THE BLINDINGLY LOGICAL FOLLY OF THE WESTERN BIG BUSINESSMAN (A.K.A WHY AUSTIN POWERS WAS WRONG)

In “Austin Powers: International man of Mystery” Michael York asserts that the cold war was over, we won.  At the time it seemed like this was correct.  But one thing was wrong with this assertion.  Sure, sure, the Eastern bloc had collapsed, Soviet Russia was no more and the Eastern European states had again embraced democracy.  But the biggest communist country on the planet was still out there, and it was growing.  Communist China over the last few years has done strange things with it’s resources and it’s money management and it has been difficult for the west to see or understand it’s thinking but the Chinese Government in this long game of financial chess has been far smarter than any Western businessman gave them credit for.

You see, Logic, if applied correctly, can show up the folly in the wisest man’s thinking.  And I remember years ago when many, many companies started to move production and manufacturing overseas on a massive scale wondering how, if those jobs are going overseas, will people simply be able to afford to buy those products?  For example, say a country has full employment and 1 company closes a factory and moves production overseas to cut costs, because the guy at the top of the business thinks that he’ll make more money because his costs have been cut and the product he’s selling in the west can stay at the same price.  

However when 1000 business do this and put 1000 people in a thousand factories out of business then that means that 1,000,000 suddenly have less money coming in and therefore cannot buy (and probably don’t want to buy) the same products they bought before.  Take HP as an example.  I used to buy HP sauce.  I now wouldn’t because they moved the factory to Holland, but like many people out there, I also wouldn’t because I can’t afford the price.  So now, the product that before made them more money due to savings of moving overseas is now being sold at Home Bargains for a fraction of the price because they can no longer sell them for the same price they used to.

Now while all the manufacturing jobs were busy being sucked up (most notably by China) the big business men in the west didn’t seem to notice or care that the people that they wanted to buy there products were now effectively unemployed and could no longer afford them.  They were so removed from reality and (In the US) were busy lobbying the republican party to give out yet more tax cuts, that they didn’t choose to see or didn’t choose to look at how consumer spending wasn’t being driven by jobs, but by credit; Cheap credit, because the west didn’t need manufacturing, and also because China was buying up US debt, although why at that stage was seemingly a mystery.  

Now, a gigantic communist state buying up all your debt may have started alarm bells ringing in some leaders, but the economy didn’t need someone at the tiller, the West had the war on terror to worry about so it was just a case of spend, spend, spend.  Of course the West was also creating financial products that would provide sustainable wealth forever.  Only this was wrong.  

The financial products were in reality little more than over-complicated pyramid schemes and when the last people on board were people with little to no money who were given mortgages they couldn’t pay that’s when the bubble burst and all hell broke loose, since then Western economies have been in free-fall with Republicans so terrified in the US of Tax Increases for the rich that the credit agencies have down-graded the US Government’s credit rating for the first time in its history.  But we have also seen the emergence of what the chess game was about.

The global currency.

For so long, the US dollar has been the planet’s global currency.  Commodities, most notably oil, are priced in it.  But now China is making waves that its currency should be the new global currency and with the Euro and Dollar dropping faster than the Titanic it finally has the excuse it needs to justify such a move.  This would mean that the world’s reserve currency and the world’s largest economy would be that of a communist state.  Big business made short term gains to get rich quick but forgot that without jobs people cannot afford its products, the more money you spend in a communist country the more money a communist country has.  China has become the dominant world economy not by military force but by stupid greedy businessmen.  

People are speculating just what it will take to get the global economy back on track, but the reality is that it has not been on a track for sometime.  China derailed it on to the sidings and merrily brought it to a stop without anyone noticing what was happening. 

This is Mister Chatable.

Thanks for listening America.     

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