United States And The G20 In Cannes

By Chandrashekar (Chandra) Tamirisa, (On Twitter) @c_tamirisa

Flattr this

American economy is on track to full employment of between 4 and 5 per cent by 2022. Unemployment fell by 0.1 per cent to 9 per cent in October 2011. The Federal Reserve is committed to expanding money supply at a zero interest rate through mid-2013.

Domestic investment and consumption have risen in recent data but not enough to create the 8 million jobs which have been lost. Creating 8 million jobs takes a long time especially when investing in foreign markets and commodities is attractive. The unemployment situation has remained the same, on net, since the fall of 2008.

A minority American view, including mine, is that all the lost jobs can be replaced sooner than 2022 if the root causes of the financial crisis are addressed and that the opportunity to do so has been missed. That financial regulatory reform is a failure because it is biased to the status quo.

The mainstream opinion in Washington, spearheaded by former president Bill Clinton’s entire economic and foreign policy teams, including Alan Greenspan and Henry Kissinger, serving this president, is that economic policy makers do not believe that there is anything fundamentally wrong with American capitalism despite its critique by Europe, Russia and China. That this crisis can be ridden out and patience is needed for the money supply which fully recapitalized the losses of the global American banks, 100 cents on the dollar, as supported by Nobel Laureate Edmund Phelps in 2008, to work through the system.

Government debt, therefore, will continue to rise after 2013 as the boomers retire to pay for their health and retirements because the expectation is that as the economy gradually recovers debt will diminish over time as a percentage of the national output and that, therefore, government spending and size can remain as strong as American capitalism.

All financial institutions have recovered. The stock market is rising. But investment to make real things for real people is not. Most dollars being domestically invested are to increase US exports per the president’s export goals to compete with Germany, Japan and China, because the dollar is cheap and can remain so for the foreseeable future until 2022.

To safeguard the fledgeling American recovery from European woes, The Whitehouse and the Federal Reserve are willing to continue to bailout the exposures of American financial institutions on Wall Street to the countries which use the euro as the common currency.

With attention of the financiers drifting across the Atlantic because money is easier to earn without doing real work for it by investing in the country, and because coal, oil and natural gas constitute the largest percentage of energy consumption, there are few places where the money can go in the country other than to where more people reside in the rest of the world such as China, India and Brazil.

There is not sufficient enthusiasm among either monetary policy makers or legislators to forego any more dollars from the Treasury’s tax earnings than they have to to provide incentives or change regulations, especially after the Solyndra debacle. Sustainability, therefore, is being seen as a high risk investment in the United States because it questions, by implication, the fundamental structure of American capitalism for its believers and threatens their political legacies.

At a time when newly industrializing countries, optimistic about their living standards, are looking ahead into this century with plenty of domestic cheap labor and American dollars flowing into their financial markets, it only makes a lot of sense for the likes of Brazil, China, India to make alternative fuels, windmills and solar panels (China being the largest global supplier) and to invest not only in alternative energy and ways of life in Asia, such as in energy, housing, transportation and information and communication technologies, but in their innovation including clean coal through global consortia such as FutureGen 2.0.

3 billion people in Brazil, China and India combined need an “All Of The Above” energy strategy, not the United States of America. We can afford to buy oil and alternative energy products with our dollars, giving the emerging markets enough time to become industrialized. Our oil dollars can help pay for the future of Middle East and North Africa (MENA) as in Masdar in the United Arab Emirates to let the recent “Arab Spring” set in.

Alternative energy imports from China, for example, would be cheaper in spite of the cheap dollar than creating expensive American jobs. More Americans can attend community colleges and learn trade skills as Germans do to provide local labor than attend expensive American colleges, Harvard or a state university, where tuitions and wages always rise immune to the economic cycle, to innovate.

It is better for the rest of the world, eager for a better way of life, to move along than it is for it to work with the United States to change America’s ways of ever higher global resource consumption using America’s education and technology, especially when American dollars are willing to finance their development.

Permanently higher unemployment supported by a larger welfare state as in Europe is, in fact, to the liking of a majority of Americans. Americans no longer wish to work hard after the feel good ‘90s.

America’s comparative advantage is Wall Street and the Federal Reserve, not the productive capacity of its people who are more inclined to keep America America – Judeo-Christian (Jewish and Christian) and white – than to work hard and play by the rules. Letting in more foreigners of other faiths and hues, especially from Asia or for that matter from below the Rio Grande could be increasingly problematic, especially as the economy recovers to full employment. Xenophobia and racism are an ineradicable aspect of being American, from Columbus and the Mayflower when the land was occupied by the European immigrants to today when the land has been won.

White Jews and Christians, male and female, need the jobs first to live better before Blacks, Hispanics and Asians. The president, as evidenced in his 2011 State of the Union address, echoed this socially protectionist sentiment of his electorate by speaking about the specter of China and India in relation to the economic competitiveness of America.

The challenge for American economic management from 2007 through 2029 by way of 2013 is historically very interesting for observers of long cycles. In 1907 the crash was mediated by J.P. Morgan. In 1913 the Federal Reserve was created to mitigate the effects of crashes if not to altogether avert them. But 1929 happened anyway to bring  about the Great Depression and the rise of the American welfare state.

Ben Bernanke and the administration team of Great Depression scholars, all born into a generation after the economic catastrophe and having learned it in books in a classroom, are approaching the year 2013, the 100th anniversary of the establishment of the Federal Reserve after the crash of 2007, in practice. 2029, as 1929 did, will happen anyway because another depression in America in 2029 is to the advantage of the rest of the world, including Europe. Missing that opportunity for them would be bad geopolitics.

