Great Depression II: Machiavelli's Advice to Obama 19 comments
an article to
-
Font Size:
-
Print
- TweetThis
Good morning Mr. President!
I have been in this business for 500 years so I know a thing or two. As a good politician your first job is going to be downsizing expectations to something closer to what the US economy can deliver.
Let us face reality, the US presidency is not all that powerful in the domestic sphere. It is only as commander-in-chief that you really have clout overseas. Unfortunately, the reality of democracy is that you have to promise a great deal more than you can possibly deliver to get elected.
Therefore, your first step must be to avoid doing terribly much. Let the economy crumble - which is also short-hand for economic adjustment - but be sure to make plenty of speeches pinning the blame on the previous administration.
Stimulus plan
In the meantime, you can announce the largest economic stimulus plan in history to remind folks that you are in the top job. Then as the wheels of capitalism turn and the economy recovers, you can claim all credit for this success, and prepare your re-election campaign.
But whatever you do, do not try to fix everything in your first 100-days. Let a US auto company or two fail. Let the stock market tank. Do not try to bailout every spendthrift bankrupt person or bank in the state of the union, allow people to take some responsibility for their actions.
It is a question of talking left while thinking right and allowing the magic of markets and capitalism to sort out the mess that excessive borrowing and poor central bank policy has led us into.
Keep your powder dry for a very necessary and productive plan to invest in US infrastructure, things that will last and produce wealth for the nation, just like the Hoover Dam from the 30s still generates electricity today.
Wall Street Crash
However, that means wiping away much of the Wall Street money machine and starting again with sound finance and investment for the long term. You will not have to take action, its self-destruction is in progress.
On the other hand, the mistake you will almost certainly try to make is to follow the advice of left-wing economists and pump more and more money into the system, producing an inflation like in the 1970s. Then you will be a one-term president like Jimmy Carter, and leave another mess for another generation to clear up.
However, the bond market will eventually collapse, bringing this easy solution to an end, and then it is simply a matter of those in debt having a hard time repaying debts or going bankrupt, and everybody else wrestling with consumer price inflation. Eventually, inflation and devaluation will eliminate debt and the real upturn can start, and realistically that is the road ahead, albeit a long and hard one.
This is the Great Depression Part II. Your task is not an enviable one and your best days are probably behind you. Only gold bugs have any reason to cheer.
Niccolo Machiavelli, Florence, Italy
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Joseph L. Sha...
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
I don't think Obama is spending an inordinate amount of time in thinking about how to slow down the recovery.
As a matter of fact I think that an orchestrated devaluation of the dollar is the end that the government is working towards. They load up with as much debt as possible and then pull the rug out on the bond holders with a devaluation. This is exactly what FDR did in 1933 with the revaluation of gold.
Great advice for all times. The reason we are in this mess is that there were too many bailouts in the past from Chrysler to LTCM.
Not a chance!!!!!!!!
Especially one that has pontificated about 'change' around every townhall.
Remember, politicians really believe that they are relevant.
Also remember; that the greatest profits are made with the 'resurection' that comes after any prolonged fall.
There will be plenty of 'fits-n-starts' to the economy and the market.
Those who have the forsight start taking risk again will be rewarded.
Disclosurers: (ACG), (PSY), (MSY).
You mean like the left-wing administration that is [finally] leaving office? Oh - I forgot Obama MADE Paulson/Bush/Cheyney blow that 1st giant wad of cash, bailing out the guys who were partly/largly responsible for getting this whole thing really rolling. You so smart!!!
On Jan 19 03:44 PM shrivman wrote:
> "On the other hand, the mistake you will almost certainly try to
> make is to follow the advice of left-wing economists and pump more
> and more money into the system, producing an inflation like in the
> 1970s"
>
> You mean like the left-wing administration that is [finally] leaving
> office? Oh - I forgot Obama MADE Paulson/Bush/Cheyney blow that 1st
> giant wad of cash, bailing out the guys who were partly/largly responsible
> for getting this whole thing really rolling. You so smart!!!
> You conveniently left out the part congress played,the biggest part, what a tribe of buffoons<
Unfortunately, they (corrupt buffoons) are still there and even in larger numbers.
spending over 350 billion to "stabilize" financial system: the result: More is needed for the second round of stabilization.
Stimulus plan in the near future: Expect half a million layoffs each month before the stimulus plan is passed and then expect well over half a million layoffs each months for 6 months after the stimulus plan is passed.
Democrats make sure depressions continue until world war. They believe in a nationally planned economy including higher taxes on corporate profits, increased federal government control over the economy and money supply, intervention to control prices and agricultural production, complex social programs and wider acceptance of unions. Interference in the economy help cause depressions, and government efforts to prop up the economy after only makes things worse by delaying the market's adjustment. We need a new political party that favors small business, the middle class and antitrust.
SURVIVAL AND GROWTHIN THE AGE OF
THE GREAT DEPRESSION II
DR. RAJU M. MATHEW
Al Ain University of Science & Technology,
Abu Dhabi, UAE
This is the Great Depression II
The crisis that we are now facing can rightly be called as the Great Depression II of 2009 and it is several times severe than the Great Depression I of 1929. It is not mere a financial melting down; not mere a credit crisis. It is not a recession to disappear within two years. The dimensions and intensities of the Great Depression II are quite different from the early one. Who had brought out the present crisis and where had gone all the money or credits that were available before a few months back, are the two questions that the general public is asking.
Who has brought it?
Almost all banks had been lending five to ten times more than what they had, by the principle of 80/20 or even 10/90 in the age of electronic cash and e-banking or e-commerce, without bothering the repayment capacities of the borrowers that ultimately resulted in the credit crisis and crushing of the stock markets. Further, the heavy expenditure on armaments incurred by almost all nations and terrorist organizations had aggravated the crisis. By siphoning off billions from the accounts of the big corporations and millions of individuals, especially the elderly, the terrorist organizations made money for their operations. Governments borrowed heavily for defense expenditures. Unfair business practices and high level frauds had made every thing very complex.
