So what I’ve suspected seems to be coming to pass. The past 20-years have mostly been hot air — people playing the stock market and trading houses like Pokemon. It’s only been recently that I’ve begun to pay attention to the economy and business matters and it shocks me how much of the US economy and the world economy in general is run off of debt trading. The problem has always been as companies and banks trade debt for increasing margin, no one ever questions who at the end of the chain actually has the tangible “money.” Of course this leads to the creation of the illusion of having money, but in reality it’s just that — air and a figment of everyone’s imagination. So in the end, we are left with that original bit of money that was first lent out and leveraged to 30x its value. We are seeing this now the stock market falls to late 80’s values as the air is let out of the balloon.
It also amazes me that the US could keep consuming despite the fact that we make less and less to actually trade. We traded the “US brand” in terms of debt notes for goods from countries like China. Hahaha! But it all falls apart as soon as somebody really wants their money. The world has come together to build this sand castle and we struggle against the rising tide to add more sand to the castle before the waves wash it away. And again I ask, what are we as the US going to give our debt owners when they want their money? And if we owe more than we have, then do we give the country over to debt holding nations in Asia and the Middle East. It’s a HUGE national security problem!
The way I see it, current government intervention is just drawing out the pain of an eventual collapse. I’m sorry but the gig is up! The illusion is broken! Granted the US has made great strides in IT and biotechnology and those assets should be worth something. But the rest of this BS nonsense — insurance to insure insurance and trade based on brand identity — is now starting to bear its ugly fruit. It’s Enron all over again — selling futures on the weather and valuing assets at what is hoped to be the value in the future, rather than their real value right now. It will now all return to its initial value plus those real gains in technology, medicine, and the like. We must now return to actually making things to trade and in an economy based on actual trading, you can’t expect people who have no jobs to buy goods. So here’s the deal — it’s great to be global, but if you are going to sell goods in a country, people of that country should be employed to some extent to make those goods. All other countries seem to understand this. This is why when US companies try to sell in foreign countries they must make the product there to avoid tariffs and high taxation. This is further extended by the fact that the companies must form join subsidiaries with the host nation’s governments. The US does this with foreign automakers, but in private industry. So why not do this with everything else? Companies scream “protectionism.” And I understand why now. It’s because a global company is not beholden to any state. They are beholden to their shareholders to pay back the greatest dividend regardless. I don’t have a problem with this as long as everyone understands that global companies are “nationless.” However, if a country is counting on that global company to provide jobs — then we have a problem. Case in point IBM which is trying to start a “brain-drain” from the US to India so they can pay lower wages, thereby increasing share holder value. There is no allegiance to the US and you could even say that actions like this hurt the US. The question is whether the US cares when things like this happen. Is it wrong for the US to protect its economic security? Believe it or not, companies will figure out a way to make money, so in this global economy, there’s no harm in saying American products for Americans — it doesn’t bar any company from coming into the US and employing US workers to make products for the US. It doesn’t bar trade either. Each country is blessed with different resources, so we must trade to distribute those resources. This gets back to the simple fact that trade is a two-way transaction and the sooner we get back to that fundamental principle, the sooner we as a planet can get back on track.