Two Economies, And One Must Die 28 comments
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With Editing by Mark Rayfield
There are, in fact, two economies at work in the world, and both are global. One must die, as it undermines the health and robustness of the other. It is, truly, a parasitic economy that has evolved as a direct result of business influences, particularly from very large capital management firms, the biggest hedge funds, banks, and insurance companies. Influences at a level so great and all-pervasive that it is able to demand and be granted regulatory advantages to enhance the efficiency with which it achieves its ends.
I’m talking about the Real Economy, where the savings of individuals are made available to enterprises which produce goods and services as investments, versus the Casino Economy, wherein those investment dollars are diverted to become the basis for huge leveraged capital positions that engage in gambling on a massive scale, whose sole objective is propagating those massive capital positions into even larger ones.
Average citizens, representing 95% of the population of most countries, are engaged in the Real Economy, where they occupy some position in the production and procurement of goods and services, in capacities ranging from production to finance and management. Their incomes are typically modest, their consumption of goods equally so, and their reliance on a healthy Real Economy absolute.
The purveyors of the Casino Economy, on the other hand, typically engage in mathematical acrobatics and arcane sciences such as perception management and political influence to gain advantage in whatever game of capital chance they have chosen to bet upon. Their incomes are outlandish, their consumption of resources copious, and their reliance on the Casino or Real economy ambiguous, as these individuals are typically highly adaptable, opportunistic manifestations of humanity who can easily find new opportunities and act in a wide variety of capacities. (I know this because I used to be one).
Their losses are transferred to the Real Economy, and their rewards are extracted from its Real Capital base.
It is the diversion of dollars from the Real Economy, where they are generated from the production and sale of goods and services, and have historically been re-invested in the Real Economy to maintain a robust level of growth, into the Casino Economy, that has fundamentally undermined the integrity of the Real Economy upon which the majority of us rely, and has subsequently diminished the ability of that Real Economy to sustain the large majority of us.
With the advent of the Financial Crisis, the real capital that is exponentially fractured into credit to create Leverage Capital for the Casino Economy has now been leveraged injudiciously into unsustainable ratios in excess of 20 to 1, and in many cases, illegally, so that even the Casino Economy is now in danger of collapsing onto itself, thus destroying not only the Leverage Capital that it created, but a great deal of the underlying Real Capital as well. This is accomplished through the forced revaluation of Real Assets due to the collapse in demand, and the complete stall of the capital velocity in the Real Economy that keeps these assets moving and in demand.
We have less Real Capital available to the Real Economy moving at highly diminished velocity because the Real Capital is being pulled out of the system by the Casino Economy minority, leaving behind only the Leveraged Capital and the assets by which they are backed. This tiny minority of rapacious human beings is sucking the life blood out of the Real Economy, and threatening to destroy it once and for all in pursuit of selfish massive enrichment.
These people should be imprisoned. We should be teaching in our schools that this brand of self-adulation and importance is representative of the most despicable form of human behavior. (unless you prefer the more British spelling “behaviour”).
The problem with the Casino Economy is that it is so deeply (tightly) intertwined with the Real Economy as to be visually and virtually indistinguishable from it. Like a tumor on the lung, we can’t see it but we can feel its effect on the rest of the system upon which it depends for life.
And very much like cancer, the purveyors of the Casino Economy pursue an improbable paradox, in that their continued success and existence almost certainly confirms the demise of the host upon which it thrives.
The difference between the parasitic and cancerous Casino Economy and the Real Economy host is that the cells of the Real Economy – people – are fully equipped to excise the agent of destruction from its midst, if only the collective willpower can be mustered and associated legislative surgery be performed before its too late.
The G20 Summit now concluded in London is the first step towards a cure. The leaders of the 20 strongest Real Economies have convened to discuss their condition, and it appears they move ever closer to identifying the true cause of their malady.
The chorus of cries for increased regulation and transparency, while not resulting in any concrete and targeted surgical strike against the purveyors of the Casino Economy are, at least, representative of the desire to become well, and that is a critical first step.
The practitioners of the Casino Economy are easy to spot. They don’t do any real work, are essentially overgrown children with major issues of self-worth, and are generally emotional basket cases incapable of long-lasting, meaningful relationships.