The Basic Reason
After high and fast growth and booms now it is the turn of gloom, recession and depression. There is a limit for speed and growth. Development based on aggressive marketing, consumerism and globalization, ignoring the vast majority, cannot go on very long. Recessions and depressions are self correcting mechanism for the maladies of a society that strives for unlimited growth at a high speed. No human being or economy can run fast for very long. Now, Information Technology and the Modern Management Techniques do not have any answer for the present crisis. So also are the cases with IMF, WTO and the World Bank that are on the verge of collapse. These are the basic lessons that the Great Depression II teaches us.
Fast to Slow
Everybody has been running fast. Fast life style has become the rule, As a result, nobody has any time even to dream, imagine, think and learn. Knowledge and scholarship have been pushed back for data and information; learning has been reduced into an exercise for scoring of higher grades or marks; reading has been neglected for the sake of scanning and extracting from the internet. Critical thinking and creative ideas or works have been denigrated; superfluous analysis and mimicries have been dominated in the place of sound theories and strategies.
In the fast life, even young men and women could not find time for romance and love making other than fast sex, that too without the botheration of child birth. The greatest causality is the family life, the cordial relationships between wife and husband and between parents and children. Even in religion, faith in God and love of human beings are pushed back by the harsh and rigorous practices and rigid interpretations, without any element of mercy and forgiveness. After a period of fast life, everybody has to go back to slow life.
The Missing Link
The value and importance of rural life, especially agriculture are withered away for the over projection of the glory of urban life and the service sector. But cities could not survive without farming and rural sector. Urban sector is depending too much on the rural sector rather than the villages relaying on cities, because most of the villages could be easily made self sufficient with regard to the basic necessities of life. Service sector of an economy could not flourish when its agricultural or industrial sectors are weak. Information Technology and Modern Management Techniques could not survive in the age of crisis; they are only catalysts for boom when the economy is sound and healthy. They are also the catalysts of doom or bust when the economy of weak and sick.
How Long it will be?
The Great Depression II, now in its first phase, would continue for a minimum period of five years, sometimes ten years, in a more rigorous way. It brings about a crisis of faith in technology, money power, managerial talents and the entire banking and insurance sector, besides the money and stock and share markets and the credit system. The highly acclaimed economic and business wisdoms and formulas are crushed and shattered. A sense of helplessness and even meaninglessness are to dominate in the thinking and behavior of not only of the common people but even the professionals and top executives .Everybody, including the top billionaires and technocrats and the most trusted business houses, has become vulnerable. A good many of them, especially the youth, are in the verge of a suicide or mental brake down.
Gone are the Ages
We have to accept, though painful, that the age of consumerism and the dominance of the service sector over the agriculture and industrial sectors are over. So also is the case with cities over the villages. The ages of malls and supermarkets and multi-billion dollar advertisements and promotional activities are over. The unreasonably over-salaried CEOs and other executives have to become an extinct species mainly for their illegitimate high bonuses coupled with their inefficiency and lack of social commitments. The age of pomp and extravagancy is finished. The inter-sector imbalances with regard to growth and wage or salary structures and the striking disparities with regard to the standard of living of the people of the various sectors are the basic reason for the present global crisis. The undue growth of the defense industries is possible only by jeopardizing all the other industries and sectors.
Who Could Save Us?
Men of ideas, vision, scholarship, theories and strategies and multi-disciplinary backgrounds could alone solve the present crisis. The only agency to deal with The Great Depression II with long term strategies and policies is the Governments that must be strong enough and duly functioning. No single country or government could tackle it; instead, global efforts and strategies are required. The UN must be made strong enough to act globally for dealing with the Great Depression II, chalking out the area of international cooperation. It must act on a war footing; other wise, over 80 per cent of the jobs would be wiped out; thousands of youth would commit suicide or become mentally sick and billions would die out of hunger, epidemics and civil wars.
Urgent Measures
The UN must set up The Great Depress II Relief Fund to help millions of people who lost their job and income consequent on the Great Depression II. UN must make all major religions and other organizations to get involved in these tasks. The Fund shall be operated in such a way that its benefits must reach to all the needy at the right time. The UN and all its Agencies must be ready to take some drastic steps including cutting the salary and other benefits to the extent of 30 to 40 per cent of all its employees, including the top executives and also limiting other expenses. On the basis of the UN guidelines, all government must come forward to put an upper limit for the salary and other perks of all those who are employed, including in the private or corporate sectors. Actors, singers, players, models and people in the show business must be ready to cut their remuneration by taking into account the global crisis. Cost of production as well as cost of living must be reduced at a considerable level so as to ensure the survival of the millions in the age of The Great Depression II.
Ineffectiveness of the Keynesian Strategies
The Great Depression II could not be dealt with a set of conventional monetary and fiscal policies as have been suggested by the Keynesians or the Neo-Keynesians that have become totally ineffective for their over-doze or over-saturation. There is a limit for technology and management techniques, including marketing in this regard. Now what are required are a massive behavioral change and a new way of life, freeing from consumerism and fast life style on the part of the society as a whole. Greater cooperation and mutual support between nations, even at global level, are the only means for survival and growth. All nations must cut their defense expenditure to the extent of seventy to eighty per cent and a joint global strategy against terrorism must be launched as no nation can be made free from it.
Re-creation and Re-learning
The Great Depression II brings life slow. It is the time for re-creation and re-learning and acquiring new knowledge and skills. It is the right time for creative works and above all reinventing the basic human, family and religious values coupled with humanism, spirituality and cooperation. It is the time for baby booms. It is the time for the re-birth of rural and farming sector. People find new meaning in agriculture and country life. Now, it is unproductive to make heavy investments in cities and high technologies and the service sector. Religions have to play a very important positive role by developing mutual respect and cooperation rather than rivalry and aggressive fundamentalism that bring Terrorism as a by-product.
Long Term Strategies
The best long term strategy to deal with The Great Depression II is to invest heavily on the rural and the farming sector and develop their infrastructures along with making heavy investment in education, especially basic science and engineering, social sciences and humanities. Learning must be encouraged by developing libraries and encouraging the overall reading habits of the people. Cost effective Open Learning-- Open Schools and Open Universities or Virtual Universities, even in Science and Technology must be set up or developed to make education reach in the hands of millions all over the world.
