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Title: debt culture gone awry (how Arabs & Persians see America)
Source:
International Herald Tribune
URL Source: http://www.iht.com/articles/2007/08/17/opinion/edvarzi.php
Published: Aug 17, 2007
Author: Hamid Varzi
Post Date: 2007-08-18 12:13:36 by Red Jones
Keywords: None
Views: 124
Comments: 5
debt culture gone awry By Hamid Varzi Friday, August 17, 2007 TEHRAN: The U.S. economy, once the envy of the world, is now viewed across the globe with suspicion. America has become shackled by an immovable mountain of debt that endangers its prosperity and threatens to bring the rest of the world economy crashing down with it. The ongoing sub-prime mortgage crisis, a result of irresponsible lending policies designed to generate commissions for unscrupulous brokers, presages far deeper problems in a U.S. economy that is beginning to resemble a giant smoke-and-mirrors Ponzi scheme. And this has not been lost on the rest of the world. This new reality has had unfortunate side effects that go beyond economics. As a banker working in the heart of the Muslim world, I have been amazed by the depth and breadth of anti-Americanism, even among U.S. allies, manifested in reactions ranging from fierce anger to stoic fatalism. Muslims outside the United States interpret America's policies in the Middle East not as an effort to spread democracy but as a blatant neocolonialist attempt to solve its economic problems by force. Arabs and Persians alike argue that America's fiscal irresponsibility has forced the nation to seek solutions through military aggression. Many believe that America's misguided adventure in Iraq was a desperate attempt to capture both a reliable source of cheap oil and a major export market for the United States. The United States borrows a whopping $2.5 billion daily from abroad to service its burgeoning debt. In order to continue borrowing at reasonable interest rates America needs to retain credibility with its overseas creditors, especially Far Eastern nations running huge trade surpluses. A cessation of foreign lending would force the Fed to raise interest rates to attract money, precipitating a collapse of the already weak housing market and pushing the economy into recession. This is why the Chinese, in particular, have threatened to retaliate against proposed U.S. trade sanctions by reducing their $1.3 trillion in dollar holdings. The U.S. debt situation is so grave that the Chinese would not even need to "dump dollars" to precipitate a meltdown but could simply refuse to extend further credit: They could cease purchasing additional Treasury Bonds and Treasury Bills, without selling any excess inventory. China has the far stronger hand, because a run on the dollar would merely reduce China's gigantic cash surplus while increasing America's debt burden to astronomical levels. U.S. debt affects all nations, but in surprisingly different ways: Third world farmers suffer from the effects of gigantic U.S. farm subsidies aimed at reducing the trade deficit, while Russia has actually profited from America's lack of discipline. Flush with funds generated from a decade of trade and account surpluses, Russia views U.S. sensitivity to its expansionist energy policy as a response to America's own failure to reduce energy waste and exploit alternative energy sources when it had the opportunity to do so. In sum, American economic decadence has become a source of Russian strength. America's supply-side economists argue that there is nothing wrong with going into debt, but this is valid only as long as a nation and its consumers are gaining something in return. What have Americans gained from their nation's mountain of debt? A crumbling infrastructure, a manufacturing base that has declined 60 percent since World War II, a rise in the wealth gap, the lowest consumer-savings rate since the depths of the Great Depression, 50 million Americans without health insurance, an educational system in decline and a shrinking dollar that makes foreign travel a luxury. The best cars, the best bridges and highways, the fastest trains and the tallest buildings are all to be found outside America's borders. Supply-siders ignore the crucial distinction between, on the one hand, debt employed as an investment vehicle to enhance competitiveness and, on the other, debt used to pay off current expenses and to create even more debt. The bottom line is that America is awash in red ink and seeks the wrong solutions to its debt problems. A return to fiscal responsibility would make America far stronger, both domestically and internationally, than would a continuation of current policies that falsely project strength through idle protectionist threats and failed military aggression. Current tensions between the United States and the rest of the world will continue as long as America's military bark is louder than its economic bite. A solution to the U.S. debt problem requires radical measures, including: the elimination of corporate tax loopholes, a reversal of tax breaks for the ultra-rich, a bipartisan campaign to eliminate budget "pork," imposition of stringent limits on corporate debt and speculative lending, a vast reduction in military expenditure and, finally, an additional 50 cent per gallon gasoline tax that would slash the federal deficit, curtail energy waste and spur technological breakthroughs. Let us hope America heeds the warnings, dispenses with junk-food economics and embraces a crucial diet of fiscal discipline. It remains to be seen, however, whether America's political leaders have the courage to instigate such reforms, and whether Congress is finally willing to do something for the future of ordinary, hard-working Americans. Hamid Varzi is an economist and banker based in Tehran.
