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The Commodore needs to listen carefully to this economist:
THREE things saved Fiji from complete disaster after the 1987 and the 2000 coups: the private sector, sugar and tourism, economist Dr Biman Prasad said yesterday.
He told the Training and Productivity Authority of Fiji’s Better Business Conference at the Novotel Convention that Centre that the private sector remained resilient.
“It is likely to remain the hope for a good economic recovery in the future,” Dr Prasad said.
“Many have suffered losses but have continued to operate in difficult conditions.”
Dr Prasad added that economics and politics were inseparable and offered some advice to the government.
“The government must understand that it is in control, it is running the country without any opposition,” he said.
H/T: Fiji Times
The problem is that Commodore Bainimarama handles the monetary policy (the Finance portfolio) for Fiji even though he has little clue or training in economics. Reports of military hoodlums beating up random people in the streets does nothing to promote tourism or private sector confidence. And as a primary product, sugar can never really do much to change the economy of Fiji from one based on primary production for Western consumption to one that brings about greater economic independence.
This is a must-read piece from an editor of GegenStandpunkt in Germany, now translated into English.
Everyone knows that this is dangerous for money. The newspapers write that inflation is imminent, even a currency reform – where money is deleted after all. For rescuing the banks, money is deleted in the end. What does this once again reveal? Everyone knows that this is the most crazy money printing action that has ever been brought under way – and they all say at the same time that this is necessary. They say at the same time that an alternative would just be impossible. So they profess that finance is the true wealth of society: this stronghold of the equation that every piece of money is more money, which the banks administer, this power to draw advance of capital out of the sleeves, to create it, wherever there is an opportunity to make business, this power is the true wealth of capitalistic nations. This is what these nations depend on, or to say it in other words: with this radicalism, by which they now are rescuing their banks, the governments profess the reason of state prevailing here: they risk their own financial power in order to rescue the private one.
It is through the power of finance (financial capitalism) that capitalistic nations hold economic monopoly over the world.
The whole article is here.
For more on the economic crisis from a heterodox perspective, see URPE.
The ‘leaders’ of the world gathered at the World Economic Forum (WEF) this past weekend to advance the failed and flawed concept of ‘free trade’ to generate economic growth for their respective nations. The forum ended in “we don’t know what to do but we must do something quickly…”
Who elected these guys?
In the next few weeks, governments will follow the good bank / bad bank policy in an effort to get the banking sector under control. That is a short-term fix till the next crisis of capitalism.
Europe is ripe with unrest. The Guardian reports on the following protests and ‘riots’ that may be part of a larger picture of growing resentment against ‘failed states’ (and here we define failed states as those who cannot take care of the basic needs of their constituents):
Upset at the government’s handling of the economic crisis, protesters in PARIS clashed with police last week, throwing bottles and overturning cars
Thousands of protesters held rare rallies throughout RUSSIA on Saturday, calling for the resignation of the government as the country continues to sink deeper into an economic morass
Fuelled by fears of rising job cuts, wildcat strikes against foreign workers spread through oil refineries and other energy facilities in BRITAIN on Saturday
Venting their fury at the way that the political class allowed the country to slip towards bankruptcy, ICELANDERS all but stormed their Parliament a few days ago
Last week in LATVIA—where growth has been in double-digit figures for years—10,000 people, rioting over the country’s economic troubles, besieged the parliament and threw Molotov cocktails at police
Some 7,000 protesters gathered outside the LITHUANIAN parliament on January 16 to demonstrate against the government’s reforms, forcing the police to fire rubber bullets to dispel the mob
In China, 20 million migrant workers lost their jobs, which threatens social stability since these workers were already displaced from their rural lands due to development.
Crossing over the Pacific and in Brazil, the less publicized but largest gathering of anti-globalization forces called the World Social Forum was held where more than 100,000 people convened to discuss how neo-liberal globalization was destroying itself and and how it was imperative to define the world we want. The forum also concluded with mixed results. Does anyone else see a pattern here?