These strategies are equally applicable to both the East and West, developing and developed nations, including GCC countries. Nobody, including the young and dynamic American President, Barrack Obama, has a magic stick to deal with The Great Depression II, other than following the above noted term strategies and policies. It is high time to realize that no affluent nation can survive by keeping a large number of nations or people poor and depressed and selling arms and defense equipments and following consumerism. It is high time to realize that terrorism and religious fundamentalism add miseries and sufferings of the humanity and bring hell on earth for they are the weapons in the hands of Satan who wants to bury down the peace and happiness of the humanity.
From Dooms to Booms
When implementing the above policies and strategies, people will come out with savings, innovative ideas, plans and strategies and to put them in agriculture, industry and service sectors within three years. All these will push up economic activities, including global trade and business. International cooperation between developed and developing or underdeveloped societies and nations would emerge so as to ensure a minimum development and standard of living for all. The people will dictate their terms of peace and co-existence over the Governments and the Terrorist Organizations, including aggressive and fundamentalist religions. There is no doubt, the humanity would withstand the crisis and enter in the New Age of Peace and Development for the bold and honest efforts of the youth.
About the Author
Dr. Raju M. Mathew is a strategist and theoretician with strong background in Economics, Cybernetics, Education and Information Science & Technology with long years of experience in teaching and research, including directing a major research project and supervising ten doctoral works. With the publication of his book, ‘Library Resource Allocation’ from England in 1981 he was been recognized as a theoretician and strategic thinker, that made the Netherlands based FID to nominate him as one of the twelve inte3rnational members for its Committee on Research on Theoretical Basis of Information Science in 1983. He formulated two basic theories of knowledge consumption and knowledge production that got published jointly by the FID and the USSR Academy of Sciences in 1985 in their work, ‘Theoretical Problems of Informatics’. Now these theories are known in his name and have become the field for doctoral research.
In 2005, Prof. Mathew proposed Knowmatics and Knowledge Technology as the two Post-Information Technology disciplines for processing and handling knowledge and also set up the International Forum for Knowmatics & Knowledge Technology (IFKT); ifkt.net. Dr. Mathew on 25th Oct. 2008 in his letter addressed to The National, forecasted the fall of oil price to the extent of $ 40 per barrel by the end of Dec. 2008 ,when its price was $78. In his web site: mathewrm.com , in Sept 2000, when IT was in boom, he successfully predicted the Great Crisis of IT within a period of five months and in April 2001, his was the only site on IT crisis. he can be contacted by e-mail: rajoocyber@yahoo.com
SURVIVAL AND GROWTH IN THE AGE OF
THE GREAT DEPRESSION II
DR. RAJU M. MATHEW
Al Ain University of Science & Technology,
Abu Dhabi, UAE
This is the Great Depression II
The crisis that we are now facing can rightly be called as the Great Depression II of 2009 and it is several times severe than the Great Depression I of 1929. It is not mere a financial melting down; not mere a credit crisis. It is not a recession to disappear within two years. The dimensions and intensities of the Great Depression II are quite different from the early one. Who had brought out the present crisis and where had gone all the money or credits that were available before a few months back, are the two questions that the general public is asking?
Who has brought it?
Almost all banks had been lending five to ten times more than what they had, by the principle of 80/20 or even 10/90 in the age of electronic cash and e-banking or e-commerce, without bothering the repayment capacities of the borrowers that ultimately resulted in the credit crisis and crushing of the stock markets. Further, the heavy expenditure on armaments incurred by almost all nations and terrorist organizations had aggravated the crisis. By siphoning off billions from the accounts of the big corporations and millions of individuals, especially the elderly, the terrorist organizations made money for their operations. Governments borrowed heavily for defense expenditures. Unfair business practices and high level frauds had made every thing very complex.
The Basic Reason
After high and fast growth and booms now it is the turn of gloom, recession and depression. There is a limit for speed and growth. Development based on aggressive marketing, consumerism and globalization, ignoring the vast majority, cannot go on very long. Recessions and depressions are self correcting mechanism for the maladies of a society that strives for unlimited growth at a high speed. No human being or economy can run fast for very long. Now, Information Technology and the Modern Management Techniques do not have any answer for the present crisis. So also are the cases with IMF, WTO, ADB and the World Bank that are on the verge of collapse. These are the basic lessons that the Great Depression II teaches us.
Fast to Slow
Everybody has been running fast. Fast life style has become the rule, As a result, nobody has any time even to dream, imagine, think and learn. Knowledge and scholarship have been pushed back for data and information; learning has been reduced into an exercise for scoring of higher grades or marks; reading has been neglected for the sake of scanning and extracting from the internet. Critical thinking and creative ideas or works have been denigrated; superfluous analysis and mimicries have been dominated in the place of sound theories and strategies.
In the fast life, even young men and women could not find time for romance and love making other than fast sex, that too without the botheration of child birth. The greatest causality is the family life, the cordial relationships between wife and husband and between parents and children. Even in religion, faith in God and love of human beings are pushed back by the harsh and rigorous practices and rigid interpretations, without any element of mercy and forgiveness. Materialism dominates over spirituality even in religion. After a period of fast life, everybody has to go back to slow life.
The Missing Link
The value and importance of rural life, especially agriculture are withered away for the over projection of the glory of urban life and the service sector. But cities could not survive without farming and rural sector. Urban sector is depending too much on the rural sector rather than the villages relaying on cities, because most of the villages could be easily made self sufficient with regard to the basic necessities of life. Service sector of an economy could not flourish when its agricultural or industrial sectors are weak. Information Technology and Modern Management Techniques could not survive in the age of crisis; they are only catalysts for boom when the economy is sound and healthy; they are the catalysts of doom or bust when the economy is weak and sick.
How Long It Will Be?
The Great Depression II, now in its first phase, would continue for a minimum period of five years, sometimes ten years, in a more rigorous way. It brings about a crisis of faith in technology, money power, managerial talents and the entire banking and insurance sector, besides the money and stock and share markets and the credit system. The highly acclaimed economic and business wisdoms and formulas are crushed and shattered. A sense of helplessness and even meaninglessness are to dominate in the thinking and behavior of not only of the common people but even the professionals and top executives .Everybody, including the top billionaires and technocrats and the most trusted business houses, has become vulnerable. A good many of them, especially the youth, are in the verge of a suicide or mental brake down.