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#1. To: All (#0)
the rest of the world gossips about us and Americans conclude that it is anti- americanism or jealously or something of that nature that causes them to do this. The Americans don't comprehend that the gossip is based in reality frequently - because our media keeps the Americans ignorant, deceives them and also the pride our people feel keeps them from seeing the truth. Our economic system is sick and we've been sheltered from that knowledge. The economists in our universities deserve some blame along with the media. As I understand it the Federal Reserve makes large donations to universities to fund economics education. What we don't understand is that we have essentially a command style economy rather than a market based system. This is done through systematic long-term and powerful interventions to make the dollar artificially valuable, to recirculate global excess dollars earned by successful trading nations back to the US and through property value bubbles carefully nurtured by powerful institutions in the financial community. Our people are completely out-of-the-loop and it is those who rule us that have made it this way. But the foreigners who gossip about us tend to blame us. Meanwhile our people live in more & more of a fantasy-land to justify the insane foreign policies in their minds.
Jeremiah 31:32 Not according to the covenant that I made with their fathers in the day [that] I took them by the hand to bring them out of the land of Egypt; which my covenant they brake, although I was an husband unto them, saith the LORD:
I wish I could remember the name of that Finance Professor-Babe who preached that Profit is "god" and Leverage is his prophet. ~sheesh~
Law Enforcement Against Prohibition when I was a sophomore in college and was in 'business' type major I was struck that in every single introductory class to management, marketing, accounting, etc - every business discipline - they had right in the front of the book an ideological statement that the only legitimate justification for any and all business decision was to maximize profit for the company. It was so uniform in the indoctrination. Anyone knows that if an individual owned a business, then he will want to make a profit, but there are times when other considerations besides profit do come into decision-making - such as doing the right thing, helping your neighbors, your employees, your customers, being a good citizen, etc. Profit may be important, but it is not absolutely everything and in business colleges for decades now they've had the extreme profit maximization ideology taught. here's a bible verse. "1 Timothy 6:10 For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows." I feel that the love of money is very seriously used to seduce our people into systematic evil and systematically accepting evil.
Jeremiah 31:32 Not according to the covenant that I made with their fathers in the day [that] I took them by the hand to bring them out of the land of Egypt; which my covenant they brake, although I was an husband unto them, saith the LORD:
yeah, and it's not just money, it's insane acquisition even when there's no money. I think about people standing in line to get the latest cell phone (when they already have a perfectly good cell phone) or the latest video game system. contrast that with cultures where people must stand in line to get clean water. it's a lifestyle, and you're right - people will accept whatever has to be done to maintain that lifestyle, even if in the back of their minds there's that little nagging thought that it might be wrong, or even immoral.
#2. To: Red Jones (#0)
#3. To: Red Jones (#0)
"There is no 'legitimate' Corporation by virtue of it's very legal definition and purpose."
-- IndieTx
#4. To: IndieTX (#3)
#5. To: Red Jones (#4)
I feel that the love of money is very seriously used to seduce our people into systematic evil and systematically accepting evil.
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