Rus & China - CURSE YOU CAPITALISM

[cannon_fodder]

Russia and China have both blamed the United States and capitalism for the economic downturn.  Putin (not the president of Russia) and Wen gave nearly identical speeches on the same day.  Blame whomever you like, but the context of their joint speeches is what is misguided.  

http://online.wsj.com/article/SB123315961511224575.html

Both countries have standing policies to resist US hegemony in world affairs, both nations are totalitarian states lacking a free media, and a lack of a right to trial in open courts (Russia past a new law:  Sedition and treason are tried before closed appointed courts.  They also redefine treason to "acts against the constitution of the Russian people."  The definition of which is up to the closed courts.  And there's the bad habit of people who speak out against the government accidentally dying shortly thereafter).

Putin, in particular, reveled in the collapse of US banks (as his own banks collapse).  It should be noted that the criticism is a bit dubious since his country's economic ruin is most threatened.  Along with it his power base.

In any event... lets examine how HORRIBLE capitalism has been to these nations:

RUSSIA:

1970's GDP growth was at 5%
1980's GDP growth was at 2%

Real income per capita under income under the Soviet system peaked in 1987 around $1,100 per person with an average 3% growth rate starting in the early 70's. .  It declined throughout the early 1990's to around $1,000.  When economic reformed were put in place starting in 1992 it began to rise.

Under the new capitalist system it has risen to $9,000.   More wealth has been created in Russia int he last 10 years than the previous 30.  They have been able to rebuild their military, construct housing, roads, oil & gas projects, and Mr. Putin himself has been able to amass a fortune in excess of $35,000,000,000 USD (on official government filings he has a total annual income of $80,000 and his total net worth is around $175,000 USD).  

Russia's people were starving, its factories crumbling, its resource production declining - capitalism comes to town and Moscow is the richest city on Earth within a decade.  Russia's economy is now four times larger than it was when they abandoned the Soviet System.  This year their economy is supposed to be almost as large as the US Federal Government's annual deficit  (Russia's economy today is similar in size to Brazil or Mexico - in spite of puffing their chest on the World Stage.  Between New York and Florida in the US GDP map of states).  

http://newsgroups.derkeiler.com/pdf/Archive/Soc/soc.culture.vietnamese/2008-06/msg00389.pdf

The Life and Times of Soviet Socialism
By Alex F. Dowlah, John E. Elliott


China is a similar scenario economically.  Without going into as many numbers suffice to say that the communist "great leap forward" killed more Chinese than WWII as hundreds of millions starved to death. Throughout modern history China has been an economic non-entity.  In the 1970's China's GDP was comparable to Canada's.  Today they are working to overtake Germany as the world's 3rd largest economy, over twice Canada's GDP.  

China started economic reforms in the 1980's with a GDP of $188 Billion, within a decade we were whining they they "took 'er jobs!"  By the mid 1990's "made in China" was a ubiquitous label on manufactured goods.  Today, China is regarded as a global economic super power with a GDP of nearly $3 Trillion (1/5th of the United States) and showing steady rapid growth.  

http://www.nationmaster.com/graph/eco_gdp-economy-gdp&date=2006


Say what you want about the current economic crisis, but for these nations to pretend capitalism has been a negative on the whole is insane.

[we vs us]

What's interesting is how both countries have used the wealth generated by open markets to shore up their totalitarian political structures.  Far as I know, neither country has had a problem reconciling the two.  I guess the lesson is that capitalism isn't so much an ideology in itself, but is instead a tool of ideology.

[Wrinkle]

I suppose the scary part of all this is both Russia and China are calling for a new monitary standard (i.e., not the USD).

[we vs us]

quote:Originally posted by Wrinkle

I suppose the scary part of all this is both Russia and China are calling for a new monitary standard (i.e., not the USD).

Iran and Venezuela have both been talking about this for awhile now, but Russia and China are considerably bigger and more influential. The big question is, is there a better alternative at this point to the USD.  From what I've read, Iran has been conducting business in Euros for a couple of years now, but it hasn't had a huge deal of success in convincing others to do the same.  

