies.
I'd write more about this, but it is 12:30 AM and I have to wake up tomarrow.
