Thursday, January 29, 2009

It's a Big Downturn

Despite the BBC's assertions that “The economists among them were Crunch Cassandras; two or three years ago they had predicted that our financial system was headed for a huge liquidity crisis - Nouriel Roubini, Nassim Taleb and economic historian Niall Ferguson.” This is not true, well true, but there are thousands of economists who have been warning of this. They have been warning of this since months before the credit crunch, and several years going back to Nixon’s presidency. These are merely those chosen to be publicized.

The credit crunch is a direct result of the cold war with the former Soviet Union. If the Soviet Union had lasted these last twenty years, well they could take full credit for this credit crises. America to show the world that its way was the best encouraged spending and debt to purchase what ever you want in the land of the “free.” The UK copied the process, special relationship they like to call it. This was to show that in America, the cultural and economic center of the West, true cultural center, American culture dominates the West, though some like France do not like it.

The debt has finally caught up, and the Ghost of the cold war will cause a draw, the Soviet collapsed and Bush became a communist, dishing out a trillion dollars to the US banking sector. Countries that have done this in the past have been vilified by the American’s particularly the Republicans, vilified as Socialist evil, but there, Bush takes a lesson from Lenin, true. And like a good Commie, Bush made sure banks recieved aide with little strings attached, few if any of the executives lost their jobs, they didn't have to take responsibility, rewarded for causing a mess.

A slump is a slump, there is nothing anyone can really do, should people buy another MP3 player when the last one is working just fine, throw away last years playstation for this new one when they do the same thing. Why should they just purchase what they do not need?

Nationalization will do nothing except make people believe that the government is doing something, however even if Bank of America is nationalized people still have to pay their debts, or will the government of Obama say that actually personal debts are cancelled, I don’t think so.

What a government can do however is change the economy, change it from a 19th Century Industrial economy to a 21st Century economy. Believe it or not, the age of Petroleum has to go, it was fine for its time, but we now have better technology. Nuclear energy has to stay because it can provide cheaply future energy for breaking down water into hydrogen and oxygen, for lights, its clean and fairly safe, one big accident in trillions of hours can not measure against it.

Change the infrastructure build green cities, green power, that the government can do until the next cycle. If we respect knowledge, there next cycle will prove to be a golden age, lasting well over a hundred years, then like all cycles come to an end and governments will have to restructure to 22nd century technology. The key is to get the world to participate in the knowledge economy then the next age will be a golden age for all humanity. Obviously America will be a leader and must participate in getting the world into this knowledge economy, though Russia’s assistance will be needed. Pity countries like Canada who inherently believe other races can not think unless taught by a white, if they continue with such a fascist attitude should not be trusted to help any nation join the global village.

Obama has a lot of work, so do the Russians, Europeans, Chinese and Indians in making sure that knowledge is understood by all to be the primary resource.

P.S, blaming America for this crises will not help, when the Chinese, Japanese, Europeans where selling goods to Japan, they knew about the precarious household debt situation in America, they where just hoping it goes away. It is not Bush’s fault either, every President since Kennedy must take blame.

Nationalization will not work, fix infrastructure to 21st century needs, then the government would have spent its money well, about 3 trillion, it’s a lot.

Take these words to heart, and we will all prosper.

Bhekuzulu Khumalo

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Bhekuzulu Khumalo

I write about knowledge economics, information, liberty, and freedom