[cannon_fodder]

China has their currency pegged to the USD, a floating Chinese currency would be a big plus to the United States but isn't really a possibility.  Russia controls their currency from their central bank and has been forced to deflate it by a consistent 10% every quarter over the last year and a half to prevent collapse (by releasing reserves on the order of hundreds of billions).  And Iran has lost billions on the Euro currency bet - insisting on 3rd part Euro transactions for oil (which are all otherwise done in USD) at the height of the Euros value (and hence the people who held USD reserves of oil are now ahead of them in the game).

The Euro is the only real option.  It is a relatively stable currency with a sound monetary policy behind it.  The Pound has been dropping, the Ruble is in free fall, the Yen has had issues for over a decade, and there really isn't another option.  The Euro's problem is that the action of several actors in the Union can destroy the confidence in the currency - the Dollar all you have to do is hope the Fed doesn't do anything stupid.

Couple that with HUGE bets on the dollar many people have.  Owning a portion of our national debt, ownership interest in American companies, or exporting to to the USA is a bet on the dollar.  As the dollar falls most foreign nations lose money.  That's why most want to see a stronger dollar.

Hence, the Dollars popularity is on the rise again.  For better or worse from our perspective.  A devaluation of our currency isn't all bad, a collapse would be (if a concerted effort to abandon the dollar gain traction).

[shadows]

CF:
Are you possibly leaving out the difference in population to Russia with  little over one  half our  population and China many times in citing the gross factors on incomes and productions.   Our system is no more than socialism hiding behind capitalism.  The reason the inflated dollar has been held up to a high standard is because we allow foreign countries to buy our land, buildings and utilities and invite them to come and take our jobs.

The uncurbed nation debt, of which can never be paid off unless we issue new currency, is being measured in the price of gold.   The world crisis in most of the monetary systems is a spin-off from of the buy now policy and we will pay you in the future. Both of the cited nations have endured the centuries in the fundamental arts that create nations that endure the constant march of time whereas we want to judge them in our system that has not withstood any challenge of endurance by any nation.

We have moved from the gold backed dollar to the silver backed dollar and now a promise to pay note dollar without any backing.   We are not standing on the cliff but are hanging over the cliff reaching out into the air for a support of the paper barter of exchange and we believe that by flooding the air with more unsecured paper dollars, it will give us a handhold and secure the nation and the world in this crisis we have created.

The eons of time will not be kind in its record of our attempt to fail even to control ourselves.

[cannon_fodder]

Shadows, thank you for reminding me there are people out there who have no clue whatsoever.  

1. Per capita GDP is NOT EFFECTED by population.  Nominal GDP is, and serves as a reflection of the total economic power of a nation.  Population generally helps a country have more economic power, but it is clearly not the driving force.  Thus, the disparity between the USA and Russia or China is not entirely relevant and the very difference (one higher, one lower... both below the USA) illustrates that point nicely.

2. Are you proposing a Stalinist form of government in which we restrict ownership to citizens and dictate who can have jobs?  Sounds American to me.   Anyone who wants to pay more for my house than I am can have it.  Anyone who can do my job better for less should take it.

Competition makes things better.  That's why Russia and China have seen their economies quadruple in short order with capitalism while the festered and failed under the closed system you embrace.

3. Our debt is not measured in Gold.  There are about 140,000 tons of gold "above ground" in the world.  For a total value of $3,584,000,000,000 USD.  The US National Debt is $10+  Trillion.  So to measure it in gold we could say about "three times all the gold in the world."

We all get .7 ounces of gold.  That's how much gold we would all get if it was divided equally among 7 BILLION people.   A loaf of bread would cost .000001 Ounces of gold.  Yep.  A nice practice system there.  That's why so many people still use it.  Payday would be awesome, a speck.

4. The UNITED STATES ECONOMY generates more wealth in one year than the total value of all the gold every mined.  PERIOD, end of story.  

Why would you think Gold would be a better backer than the economy that has generated the wealth?


/why do I waste my time?