Gone are the Ages
We have to accept, though painful, that the age of consumerism and the dominance of the service sector over the agriculture and industrial sectors are over. So also is the case with cities over the villages. The ages of malls and supermarkets and multi-billion dollar advertisements and promotional activities are over. The unreasonably over-salaried CEOs and other executives have become an extinct species mainly for their greed, corruption and illegitimate high bonuses coupled with their inefficiency and lack of social commitments. The age of pomp and extravagancy is finished. The inter-sector imbalances with regard to growth and wage or salary structures and the striking disparities with regard to the standard of living of the people of the various sectors are the basic reason for the present global crisis. The undue growth of the defense industries is possible only by jeopardizing all the other industries and sectors.
Who Could Save Us?
Men of ideas, vision, scholarship, theories and strategies and multi-disciplinary backgrounds could alone solve the present crisis. The only agency to deal with The Great Depression II with long term strategies and policies is the Governments that must be strong enough and duly functioning. No single country or government could tackle it; instead, global efforts and strategies are required. No savior will come to save us; we must be our own saviors. The UN must be made strong enough to act globally for dealing with the Great Depression II, chalking out the area of international cooperation. It must act on a war footing; other wise, over 80 per cent of the jobs would be wiped out; thousands of youth would commit suicide or become mad and billions would die out of hunger, epidemics and civil wars.
Urgent Measures
The UN must set up The Great Depress II Relief Fund to help millions of people who lost their job and income consequent on the Great Depression II. UN must make all major religions and other organizations, besides all countries, to get involved in these tasks. The Fund shall be operated in such a way that its benefits must reach to all the needy at the right time. The UN and all its Agencies must be ready to take some drastic steps including cutting the salary and other benefits to the extent of 30 to 40 per cent of all its employees, including the top executives and also limiting other expenses.
On the basis of the UN guidelines, all government must come forward to put an upper limit for the salary and other perks of all those who are employed, including in the private or corporate sectors. Actors, singers, players, models and people in the show business must be ready to cut their remuneration by taking into account the global crisis. This is the only way to cut the cost of production as well as cost of living so as to ensure the survival of the millions in the age of The Great Depression II and thereafter.
Ineffectiveness of the Keynesian Strategies
The Great Depression II could not be dealt with a set of conventional monetary and fiscal policies as have been suggested by the Keynesians or the Neo-Keynesians that have become totally ineffective for their over-doze or over-saturation. There is a limit for technology and management techniques, including marketing in this regard. Now what are required are a massive behavioral change and a new way of life, freeing from consumerism and fast life style, a byproduct of materialism, on the part of the society as a whole. Greater cooperation and mutual support between nations, even at global level, are the only means for survival and growth. All nations must cut their defense expenditure to the extent of seventy to eighty per cent and a joint global strategy against terrorism must be launched as no nation can be made free from it.
Re-creation and Re-learning
The Great Depression II brings life slow. It is the time for re-creation and re-learning and acquiring new knowledge and skills. It is the right time for creative works and above all reinventing the basic human, family and religious values coupled with humanism, spirituality and cooperation. It is the time for baby booms. It is the time for the re-birth of rural and farming sector. People find new meaning in agriculture and country life. Now, it is unproductive to make heavy investments in cities and high technologies and the service sector. Religions have to play a very important positive role by developing mutual respect and cooperation rather than rivalry and aggressive fundamentalism that bring Terrorism, as a by-product.
Long Term Strategies
The best long term strategy to deal with The Great Depression II is to invest heavily on the rural and the farming sector and develop their infrastructures along with making heavy investment in education, especially basic science and engineering, social sciences and humanities. Learning must be encouraged by developing libraries and encouraging the overall reading habits of the people. Cost effective Open Learning-- Open Schools and Open Universities or Virtual Universities, even in Science and Technology must be set up or developed to make education reach in the hands of millions all over the world.
These strategies are equally applicable to both the East and West, developing and developed nations, including GCC countries. Nobody, including the young and dynamic American President, Barrack Obama, has a magic stick to deal with The Great Depression II, other than following the above noted term strategies and policies. It is high time to realize that no affluent nation can survive by keeping a large number of nations or people poor and depressed and selling arms and defense equipments and following consumerism. It is high time to realize that terrorism and religious fundamentalism add miseries and sufferings of the humanity and bring hell on earth, for they are the weapons in the hands of Satan who wants to bury down the peace and happiness of the humanity.
From Dooms to Booms
When implementing the above policies and strategies, people will come out with savings, innovative ideas, plans and strategies and to put them in agriculture, industry and service sectors within three years. All these will push up economic activities, including global trade and business. International cooperation between developed and developing or underdeveloped societies and nations would emerge so as to ensure a minimum development and standard of living for all. The people, especially the young, will dictate their terms of peace and co-existence over the Governments, Religions, Political Parties and the Terrorist Organizations, including aggressive and fundamentalist religions. There is no doubt, the humanity would withstand the crisis and enter in the New Age of Peace and Development for the bold and honest efforts of the youth.
About the Author
Dr. Raju M. Mathew is a strategist and theoretician with strong background in Economics, Cybernetics, Education and Information Science & Technology with long years of experience in teaching and research, including directing a major research project and supervising ten doctoral works. With the publication of his book, ‘Library Resource Allocation’ from England in 1981 he was been recognized as a theoretician and strategic thinker, that made the Netherlands based FID to nominate him as one of the twelve inte3rnational members for its Committee on Research on Theoretical Basis of Information Science in 1983. He formulated two basic theories of knowledge consumption and knowledge production that got published jointly by the FID and the USSR Academy of Sciences in 1985 in their work, ‘Theoretical Problems of Informatics’. Now these theories are known in his name and have become the field for doctoral research.
In 2005, Prof. Mathew proposed Knowmatics and Knowledge Technology as the two Post-Information Technology disciplines for processing and handling knowledge and also set up the International Forum for Knowmatics & Knowledge Technology (IFKT); ifkt.net. Dr. Mathew on 25th Oct. 2008 in his letter addressed to The National, forecasted the fall of oil price to the extent of $ 40 per barrel by the end of Dec. 2008, when its price was $78. In his web site: mathewrm.com , in Sept 2000, when IT was in boom, he successfully predicted the Great Crisis of IT within a period of five months and in April 2001, his was the only site on IT crisis.