It sort of reminds me of immigration reform conference calls: a chaotic bunch of good people who have a lot of ideas but little desire to go maverick with implementing them. If we can’t deal with tiny things like immigration reform, there is little chance of dealing with the collapse of the U.S. economy given how incompetent American economists are due to the stifling of heterodox ideas in Economic Departments across the country. The BEST economists are not hired by the U.S. government or businesses — they end up mostly as failed lecturers or professors in the Ivory Tower. That’s part of the reason this country is in a crisis — a failure to listen to solutions outside of the ‘capitalist world order.’
An opinion from the Blue Mass Group:
This is an aging country. Only the illegal immigrants with their young families were consuming enough housing, food, clothing, and transportation resources over the past several years to keep the economy growing. Then the Oppression started. Record numbers of immigrants were deported last year. The number of illegals crossing over the border dropped sharply. Thousands of Brazilians went home. Thousands of Irish left for a more welcoming Australia. All because of harrassment. Then the economy started to sink. A great example is Rhode Island. Their economy was humming until the governor turned up the heat on illegals. Now they have the worst economy in the country. The U.S is out of money and can’t borrow enough to turn this recession around. The whole world depends on U.S. consumption to drive their economies.
While the argument does little to present evidence and treats correlation as causation, it raises some valid points.
Targeting and rounding up undocumented immigrants for deportation has undoubtedly led to the creation of ‘ghost-towns’ like Postville. Resources that could be better spent on social services are nonetheless poured into criminalizing illegal work and presence. For example, Prince William County is suffering budget shortfalls due to foreclosures in additon to a rabidly anti-illegal ‘nab-n-jail’ program. Law Professor Richard Delgado wrote an excellent piece on the direct economic impact of the crackdowns on food prices:
Many farmers are plowing their crops into the ground, realizing that without immigrant workers to pick them, harvesting is simply uneconomical. Still others are shifting to crops that are less labor intensive, even if this means cutting down mature orchards and starting over. The lower supply of food inevitably results in higher prices as consumer dollars chase a dwindling or shifting market.
A new study by the Minority Business Development Agency of the U.S. Department of Commerce and the Office of Advocacy reports that immigrant-owned businesses contribute positively to the economy. While it did not concerntrate particularly on undocumented immigrants, the CPS found:
* Immigrant business owners are concentrated in certain states, including California, New York, New Jersey, Florida, and Hawaii.
In light of these facts, immigrant crackdowns might not help (and most likely hurts) the economy.
If the United States was to legalize 12 million undocumented immigrants, would they not pay fines, back taxes and acquire property–in other words, increase consumption–which in turn would stimulate the economy? Workers who are not part of an underground (informal) economy and don’t live in the shadows due to fear of deportation could acquire new job skills and move up the career ladder. That translates into higher wages, more money paid in taxes, and more money for consumption.
I wish I had the ability to be shocked when I hear about a ‘deep crisis’ that can cause staggering losses (a cyclical crisis of capitalism), a $700 billion bailout for private sector cronies and John McCain canceling a 2-3 hour debate appearance as a publicity stunt to resolve this crisis (as if, his presence would make a difference. Admittedly, he has a weak economic understanding). But I digress.
It’s not like a major financial crisis was unexpected in the near future. Political economists have been making predictions about the fall of the U.S. dollar for quite some time; this Wall Street financial collapse is just a start. Oil prices are dropping, Asian markets are coming down even immigration is down (ALIPAC must be happy; they are happily blaming immigrants for the meltdown too). Actually forget the contemporary political economists and politicians trying to pinpoint the source of this crisis; revisit the blog favorite Karl Marx, who held that the internal contradictions within capitalism as a system would create cycles of boom and slump, that over time would become more untenable as social forces opposing it built up, eventually leading to an overthrow of the system. What are these internal contradictions?
1. The tendency of the rate of profit to fall
2. The concentration of capital
3. Rise in unemployment
4. Overproduction or Underconsumption (crisis of realization)
5. Collapse of credit
6. Bigger firms buying out smaller and weaker firms (in this case, the government bailing out)
7. Crisis ‘solved’ till the next inevitable cycle
Do these predictions of more than 150 years ago sound familiar?
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