Copyright 2008 T. Sheil & A. Sheil All Rights Reserved
Four Articles on Economy
The recent series of economic woes has many wondering what is next. The crunch was first felt when we invaded Iraq. Since then, we have seen the devaluation of the dollar, a mortgage fiasco and an oil crisis. We need to take a cold, hard look at this runaway train.
The economic mess actually began back with the energy crisis in California. That was a man-made problem and the major player was Enron. When Enron went bankrupt two years later, everyone was surprised. It looked like a rock solid company. However, the books were “cooked.” In other words, there was a type of creative accounting smoke-and-mirrors stunt that made it look like they had money which they did not. Enron was trading on nothing more than hot air. The same happened to another giant corporation, Worldcom. Like Enron, it had traded on promises and illusions of funds that were not there. As the song says, “Nothing from nothing is nothing.”
Meanwhile, South America was experiencing an economic recession of its own. Though its economy is not as vibrant as that of the United States, Europe and Asia, it is large enough to matter. This recession would blend with other events to cause more economic troubles.
South America notwithstanding, the Enron and Worldcom bankruptcies were the first stage of greater woes. Their assets were based in falsified records rather than actual currency (FE).
The oil crisis built up steam. The real crisis was not production, but speculation on the commodities market. Prices climbed based on potential purchases and “what ifs.” One of the major players in this commodities game was Lehman Brothers. Speculation and money-juggling caused the ferocious rise in oil prices, and those doing the dirty work were mainly American and European investors. Once again, the cause of the crisis was little more than hot air. It had little to do with actual oil production or its availability. Real assets (FE) had nothing to do with it.
The mortgage crisis had its origins in unsecured loans and variable mortgage rates. The folks giving the mortgages were free with the money. Folks buying houses went bought their means. As the economy tightened, the mortgage companies raised the rates. It led to foreclosures in a market where few can afford a home. Once again, it was promises and paperwork, but too little real assets (Fe).
The real problem is greed. Greed is fed by the Naud Rune. It is based in the belief that one does not have enough. Greed was behind the “cooked books” of Enron and Worldcom. Speculators’ Greed was behind the oil speculation. Mortgage companies’ greed was behind the mortgage crisis, and buyers’ green added to it.
What fed the greed? To put it in plain language, it was nothing but “hot air.” Promises, speculation, falsified accounting and empty coffers fed all these crises. That would be funny, except that real people are victims of these shenanigans. Real people lost homes, jobs and investments. Real people cannot retire because their investment portfolio is shaky.
Perhaps there is a little justice. The government refused to step in to help the investment firm of Lehman Brothers. That company was a big player in the commodities market and the ridiculous oil prices. Otherwise, it is a time to wait for a change.
The trend may slow, but it will not go away. Expect the first signs of real improvement after the presidential election. Many investors regard George Bush as economic poison, and so are holding off investment during his tenure. They will not wait for January 20. Just as they invest on promises, so they will invest when the promise of the new president is assured.
The lesson should be clear. All of these failures were based on nothing. There were no real assets in place. It was promises for the future, speculation, greed and wishful thinking. Had real assets been in place, none of this could have happened.
Apply the lesson for yourself. As it is said in “The Magic Story,”
“Better a dime in the hand than a thousand promises for the future.”
Having passed through a rough economic tide, most of us have had to cut our spending. Lowering gas prices hint that the tide may be winding itself down. Having taken measures to squeeze through these tough times, it is a good idea to see where we can apply the lessons of our recent experience.
Ask yourself these questions.
1) What exactly did you have to cut out or cut back? Make a list of these things. Once you have done that, look over the list. How much has each cut affected you? Was it difficult? Did you feel the pinch? Or was it relatively painless? How much money did each cut save you?
2) In view of the cutting down and holding back, how many things that you thought were necessities turned out to be unnecessary? How many can you ‘do without?’ How many are you willing to do without?
3) Have you come to a better appreciation of your necessities? Have you a better idea of when and where you cannot make cuts?
4) Have you found ways to “stretch” your money? Did you discover ways to make your money buy more?
The Naud time is a tough time, but it can also lead to a Jer time. Naud shows us where we are wasteful, foolish and extravagant. It exposes the things that eat at our prosperity. When we stop doing these things, we increase our affluence.
The curious relationship between the Untied States and
Saudi Arabia began with Franklin Roosevelt. It is an alliance based in oil. As
American industry increased, so did the demand for oil. Foreign sources would be
needed, hence the cultivation of ties with the oil-rich Arab state.
Saudi Arabia has a unique role in the Muslim world. It is the home of the Arab holy cites of Mecca and Medina. Formed of an alliance of a desert tribe with the Wahabi sect of Islam, the Saudi government is infused with fundamentalist Islamic ideals.
Saudi Arabia is not an Arab nationalist state. It is a monarchy that has a theocratic twist. Despite the claims of our current president to promote democracy throughout the world, Saudi Arabia is a tightly-controlled absolute monarchy. The United States has made no attempt to change that. Our current government feels that the Saudi monarchy is a better ally than a democratic regime.
The same goes for human rights. No attempt has been made by our government to encourage the Saudis to protect human rights. Saudi Arabia is run according to a strict interpretation of Muslim law. One instance of Saudi law is that women’s rights are virtually nonexistent. The status quo is maintained by a semi-autonomous “morals police” who strictly enforce Muslim law. Freedom is limited. This is why foreigners tend to live in compounds separate from Saudi society.