Dr. Mathew is on a mission of making the world aware of the impacts and intensities of the present crisis, the Great Depression II of 2009 and persuading the governments and international agencies to formulate correct strategies and policies and implement them to deal with it and make an early recovery from it, other than simply wasting time and money for a series of seminars and conferences. This is not the end of the earth, but the beginning of a New Dawn for the young, provided they are ready to act. Dr. Raju M. Mathew can be contacted by e-mail: rajoocyber@yahoo.com. Some of his other works are given in his site: ifkt.net
(This is a revised one)
OF THE GREAT DEPRESSION II
Dr. Raju M. Mathew*
Age of Booms
OPEC had enjoyed all the pleasures of the boom for a very long time and that made them to become the richest bloc of the world as oil price jumped to more than $100 and to some extent to $ 147 from a reasonable price of $ 40 per barrel. As a result, their unspent oil reserve funds exceeded in terms of several trillions, far ahead of the entire wealth of over 70% of the developing countries of the world.
Consumerism
OPEC have become super-rich with their over priced oil supplied to not only the industrialized countries but also the less developed countries of the world. OPEC has emerged as the biggest monopoly so as to dictate the price of oil as long as demand was there. OPEC have become very effective to protect the interest of its members, even challenging the very existence of the oil importing countries and thereby the global economy. OPEC have played a strategic and hidden role in bring the present global crisis, the Great Depression II by squeezing wealth of several nations and making them poor for the sake of their greed, affluence and promiscuous consumption. As a result, a large number of the OPEC citizens have been reduced into mere slaves of consumerism. Some of the members of OPEC have turned corrupt and inefficient and prodigal too.
Goose that Lays Golden Eggs
To OPEC, all oil importers and consumers are mere goose laying golden eggs. They are too wise enough to kill the goose, the oil importing countries by cutting oil production and creating an artificial price increase. They know that no nation can afford to buy oil for more than $ 40 when the entire world is in the grip of the Great Depression II. The world has more cars than what it needs. Without burning so much oil and making so much travel and even paying one third of the salary for the CEOs, the world economy can function more efficiently than ever. For the very survival of the humanity, we have to reduce our oil consumption and reduce the cost of production and cost of living to the extent of 40 to 60 per cent.
OPEC recently fixed the fair price of oil as $78, for they want to make fresh investment. That means, for a very long time, they plundered the world community by charging a very high price over the fair price. Further, they have been trying to convince the world that the present crisis is only a short term one and for the sake of future oil supply, the minimum price must be fixed at $ 78. That means, they want to continue their old life style and are not prepared to share the burden of the present crisis but to transfer it on others.
The Great Depression II
But the world is under the spell of the Great Depression II, more sever than the previous Great Depression of 1939. The present crisis is the creation of a group of rich countries of the west, besides the OPEC for their uncontrolled greed and consumerism. Globalization and Information Technology have been designed as the tools by which the entire world has to bear the pain and sufferings of the Great Depression II. Of course, the greatest victims are the poor, especially of Asia, Africa and Latin America. However, the benefits of the earlier booms had never been reached to the poor but amassed by the rich and powerful, including OPEC.
Collapse of the Global Economy
The global economy is one the verge of a collapse and it cannot be saved by some stimulus packages created with very huge debt or deficit, protecting consumerism. It would aggravate the crisis within one year after some initial signs of recovery in one or two sectors. Most of the stimulus packages are designed on the assumption that the crisis will be over within one year. But, it must take at least five years for the global economy to recover from the Great Depression II because it is so weak and sick and its wounds are so deep. The global economy is totally imbalanced and disintegrated, designed to work against the poor nations. The so called rich people or nations too are getting poor because the earth does not have the adequate resources to afford their consumerism and affluence.
OPEC Too Must Share the Burden
It is a fact OPEC has to make fresh investment for the future supply of oil. Of course, they should have to make the investment by using their own reserve funds or the accumulated profits made by selling the over priced oil even to the developing and poor countries of the world. The fresh investment could be made without transferring the pain on the shoulders of the entire world. The member countries of OPEC must be prepared to control their extravagancies and spendthrift mentality by making themselves free from consumerism. If the world as a whole is suffering from the Great Depression II, OPEC too must be prepared to share the pain and to express their solidarity with the rest of the people. Other wise, OPEC would be treated the enemy of the rest of the world. OPEC must come out from its thick shell to save the global economy and the suffering millions with viable proposals rather than the confined to the profit motive and amassing the wealth of the world.
* This is the fourth series of writings of on ‘The Great Depression II’ by Dr. Raju M. Mathew. His previous writing can be found if a search is made under ‘Dr. Raju M. Mathew’ or ‘Great Depression II’
About the Author
Dr. Raju M. Mathew is a strategist and theoretician with strong background in Economics, Cybernetics, Education and Information Science & Technology with long years of experience in teaching and research, including directing a major research project and supervising ten doctoral works. The Netherlands based FID nominated him as one of the twelve international members for its Committee on Research on Theoretical Basis of Information Science in 1983.
Dr. Mathew formulated two basic theories of knowledge consumption and knowledge production that got published jointly by the FID and the USSR Academy of Sciences in 1985 in the work, ‘Theoretical Problems of Informatics’. Now these theories are known in his name and have become the field for doctoral research.
In 2005, Prof. Mathew proposed Knowmatics and Knowledge Technology as the two Post-Information Technology disciplines for processing and handling knowledge so as to develop knowledge industries. He is the Founder President of the International Forum for Knowmatics & Knowledge Technology (IFKT). Some of his works are available in the site: ifkt.net
Dr. Mathew is on a mission of making the world aware of the impacts and intensities of the present crisis, the Great Depression II of 2009 and persuading the governments and international agencies to formulate correct strategies and policies and implement them urgently to deal with it and make an early recovery from it, so as to save the lives of millions, especially the young. Dr. Raju M. Mathew can be contacted by e-mail: rajoocyber@yahoo.com.
THE HIDDEN THREATS
Dr. Raju M. Mathew
Al Ain University of Science & Technology
Abu Dhabi, UAE
Following the American lead, lunched by President Barrack Obama, almost all governments, including China, India, Kuwait, the UAE and several other countries have either introduced or are on the process of introducing economic or financial stimulus packages to make an early recovery from the global economic crisis, that they prefer to call ‘Recession’. But they are forced to admit that it is more severe than the Great Depression of 1929. Then, of course, it must be the Great Depression II of 2009, lasting several years to recover. A series of global summits to deal with the crisis are under way.