During this interim period of collective self-discovery, where we amble towards frank and sincere assessment of what is truly wrong with humanity as a species and embrace a cure, it wouldn’t hurt for those among us who can spot the Casino Economy players to put them on notice verbally that they are known, and will be watched, and that no amount of shielding with security and servants and remote residences and yachts will prevent their eventual elimination by a determined Real Economy. When your biggest fear is that people will realize you’re really nothing more than a frightened, little child inside, despite your superficial great power and wealth, shame is a very powerful tool.
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This article has 28 comments:
And throw us into debt. The symbiotic relationship between ever-growing government and all overpaid nonproducers is not coincidental. Without excess government we wouldn't have the "need" for so many accountants, lawyers and financiers.
All that creates monstrous excess expense so we can't compete in most areas in the global economy. We've lost our lead in new patents to Germany and Japan. Americans spend too much time and wealth kowtowing to the system and not to real accomplishment. The real economy has shriveled as is now evident by the removal of most credit. When the dollar disappears and interest rates skyrocket, look out below unless there is one more "recovery" in this failing system.
That's what they're desperately trying to engineer with the $ trillions they're throwing at Wall St. Great for the insanely overpaid financial engineers that brought us here with their political enablers. When do the rest of us realize it's not worth it?
Stop the political junk about people being put in prison. I know it is popular talk among the government types and their storm troupers but how about some american talk. the politicians created fostered and assisted with this mess and now they and you talk like you are some type of saviors. Did you see the pitch fork comment by curtain officials. Doesn't sound like america to me. First they come for them and we cheer, than they come for us and we weep.
"My administration is the only thing between you and the pitchforks."
This was as much a veiled threat as it was a warning. Obama has the power right now to turn the tables on the financial sector with a few choice words to the American public. I doubt he will do it, but the possibility exists. Depends on how bad things get, I suppose. We'll see.
Without massive, global job creation, there is nothing but disaster ahead---unless a new economy is invented, one that does not require work to survive and/or prosper.
That may be the biggest job of all, somehow living a life without work but doing so with dignity, decent food, clothing, and shelter.
I believe Obama sees it this way, too. He's pushing for better schools and a pool of engineers and scientists, both of which engage in real productivity...not wiping their butts with worthless paper.
The velocity of money has slowed to a trickle as the casino sucks dollars out of the real economy. And as quick as Al, Hank, Ben and Timmy shovel money into the financials, they funnel it off to the casino.
I'm less optimistic about any of the G 20 closing down the casino. They make HUGE campaign contributions, have immense influence in decision- making circles and aren't going to let the source of their exorbitant incomes be shut down without a struggle. And they're greedy enough to kill the goose that lays the golden eggs rather than give it up.
Doug T
www.mutualfundwealth.com/
Putting our faith in *government* to accurately diagnose our economic disease and then to prescribe an efficacious treatment now, are we, fellow capitalists? What across all the ages of history would suggest such foolishness is justified? Government is just as much a parasite as the Casino bosses, and in fact is simply a different face of the same pathology.
Good luck to all. We're gonna need it.
On Apr 05 10:54 AM Bull Run wrote:
> The Casino economy, US NY financials, has represented. 41% of all
> domestic corp. profits over the last decade.. Hard to believe, but
> true. It's not only the biggest game in town it's the only game
> in town..The real econly is made up of Wal Mart workers, and used
> car salesmen driving leased SUVs.. 1 out 50 in Calf. was in realestate,
> before the crash..
I love it, "The practitioners of the Casino Economy are easy to spot. They don’t do any real work, are essentially overgrown children..." is a great observation of the character of the Wizards of the Universe. That was a superb dig and vilification of these fellows.
I too have written about the obvious fraud in monetary value of more than an order of magnitude greater than reality for "securities" written, bought, sold, and traded by people who never really owned any of the underlying real world assets in the first place.
Even if we were to build a strong world in this reality, these Wizards would claim it as their own and destroy it like phantoms in a video game.
Steal away their cloak of invisibility, and you will find that the Wizards are just children at play.
With the Government throwing trillions to keep the party going, has anything really changed yet? I say not. Villans are being created to help divert attention from the real culprits. Not all of them are financiers....far too many of them are YOUR ELECTED REPRESENTATIVES and their henchmen.
Why is the Obama administration suddenly changing its view about GM?
If GM goes through a "quick" bankruptcy, the fat cat, Wall Street bond owners, who are insured with AIG credit default swaps, make out BETTER than if GM survives. To me, this incredible revelation shows the Casino Economy is still going strong.
The Casino economy is based on speculation, just as somebody bets on the 40 to 1 shot at the track. If you want to curtail speculation, tax the profits on it at 90 percent.