Humbling the American behemoth, its military and economic machine which rose to global power after World War II when the rest of the world was in ruins albeit due to its own making, is in the interest of all. This time around, an American depression, again albeit due to its own making, will not cause another world war for America to recover from it unless the United States of America, in spite, blames its woes from 2007 through 2029, despite ample warning, on the rest of the world with its nuclear weapons and all, for this is the American character.

America mired in wars around the world and then going to war in retaliation over its depression after 2029 is an outcome to anticipate for the rest of the G20 in Cannes. More importantly, the rest of the world must guard itself from the intent of the United States to drag it into a war with itself in a projection of the American civil war onto the 21st century world order.

The rest of the world does not want war. We do, Bush or Obama, because war has brought economic growth to the United States from the days of the Civil War to these days of Iraq and Afghanistan and the coming days of Iran.

That, however, will not be the End of Days if it is the end of America.


About Chandrashekar (Chandra) Tamirisa

This entry was posted in Economics, Politics, Transformations LLC, World and tagged , , , , , , , , , . Bookmark the permalink.

3 Responses to United States And The G20 In Cannes

  1. Ml Hayes says:

    How can 300 million out produce 3 billion 10:1 year after year decade in and out? If you attribute this to war then you have to discount the wars that the other economies have engaged in to make the comparisons.

    There is not any magic about this and there is no need to vilify the Americana as the sole cause of poverty in the world. Much of the problem is a matter of perception or the lack of visibility into the economies of closed states like China. The India’s and Brazils of the world are open for all to see and what we see is pure greed on a scale that is numbing. What often passes for national pride is propaganda that tries to shift the blame for disparities in wealth across international borders so as to make a case for displaced hate.

    For example, the Iranians hold a holiday demonstration to commemorate the U.S. hostage taking and reaffirm the official anti-US stance. However, the Green Revolution (that really launched the 2011 Arab Spring Revolutions in multiple nations), was rightly in opposition to their theocracy ruling the nation and stifling the ambitions of the Iranian people. The economic impact of the Iranian opposition to Western influences is negligible without the consistent opposition to the existence of the State of Israel. Most other nations would hardly care one way or the other, but this refusal to work out some form of compromise is a dual sin on both sides of the argument.

    Nothing in Judaism or Islam warrants the continued animosity and the Christian influence is more absolution than it is true brokering of peace. It simple allows for divisions in those nations that otherwise would not even give the idea any consideration.

    What many Middle Eastern nations seem to forget is that their global impact on trade is closely related to a resource of relatively limited quantities. Nations such as the United States and Russia, which have their own reserves, need not fear one-product economies and theocratic dictatorships because those are self-limiting systems that will always need to monitor their internal dissent to remain in power.

    The pain of economic collapse may not be avoidable in a purely capitalist economic system, but the expectation of rebound offers a hope that few other systems now in practice can match. Monarchs and dictatorships tend to stagnate in a similar but more violent manner. The Iranian response to the Shah will eventually be repeated as a conditioned response to the Mullahs in charge. If these holy men are as wise as they suppose, they should account for the transition in some manner that supports their religious tenets to retain the control of the judiciary while abdicating that of the executive and the legislative. The merchants and the businesspersons of the nation will be thankful.

    It is easy to look back and draw a conclusion from history that fits a perception of what we want the future to look like. Americans want a peaceful future, but we have allowed out politics to be too influenced by the ambitions of multinational corporations. Some understand and fear the isolationist and paranoia that accompanies such nationalistic notions. The United States cannot just try to turn back the clock. The realities of global changes in climate and economics will keep us on point for far longer than most give us current credit.

    China is not only reluctant to take a role in leadership, she is unable to provide an example that anyone wants to emmulate. The American example may no longer be near ideal, but the alternatives are closer to Western ideals than those of the Communist genera.

    • 300 million Americans out consume the rest of the world. Consumption in the United States is about $10 trillion per year. That which is consumed is also produced and vice versa and you are correct because it is the basic macroeconomic cycle. The United States consumes $10 trillion because it lays its claim to other countries’ resources, including labor and commodities, while saving its own since Teddy Roosevelt at the turn of the last century. People in other countries do not consume as much and, therefore, do not produce as much for themselves. When the cycle is closed, consumption and production is all internal. When the cycle is open, consumption is internal, and production is spread out around the world. So Americans in a global economy, out consume more than out produce but lay claim to other peoples’ production. That was one of the implications of my article. War is a source of government investment. The Pentagon’s budget is $1 trillion out of $4 trillion spent by the government annually. Investment in the military creates high-wage jobs both because of government investment and government consumption. Why military power? To claim foreign resources including oil and minerals. This is the reason for the wars in Afghanistan (Lithium in batteries and rare earths), Iraq and Persian Gulf (oil and gas). Race and religion are rationalizations of geopolitical motives.

  2. In puritanical America, the meaning of “hope” is its antithesis: pestilence. In American colloquialism it is called “stringing” someone “along” until they are “hung out to dry.” The rest of the world should, therefore, trust the United States only if the outcomes to advance their interests materialize.

    Lesson for the G19 in Cannes: “If Obama or Clinton raise your expectations hold them to it. Schnucks. You are dealing with a country made not by innovation but by traveling salesmen who always knew how to leverage others’ innovation.”

    America makes promises it delivers either through subterfuge or power, especially when held accountable. The only American innovation is its founding, besides the telephone, the airplane and the internet. All else came from elsewhere, including the industrial revolution.

    In a political-economic system where material success is predicated on utilizing others’ human capital, social attitudes determine success. Racism prevails whatever your merits in leadership. So, America the schnuck, must be careful with Indo-Aryans in its own backyard, especially the Brahmins.

    Four Forces and the Fifth Horseman. https://ctamirisa.wordpress.com/2011/02/13/the-four-forces-and-the-fifth-horseman/

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s