Basic Assumptions
However, almost all packages are based on the following assumptions:
1. The present crisis is a recession to disappear within one year or at the maximum two years, as it is only a short term phenomenon.
2. It is basically a problem of credit crunch.
3. The market is flooded with unsold industrial and consumer products.
4. Speedy recovery could be made by injecting more funds either by debt or deficit financing.
5. By ensuring easy credit and supporting banks and also one or two major industries, the crisis could be averted and recovery could be made soon.
Over Simplification
The present Global Economic Crisis has been over simplified or presented as a mere financial meltdown or recession and it could be dealt by making available more funds to the consumers so as to create new demand for all the unsold items and thereby revive the market and ultimately bring back the boom. The required fund could be raised by either deficit financing or public debt, besides borrowing from other sources that could form the basis of further credit. All the assumptions are wrong with out any basis.
Wrong Diagnosis
But the very assumptions of all these recovery packages are conceived without the backing of any sound theory and strategy or even history. Both the experts and rulers ignore the truth that the basic problem is not of the credit but of income and earning of the people to create a sustained demand and ensure reasonable saving and investment. If the newly created funds are flooded to the market, of course, most of the unsold items will be sold out and after that people may not have any more money or credit with them to make further purchases. That leads to another great catastrophe to appear more rigorously than ever.
Boom: Real or Illusion?
It is high time to re-examine the very truth and foundation of the so called boom that the global economy had undergone with the unbelievable availability of free credit for all. Almost all banks had offered unlimited credit, ten or twenty times over their liquidity or reasonable limit, that too without bothering the repayment capacities of the borrowers. For amassing very huge amounts as bonus, the bank men and CEOs had prepared inflated or fabricated statements about their assets, liquidity and profit without any basis by cleverly manipulating accounts, e-banking, e-credit and e-commerce. On the strength of the easily available credit cards and e-money, consumers had rushed to the market to buy even unwanted items, without bothering much about their real income and repayment capacity. That had made an illusionary boom, without the backing of real earning and actual purchasing power. In other words, the boom was not a real one.
Simple Economic Truth
No economy can survive long with mere credit based purchases without the backing of the real income and earning besides adequate saving and investments. Income and earning are very much related to resource allocation efficiency, over all productivity and competitiveness. Profitability depends upon demand and cost of production as savings depend upon thrift, earning, cost of living and taxation. Without a reasonable savings, no investment and innovation could be made.
It is equally important for a healthy economy to keep its cost of production and cost of living at the bottom. Further, there must be inter-sector balance with regard to growth and earning between various sectors, as all the sectors are equally important for the healthy survival of the global economy. The greatest blunder that we committed was giving dominance of Service Sector over Agricultural and Industrial Sectors that lead to the collapse of agriculture and then industries. The very reason for the present global crisis that has grown to the extent of the Great Depression II is the deliberate denial or rejection of the basic economic truth committed by all the economic and business players, including governments and international agencies.
Consumerism
The rate of consumption is not a true index of the soundness of an economy. Some times it shows the intensity of illness of a weak economy. If there is no hope or future, people or nations may spend every thing at the height of desperations, including for defense expenditure and terrorism . It can be seen that in the entire history of mankind, the west and the newly rich regions spend trillions just for consumption for the last five years on the wrong belief that spending or consumptions lead to economic boom. This is the basis of Consumerism and Modern Marketing.
The unlimited spending on consumption drains away the entire saving and even dwindles the wealth of nations and individuals and turned everybody debtors. If governments thrive on deficit financing and individuals and families live lavishly and spend on credit, an economic collapse or a Great Depression is inevitable, as nobody can prevent it. In short, Consumerism hjas emerged as the greatest threat of humanity in the twenty-first century, as it begets Materialism and Terrorism besides Greed, Corruptions and Frauds.
The Hidden Threats
The stimulus packages so far announced are based on wrong or improper assumptions without taking into account the simple economic truth. Credit and banking have no existence or future if the whole economy is weak and sick. No stimulus package is effective or successful if it rejects the basic economic truth. The package must be aimed at improving the very foundation and health of the economy. Other wise, the packages with shorter objectives of selling out the unsold items in the market that too based on credit, will be self-defeating and bring out further crisis more rigorously, making the entire world suffer more and making future generations more debtors.
Global Strategy
There is no short cut to solve the crisis other than putting the economy on a sound basis by improving the income and earning of the people besides their productivity and efficiency. In other words, the actual purchasing power of the people, even without the backing of credit, must be improved tremendously along with cutting the cost of production and cost of living, so as to ensure sustainable saving and investment. In other words, consumerism must be buried down at any cost for the very survival of humanity. Inter-sector and inter-regional imbalances must be rectified. It is a blunder to give too much faith or emphasis on Information Technology, Modern Management Techniques and the Service Sector. Since the problems are global in nature, their solutions too must be global. No country or people should be left in the efforts from a speedy recovery of the illness of the global economy.
It is high time to adopt a mature and balanced approach towards consumerism, marketing, credit, e-banking and e-commerce besides minimizing oil or energy consumption, development based on tour and travel and automobile. The world has more cars than it actually needs; we are burning more oil than our environment could afford and people are traveling more than what is needed for the wrong or mistaken logistics of their stay and work. Because of aggressive consumerism and marketing, just 8 % of the world population spend and consume as much as the rest of the world.
The wage and salary structure, including bonuses must be restructured so as to ensure some reasonable balance between agricultural, industrial and service sectors and between industries and services. Unreasonably high salary, bonuses and profits in some sectors or firms lead to greed, extravagance and the associated crimes that would affect their own very efficiency and survival.
UN and other intergovernmental and non-governmental agencies must come together to chalk out global strategies and policies to deal with the Great Depression II. The major religions of the world must play a pro-active role in minimizing the sufferings of the world population rather than spreading hate and revenge leading to terrorism.
(Note: This is the fifth series of work on the present global economic crisis under ‘Great Depression II’ by the same author).
