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Building an Open Future [This Network is not currently active and cannot accept new posts] | | Topics
Economic Depression 2009?Views: 179
Mar 18, 2009 4:11 am re: re: re: re: re: re: re: Economic Depression 2009?

John Stephen Veitch
Hello Lamar

You wrote:
"With regard to capitalism and free markets, that is simply how a successful economic system works. Russia went bankrupt because the Communistic economic system could not sustain itself. You simply cannot predict in advance how much in the way of goods and services will be needed by a population."

I did study the Soviet and the Chinese economic models many years ago. I agree with what you said about how it's impossible for the central planners to predict what's likely to be needed. But it's also impossible to do that in a free market economy too. After 30 years, and especially now, it's so much easier for me to see that BOTH systems are deeply flawed.

For instance I've been laughing for about 5 years over the great hallabsloo on Ryze, because Kofi Annan was supposed to be directly involved in a Food for Oil scandal at the United Nations. Millions of dollars were supposed to be involved, and the controversy went on for months. Why? Because it suited the USA to cripple the United Nations, and make it completely ineffective. Eventually there were some irregularities found involving Annan's son, to the extent of $600,000 I believe.

In contrast the USA in Iraq has been involved in scams and rip-offs involving millions of real dollars that are for the most part not even investigated. Much of this is directly related to the Republican Party decision to give contracts to friends of the party on a cost plus basis. In at least one case I know about on a "no competition" basis.

One of the big jokes in International Economics was the Soviet incentive system. For instance on the railway bonuses were paid for the tonnage that passed down the line. Annual traffic data showed that the scheme was massively successful. Yet Russian businesses could never find rolling stock on which to transport their goods. Complaints were widespread. In fact much of the rolling stock was filled with rocks that were shipped across the Soviet Union and back repeatedly. It was a great way to increase the tonnage.

So in Iraq under cost plus contracts I heard reports of trucks that are never unloaded, simply driven across Iraq and back to clock up the cost, which is then billed at 100% mark-up. And the stories about the building paid for and never started, and the meals never delivered and the training that was done by people who were never employed, and the financial auditing that was done by two men with no accounting skills and no staff.

This is not a few bad apples, Lamar, it's a whole rotten system. The mortgage crisis proves it. For Fannie Mae and Freddie Mac to be so deeply underwater, thousands of real estate agents, valuers, lawyers, accountants, bankers, buyers and sellers all had to WANT these fraudulent transactions to be made. Every one of them is crooked, but they all claim to be innocent. If you choose not to see, it's amazing how blind you can become.

So the "free market" system has failed very badly.
The "centralised market" system has failed very badly.

So now it's time to discover the "truth" if we have the courage. Which brings me back tho this central message.

So for Americans, I think there is going to be a lot of discovery about "missing truth" in the next few years.
It applies to "free markets", and to "democracy" and to "American exceptionalism" and "racism" and "the success formula" and much else about American life. The Depression will be a great bullshit detector.

John Stephen Veitch
Open Future Limited - http://www.openfuture.biz/
Innovation Network - http://veech-network.ryze.com/
Building an Open Future - http://openfuture-network.ryze.com/

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