Hi Sally, Happy New Year.
US media will say what it's told, and economists do not readily analyze
outside the framework of the stock market of the middle class, lest the
cat gets out of the bag that fictitious money markets are where it's at.
Most economists are hired to teach, or to analyze or oversee
government/corporate expenditures. What theoretical economists should
most pay attention to is the other economy for those who can afford to
play currency markets, since that is the hub of global economic
decisions. $Trillions per day now, compared with commodities approaching
such a sum only annually. But currency markets have doom written all
over them, if one stops to consider that their rewards are based upon
speculation of an individual nation's GDP, which will be going down the
tubes the West world over. Black market profits funneled into this bag
may account for one fifth to nearly one third. Oddly, Wallerstein
doesn't speak of currency markets, nor the non-existent laws around
them, which contribute greatly to the stagnation he cites. He has also
makes no mention of the global effect of another unrealistic but huge
economy--that of security against terrorist threats. He focuses more on
social concerns of a depression economy, which certainly begs attention,
but offers little more than sympathy. This would read better as a piece
of journalism if it asked more of the right questions, because it is
essentially void of solutions.
Economists would be of greater use to society if they were to look to
the near future where diminishing resources and diminished tax bases
will cause a shift in wealth positions, especially for both middle and
upper classes. The poor needn't remain poor. We're stuck for now with an
overpopulated earth, but with great potential to create necessary new
industries and the educational systems essential for reducing not only
population, but consumer 'needs'. War and all its illusory defense
mechanisms and very damaging pollutants should be amongst the first to
go. Nothing will get done by simply being witness to the mayhem, and
applying quick fixes. Quantitative Easing III and IV, for example, will
be short term. Plans for alternative and sustainable systems and
commodities must be implemented while we still have clean water to
share, food that's safe and affordable to share, and energy by which to
construct better energy systems. And while we still have an internet and
other communications systems in tact by which to share community saving
information. Beyond this point, the world will not be able to work
together for the future that is possible. Instead, pods of survivors
will compete for limited resources, and civilization will get to start
up anew.
*Natalia* *Kuzmyn*
On 1/1/2011 10:44 AM, Sally Lerner wrote:
I'm interested in responses to this comment from a highly respected analyst.
And happy 2011to all. Sally
________________________________________
From: Commentary Subscribers [[email protected]] on behalf of
Becky Dunlop [[email protected]]
Sent: Saturday, January 01, 2011 4:55 AM
To: [email protected]
Subject: Immanuel Wallerstein's Commentary No. 296
Commentary No. 296, Jan. 1, 2011
"End of the Recession? Who's Kidding Whom?"
The media are telling us that the economic "crisis" is over, and that the world-economy is once
more back to its normal mode of growth and profit. On December 30, Le Monde summed up this mood in one of its
usual brilliant headlines: "The United States wants to believe in an economic upturn." Exactly,
they "want to believe" it, and not only people in the United States. But is it so?
First of all, as I have been saying repeatedly, we are not in a recession but
in a depression. Most economists tend to have formal definitions of these
terms, based primarily on rising prices in stock markets. They use these
criteria to demonstrate growth and profit. And politicians in power are happy
to exploit this nonsense. But neither growth nor profit is the appropriate
measures.
There are always some people who are making profit, even in the worst of times. The
question is how many people, and which people? In "good" times, most people are
seeing an improvement in their material situation, even if there are considerable
differences between those at the top and bottom of the economic ladder. A rising tide
raises all ships, as the saying goes, or at least most ships.
But when the world-economy becomes stagnant, as the world-economy has been
since the 1970s, several things happen. The numbers of people who are gainfully
employed and therefore receiving an income that is minimally adequate goes up
considerably. And because this is so, countries try to export unemployment to
each other. In addition, politicians tend to try to deprive the elderly retired
persons and the young, pre-working-age persons of income in order to appease
their voters in the usual working-age categories.
That is why, appraising the situation country by country, there are always some
in which the situation looks much better than in most others. But which
countries look better tends to shift with some rapidity, as it has been doing
for the last forty years.
Furthermore, as the stagnation continues, the negative picture grows larger, which is when the
media begin to talk of "crisis" and politicians look for quick fixes. They call for
"austerity," which means cutting pensions and education and child care even further. They
deflate their currencies, if they can, in order that they reduce momentarily their unemployment
rates at the expense of some other country's employment rates.
Take the problem of government pensions. A small town in Alabama exhausted its pension
fund in 2009. It declared bankruptcy and ceased paying its pensions, thereby violating
state law which required it to do so. As the New York Times remarked, "It is not
just the pensioners who suffer when a pension fund runs dry. If a city tried to follow
the law and pay its pensioner with money from its annual operating budget, it would
probably have to adopt large tax increases, or make huge service cuts, to come up with
the money. Current city workers could find themselves paying into a pension plan that
will not be there for their own retirements."
But this is the looming problem for every state within the United States who,
by law, must have balanced budgets, which means they cannot resort to borrowing
to meet current budgetary needs. And there is a parallel problem for every
nation within the euro zone who cannot deflate their currencies in order to
meet their budgetary needs, which has meant that their ability to borrow leads
to exorbitant unsustainable costs.
But what, you may ask, about those countries where the economy is said to be "booming" such as Germany and most
particularly, within Germany, Bavaria - called by some "the planet of the happy." Why then do Bavarians "feel a
malaise" and seem "subdued and uncertain about their economic health"? The New York Times notes that
"Germany's good fortune...is widely viewed (in Bavaria) as having come at the expense of workers, who for the past decade
have sacrificed wages and benefits to make their employers more competitive....In fact, part of the prosperity comes from people
not getting the social security they should have."
Well then, at least, there is the good example of the "emerging economies" which have
been showing sustained growth during the last few years - especially the so-called BRIC countries.
Look again. The Chinese government is very concerned about the loose lending practices of Chinese
banks, which seem to be a bubble, and leading to the threat of inflation. One result is the sharp
increase in layoffs in a country where the safety net for the unemployed seems to have disappeared.
Meanwhile, the new president of Brazil, Dilma Rousseff, is said to be disturbed by the
"overvalued" Brazilian currency amidst what she sees as the deflating U.S. and Chinese
currencies that, together, are threatening the ability of Brazilian exports to be competitive. And
the governments of Russia, India, and South Africa, are all facing rumbling discontent from large
parts of their populations who seemed to have escaped the benefits of presumed economic growth.
Finally, and not least, there are the sharp rises in the prices of energy,
food, and water. This is the result of a combination of world population growth
and increased percentages of people demanding access. This portends a struggle
for these basic goods, a struggle that could turn deadly. There are two
possible outcomes. One is that large numbers of people will reduce the level of
their demand - most unlikely. The second is that the deadliness of the struggle
results in a reduced world population and thereby fewer shortages - a most
unpleasant Malthusian solution.
As we enter this second decade of the twenty-first century, it seems improbable that by 2020 we
shall look back on this decade as one in which the "crisis" was relegated to a historical
memory. It is not very helpful to "wish to believe" in a prospect that seems remote. It
does not help in trying to figure out what we should do about it.
by Immanuel Wallerstein
--
Becky Dunlop
Secretary, Fernand Braudel Center
Binghamton University
PO Box 6000
Binghamton NY 13902
http://fbc.binghamton.edu<http://fbc.binghamton.edu/>
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