About the Author
Dr. Raju M. Mathew is basically an economist and a strategist and theoretician with strong background in Cybernetics, Education and Information Science & Technology with long years of experience in teaching and research, including directing a major research project and supervising ten doctoral works. Dr. Mathew formulated two basic theories of knowledge consumption and knowledge production that got published jointly by the FID and the USSR Academy of Sciences in 1985 in the work, ‘Theoretical Problems of Informatics’. Now these theories are known in his name and have become the field for doctoral research.
In 2005, Prof. Mathew proposed Knowmatics and Knowledge Technology as the two Post-Information Technology disciplines for processing and handling knowledge so as to develop knowledge industries. He is the founder president of the International Forum for Knowmatics & Knowledge Technology (IFKT). Some of his works are available in the site: ifkt.net
Dr. Mathew is on a mission of making the world aware of the impacts and intensities of the present crisis, the Great Depression II of 2009 and persuading the governments and international agencies to formulate correct strategies and policies and implement them urgently to deal with it and make an early recovery from it, so as to save the lives of millions, especially the young and the poor. Dr. Raju M. Mathew can be contacted by e-mail: rajoocyber@yahoo.com.
THE GLOBAL ECONOMIC CRISIS
DR. RAJU M. MATHEW
Global Economic Crisis
The world is under a great economic crisis. For the conventional economists it is only a Recession and not a Depression at all, for their partial analytical techniques, over-simplified models with unrealistic assumptions and over emphasis on data. It may take at least five years for them to realize that it would be a Great Depression and by that time it may be over. When Cybernetics is employed for the study of the working of the global economy as a whole with multi-sector approaches on the basis of the deeper understanding of Political Economy, we are forced to admit that this is not a simple Recession, but the Great Depression II that requires not only Economic Stimulus but Ethical or Spiritual and Political Stimulus Packages too to recover.
Dreadful Consumerism
Not only the capitalist or developed countries but also the Socialist or Islamist or Less Developed Countries too are brought under the Great Depression II. It is not only Islam or Christianity but also Communism could not save the world from Consumerism and the unethical or immoral business practices that are hundred times deadlier than Materialism or even Atheism. Consumerism has emerged as the greatest threat to the very existence of Capitalism for it drained away saving and investment, that constitute Capital without which there is no Capitalism.
The corporate culture has corrupted almost all religions and communist movements and made them the victims of Consumerism. The corporate culture made everything expensive and unaffordable for the majority for it aims only ‘the chosen few’. It has speeded up the process of the demise of spirituality and moral values. Eroding of the basic spiritual values has paved the way for greed, fraud and corruptions at all level. The present crisis is the result of the total moral, ethical and spiritual failures rather then the economic and technical ones.
Animal Farms
Both Capitalism and Socialism are built up with thrift, saving, investment and allocation of resources, production and distribution of wealth and income and treating consumers as rational human being and above all giving emphasis to social well being. That is why; both Islam and Christianity could survive or flourish under Capitalism or Socialism for they too adhere to hard work, thrift, investment and social well being.
Islam and Christianity never advocate theft and looting or plundering, though the Israelites had committed theft, looting and plundering and devised formulas for sharing the loot, including women, especially virgins even to the priests and the God during the time of Moses as stipulated in the Chapter 31 of Numbers of the Old Testaments. On the other, Consumerism is an ideology of harvesting without sawing and nurturing just like looting and plundering. It treats human being as mere irrational animals for consumption without any concern for individual and social well-being.
‘Party Animal’ is a very popular word under Consumerism as it reduces men and women just like animals for consumption with animal behaviors besides treating them, especially women as consumable products to be bought though for a short period. The Corporate Culture with the powerful weapon of Consumerism aims at making the entire globe, ‘a very big animal farm’ with men, women and children.
Terrorism is a strategy of Consumerism to uproot the very foundation of Islam and Christianity besides Capitalism and Democracy. Unfortunately, Islam is the hardest hit and the greatest victim of Terrorism that aims at burying down it. Unless Islam, especially the peace-loving and spiritually sound Muslims could contain the onslaught of Consumerism and Terrorism, it would be vanished for ever, as a very big human tragedy.
Spirituality and Human Values
In the demise of spirituality and basic human values, religions turn towards rigorous and harsh customs, devotions, stereotype prayers and fasting, like a military drill, without any element of love, mercy and forgiveness. All these factors acted as catalysts for religious fundamentalism. A big vacuum in spirituality of religions paved the way for terrorism. The youth, especially the poor, are indoctrinated and getting believed that the greatest virtue is to become martyrs and to die and kill for their religions for they are rewarded with all the luxuries and pleasures of a ‘seven star hotel’ besides the service of seven virgins in the Paradise after their martyrdom. Sex, drugs and money are indiscriminately administered to them as the immediate rewards for their loyalty and commitment.
Their Failures
Islam and Christianity, the two major organized world religions, have miserably failed, in practice, to imbibe the basic moral, spiritual and ethical values to the humanity. After embracing the corporate culture, they have been rivaling each other in spreading across nations and adhering to the rigorous religious practices. Their champions or leaders have become as materialistic as the ancient Epicureans.
Because of their warring or quarreling factions and their quench for pomp and acquiring more and more material wealth, almost all religions miserably failed to lead the world in the realm of spirituality and to inculcate minimum ethical and human values to the society. Most of the sects or cults in Hinduism and Buddhism also assumed the role of big multinational corporations with assets in terms of trillions, using sophisticated technologies.
The Ideology of ‘the Chosen People’
Both Islam and Christianity claim that they are the chosen people of their God. The ideology of chosen people was originated at the time of Abraham and developed into violent and aggressive form during the time of Moses, after the Exodus, on the march of Israelites towards the ‘Promised Land of Canaan’. The Bible gives a detailed account of the kings or peoples who were looted, raped, captured or exterminated in their hands.
When a particular tribe or race or religion claims that it is chosen by the God, it undermines other tribes or races or religions and subscribes to the deadly ideology of superior race or tribe or religion that would become the basis of Fascism as had advocated by Adolph Hitler. As a result, others are branded inferior or even sub-human being so that they could hate or subjugate or exterminate them and thereby they could please their God.
