TOTAL LICENSING
cellence for the gov- It leads to early retirements in the corporate the, by then, reduced quantities of imports to
ernment to care for culture and brings untried second-stringers into the USA. Wen Jeibao and Obama must keep
its citizens 65 years command and can create some lack of decisive- waltzing together or the ballet of the elephants
or older, and only one ness when, instead, new ideas and courage might will stop and might end in disaster. Mutual as-
in eleven were older be helpful. The upheaval in some industries is sistance must not end in mutual destruction!
than 65. Now, thanks shocking. • Already the Davos world economic forum
to advances in nutri- • Consumer borrowing dropped by a record recently wondered if there might be a world
tion and healthcare, 7.9 billion and led to the first decline in totals without the USA as the main engine of growth.
it is one in seven and since 1992. (Federal Reserve, “On the Drop in Could India and China maintain their breakneck
by 2030 we expect it Value of Securitized Assets”) economic progress, even if the US “decoupled”
to be one in five. In the 2008 fiscal year these • Borrowing secured by real estate fell by 2.8 and the world economy had to grow without
entitlements amounted to 1.3 trillion out of the billion. the USA?
total federal spending of 2.98 trillion. (Defense • Unemployment benefits rose to 4.6 million – “Sorry, the world is no longer flat, it is upside
in total compared at only 618 billion - so, even a 26 year high. (Labor Department) down”, says Mohamed El-Erian, CEO of bond
President Obama’s reductions in defense, there- • Credit cards decreased by $2.8 billion - the mutual fund giant PIMCO.
fore, cannot help enough to cure these endemic biggest decline since records were kept (1943).
problems.) • Walmart, Macy’s, Kohl’s, and The Gap slashed BOOMS AND BUSTS: A CHRONICLE
The Baby Boomer bulge of children born be- earning forecasts after the worst holiday shop- We must remind ourselves that “boom and
tween the end of World War II, in 1946, when ping season in four decades. bust” is not a new phenomenon and reoccurs
victorious soldiers returned to start a “normal” • Late payments on all rotating loans rose periodically. Always, the world recovers bringing
civilian life, through the 1960’s number about 79 8% from the previous quarter (a 29 year high). new vistas and lessons for the future:
million, and they are now beginning to retire. (Bloomberg) • Most of us have heard about the “Tulip Ma-
They shared their parents’ belief that arriving at • Cumulative 2008 profits of the Fortune 500 nia”, which descended upon Holland in 1637
65 was a good thing! You could finally have fun companies fell 87 percent from their 2006 peak after that flower had been introduced from
with the children out of your house, you could to $98.9 billion from $785 billion (Fortune Mag- Turkey and had become a symbol of beauty and
travel, garden, volunteer in “good” unpaid work, azine). an object of desire and pride for the wealthy.
and pensions and dividends would make you fi- • IMF forecasts that the global economy will Between November 12
th
of 1636 and February
nally free of dross and routine – by now you had shrink by 2% this year, the first worldwide con- 3
rd
of 1637 the craze led to excesses. There was
earned it! And, you had no memory of any really traction ever. a recorded sale of 40 bulbs of a select strain for
bad times; Vietnam was over, and consumerism • Economies in weaker Eastern European 100,000 florins (Dutch guilders) at a time when
probably tempted you into a “feel good hubris”. countries are in distress – and this could lead to “8 fat swine” only cost 240 florins. To reserve
These boomers will not look kindly at society a bigger gap in the European economy between future tulip bulbs the Dutch invented the “Fu-
yanking the carrot away just when they are the wealthier west and the poorer east. tures Contract” which has survived in different
ready to make it into the best carrot cake ever. • Many questions bedevil the choice between forms until today.
How will a government elected and favored by our theories of free trade versus protectionism When speculation and search for riches brought
the very young deal with these baby boomers of domestic industry. While the world economy a tremendous quantity of tulips to the market
when the young, besides having huge college demands the promotion of free trade as an en- by late spring (February 1637) many specula-
loans, are the group who will have to face paying gine of growth, protectionism reduces domestic tors were stuck with unsold bulbs and lost their
taxes for all? job loss. The “buy American provisions” terms shirts together with barrels of rotting unsold
of the American stimulus package search for ad- bulbs. By May 1
st
1637 all was over and the tulip
MORE DETAIL vantages through protectionism. In return, now became only the pretty flower that is still being
Just a few more brushstrokes to put shadows on Mexico slaps higher duties on many American exported by the millions from the Dutch tulip
our self-portrait of the American Recession: products from pencils to toilet paper. However, fields of today.
• With joblessness hitting a higher percentage there is one notable exception:
of husbands than their wives, because men tend Also, there were:
to be a majority in job losses (82%), there is a USA AND CHINA LEAN ON EACH • The Mississippi Company and South Sea
growing population of “Mr. Moms” who suffer OTHER Company bubbles in exotic, far-away real estate
under the loss of the traditional role of “Head • China needs the hungriest consumer in the investment around 1720.
of the Household”. This can lead to anger and world – the American public - to keep its econ- • 1815 - The Bond Market bubble, engineered
depression. omy going in industry, services, or trade, so that to some degree by the House of Rothschild
• With increasing government ownership in it can absorb its tremendous flood-tide of rural when Napoleon lost the Battle of Waterloo and
major industries like the auto industry, banks, or youths that want the better life. Rothschild express couriers beat all the govern-
insurance, corporate culture is going through a • The USA needs credit to allow it to keep im- ment news of Napoleon’s defeat.
major shift. A lot of Top Brass, even if there were porting, and, whether it wants to or not, China • 1826 – 1829 – The first great Latin American
no ceilings slapped on their pay, now have an un- needs to buy American debt and assets. debt crisis – collapsing South American govern-
accustomed boss – a government official, rather • Already China must discourage immigration ment bonds.
than a permissive board of directors or the to its cities. If China did not support the US dol- • 1867 – The shipwreck of the American Con-
stock market. This affects needed inventiveness lar it might fall and China might loose its place federacy’s Treasury notes, sold to sympathetic
and risk taking at the altars of free enterprise. to other low cost countries who could supply Europeans when the government of the Con-
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