One of the main sources of support for Al Qaeda comes from Saudi Arabia. Princes and other rich Muslims are benefactors to Islamic terrorists. The Wahabi sect either abets terrorism or looks the other way. Note that many terrorists are Saudi citizens, and Osama bin Laden is descended of a Saudi family.
The Saudi national defense is armed with American weapons and training. Our government is committed to defending the theocratic monarchy. Look at how quickly the U.S. jumped when Iraq invaded Kuwait. U.S. troops were in Saudi Arabia and kept coming. Despite this, Saudi Arabia’s record as an ally is questionable. As an Opec member with a lot of clout, it has done little to protect US interests. As a government, it has done little or nothing to prevent its citizens from funding terrorism.
Neighboring nations such as Abu Dhabi, Qatar and the Emirates are also monarchies. They are more progressive than Saudi Arabia, mainly because they know it increases profits. Once again, these are not Nationalist states. They can best be described as moderates. Like the nationalist states, they have little tolerance for potential terrorists. Were there to be an Arab economic boom, it would likely come from these smaller, progressive states. They are far bette allies to us than Saudi Arabia.
Many
people are concerned about China. Our economy has become inextricably tied to
the giant Asian nation. China is a major competitor for buying oil to fuel its
economic boom. Judging from cause to effect, it looks as if the Chinese economy
will continue to boom.
The current government has been able to rule China because it is relatively cohesive. Unlike the fractious and corrupt “democratic” Nationalist government of Chiang Kai Shek, the Communists have been a cleaner operation. However, the cracks are showing. Tiananmen Square was just a flicker of future discontent. The recent Tibetan debacle is another. China may have quelled Tibet temporarily, but it is still simmering. Corrupt business practices, such as the contaminated milk scandal and the lead paint on exported toys hint at worse. The Communists have been playing “catch up” to work with a free market economy and private enterprise. Such things were not part of Mao Tse Tung’s ideology. Unrest in the outer provinces is also a warning. China is not the monolithic manufacturing giant, but a compilation of various provinces, smaller states and ethnic groups.
Like the Manchus before them, the Communists were able to manage China for almost sixty years due to cohesion, incorruptibility and dynamic government. The Communist government did more for the people than the preceding Nationalist and Imperial governments. Like its Russian Communist counterpart, it made things better for the average citizen. We can see a contrast to the Manchu government that ruled China until the early 20th Century CE..
The Manchu problem was that its dynamism and cohesion eventually faded into decadence and corruption. Among officials, self-interest eclipsed national interest. That made China easy pickings during the Opium Wars of the 19th century, and left it open to the ravages of the Tai Ping Rebellion that raged from 1851 to 1864. Imperial China limped along, defeated in 1894 by the Japanese and shaken in 1901 by the Boxer Rebellion. Corruption was so bad at all levels that the Mandarin government had to threaten high penalties to keep soldiers from selling their brass cartridges to scrap dealers.
Is the Chinese Communist government going the way of the Manchus?
The Communist party has not been “revolutionary” since the “gang of four” trials of the 1970s. You can be sure that corruption is already thriving in distant regions among local government officials. Graft and influence-peddling exist at the higher levels, but these are not revealed publicly if the perpetrators are caught. Communist China is conscious of its image and does not want to admit that corruption can exist in its government. It is not what you see, but what you do not see that is telling.
Communist China is trying to reconcile a market economy with Marxist Socialism. It is also trying to keep a lid on expressions of discontent. It was able to stifle the Tibet protests for a while. However, the people are wise to these things. You can be sure that somewhere in China are groups who will present a fight that the government does not know.
I expect that within the next ten years, China will experience regional rebellions. They will be more successful and larger. As a third generation of party elders take the helm, fissures will be seen within the government. The largest rift will separate hardline Communists from supporters of a wider market economy. I believe that at least two of the regional rebellions will expand into other regions, and may even threaten the central government. Rather than bullying customers, the Chinese government will be seeking to placate its allies and gain their support in order to survive.
As an aside, who will arm and support these rebels? It will not be the major powers, nor any of the other European nations. I expect smaller nations will see these rebellions as fitting their own agendas. Remember how Libya supported many such causes? Though Libya is out of the terror-sponsoring game, others might want to take the chance. Russia has already had its problems with Terrorism and rebellion, as we saw in Chechnya. China is going to have its hot spots, too. I would not be surprised if some of the arms will come out of Central Asia, the Middle East or even Africa.
The problem for China is the size of its population. A rebellion such as Chechnya may be a few million people. In a Chinese province, it can be tens of millions. I could see some of the Central Asian republics giving support to Chinese rebels. One might also see private interests from India doing the same. Middle Eastern or Islamic supporters could easily get involved in backing a revolt by China’s Muslims. One thing we learn from Chinese history. If one big rebellion starts and shows signs of success, at least two more will see an opportunity to do the same. China has never had just one rebellion at a time. The rebellions may be based on various things. One or two might be ethnic uprisings, another a religious clash, and still another and ideological struggle. The cohesion of the Chinese government and the willingness of its people to support it will be important factors in how well the large nation can fend off uprisings. With an increase in corruption, political wrangling and discontent among the people, China would find itself sorely tested in such a situation.
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