Christianity is a thousand kilometers away from Jesus who taught to make peace on earth and to love and forgive the enemies and to consider all human beings the children of the Loving Heavenly Father. So also is the case with Islam as it is away from Koran that taught to worship the Most Merciful Allah who demands every Muslim to give mercy and care not only to all human beings but also to animals and even trees.
Both Islam and Christianity are corrupted with power, money and Consumerism besides the deadly ideology of ‘the chosen people’ with the right to punish or exterminate the disobedient or men without the ‘official version of the faith’ or men with alien faiths who are branded as ‘Pagans’ or ‘Kaferes’ as the communist are branding their enemies as ‘revisionists’ or ‘imperialists’ for extermination.
For the Just, Loving and Merciful God or Allah, all men are chosen and everybody has an equal right for a decent life just like the people of the OPEC or OECD countries and everybody must observe spiritual and ethical values. Nobody has any right to dominate or exterminate other people. If Islam and Christianity fail to bridge the gap between the rich and poor and to end discrimination between the Black and the White and upheld basic spiritual and human values, at least among their own followers, their very worth and relevance are questioned in the age of the Global Crisis and thereafter. This is the fundamental crisis of both Islam and Christianity, threatening their very existence.
Oil and Cars
Industrialization started with steam powered locomotives and nurtured by the automobile industry that speeded up the processes of urbanization and fast life style besides giving predominance to oil industry. Oil producers and automobile industry started to dictate the entire economies of the world, especially of the western industrialized economies. OPEC has squeezed oil importing nations by charging exorbitant price for oil and amassed the wealth of nations.
The corporate world has effectively employed Information Technology to have a virtual control over the entire globe by e-money, e-banking and e-commerce and spread the corporate culture of greed, fraud and consumerism. Oil, cars and consumerism, originally acted as the catalyst of boom have turned the catalysis of Doom or the Great Depression II. They have drained away the saving and investment habits of the middle class and made everybody debtors and upset not only the balance of economies but also of the Nature.
New Awareness
People are getting aware that for the wrong logistics of their places of stay, work, shopping and entertainment, they have to travel a lot and burn out a lot of oil unnecessarily. . They could have avoided over 60 per cent of their journeys, especially in the age of advanced communication technologies. By a proper use and development of public transportation system, many could have avoided owning cars or traveling in cars. A good majority of business trips are unnecessary or unproductive. ‘Traveling less and less and consuming lesser and lesser oil for the recovery of the economy and for the health of the environment’ would emerge as a major slogan in almost all countries. All these make a very dark future for the oil, automobile and hospitality sectors.
Natural Death
It is time for the Multinational Corporations to have a natural death for their crimes committed against the humanity, especially against the poor nations and peoples. Championing the cause of consumerism, they have even turned a malignant cancer of Capitalism and Globalization besides corrupting Islam and Christianity and other religions. They destroyed the economic foundations of millions of families and virtually wiped out the middle class not only in the west but also in emerging economies with their aggressive marketing strategies.
Selling dreams and fantasies, they dragged everyone into illusions. They have invisible links with various terrorist organizations. They are involved in money laundry, corruptions and fabrication of documents and cheating the shareholders and the general public. For the high salary and bonus besides aggressive marketing, spending billions for sales promotions and thereby making big profits, they keep on going the cost post of production higher and higher as they push up of cost of living too. That is why; no popular government could dare to support or bail out them with tax payers’ money. Let them pay the price.
The Stimulus Packages
It is fact that, none of the stimulus packages, though in terms of several trillions, could save the world from the impending peril and miseries of the millions unless the world saves itself from the dirty hands of consumerism and controls the growth of automobile industry besides reducing oil consumption to the extent of 30 to 40 per cent and turning towards spirituality and ethical values. This is the time for fair business practices and code of ethics for all economic activities besides regulating marketing and advertisements. Ensuring sustainable income along with reasonable saving and investment is the only means for recovery on a long time basis. Otherwise, all the stimulus packages and recovery efforts would vanish within three to six months after making some symptoms of recovery and then aggravate and prolong the crisis to the extent of ten years.
Recovery and Growth
The present global crisis taught the humanity the basic lesson that various socio-economic systems or organizations could not survive without the basic moral and ethical values and some element of spirituality and maintaining the balance of the Nature. It is high time in burying down Consumerism and Corporate Culture besides adopting slow and simple life styles and turning towards spirituality and setting right the imbalances between urban and rural sectors and also between agriculture, industry and service sectors and the different regions of the world for the very survival of humanity. Humanity could not afford to pay so much high salary and bonus in terms of several millions to the CEOs and Managers and to allow the traders and business people to make such a huge profit within a short span of time. Cost of production and cost of living must be put back at the minimum for sustainable development.
It is a great crime against Humanity and the Nature to burn out so much oil and generating so much heat and sound from the speeding millions of cars and driving away the millions from farms and rural life to the cities. It is high time to redefine the very meaning of development and urbanization especially when the entire humanity is under threat and peril. The fruits of development must be reached in the hands of all people, sparing none on any ground. Then only we could bring out a real recovery and attain sustainable growth.
(This is the seventh series of work on ‘The Great Depression II’ by the same author and prepared on 20th April 2009).
About the Author
Dr. Raju M. Mathew is an economist, a strategist and theoretician with strong background in Cybernetics, Education and Information Technology with long years of experience in teaching and research. He has so far supervised ten doctoral works, including the basic approaches of Hinduism, Buddhism, Christianity and Islam towards knowledge, economy and spirituality.
Dr. Mathew formulated two basic theories of knowledge consumption and knowledge production that got published in 1985 and appeared in several languages. Now these theories are known in his name and have become an area for doctoral research. In 2005, Prof. Mathew proposed Knowmatics and Knowledge Technology as the two Post-Information Technology disciplines for processing and handling knowledge so as to develop knowledge industries.
He is the founder president of the International Forum for Knowmatics & Knowledge Technology (IFKT). Some of his works are available in the site: ifkt.net.
Dr. Mathew is on a mission of making the world aware of the impacts and intensities of the present crisis, the Great Depression II of 2009 and persuading the governments and international agencies to formulate correct strategies and policies and implement them urgently for an early recovery, so as to save the lives of millions, especially the young and the poor. Dr. Raju M. Mathew can be contacted by e-mail: rajoocyber@yahoo.com.