In the early 1990 there were several conferences on the end of the Soviet Union in which I participated. They were directed by Dr. John H. Moore, formerly deputy director of the Hoover Institution and of the National Science Foundation, who then was the director of the International Institute at George Mason University and later President of Grove City College in Pennsylvania. I participated in one held in Paris at Le Defense building of the Thomson company with a number of Russians dealing with the new situation. Another was sponsored by George Mason University and resulted in a book edited by John H. Moore, Legacies of the Collapse of Marxism (Fairfax, VA, George Mason University Press, 1994). It contained papers by a number of authorities such as Robert Conquest, Daniel Chirot, and George Mason faculty such as James Buchanan, Seymour Martin Lipset, Francis Fukuyama and Leonard P. Liggio.
In my paper I explained the connection between the economic downturn in the US and the end of the Soviet regime. Starting in 1988-89 the US experienced a serious crisis in the Savings and Loan Banking industry (partly resulting from the Democrats in Congress ending the tax advantages in investing in apartment housing). The downturn continued during the presidency of George H. W. Bush contributing to the election of William Jefferson Clinton. US foreign policy had developed a goal of stabilizing the communist regime in the Soviet Union as a way of keeping the Soviets on an even course. This involved propping up the Socialist economy in Russia. The US downtown limited the assistance and investment which had been flowing; this called the buff of the economic viability of economic calculation under Socialism. The Communist economy could no longer be sustained without the Western flows of money. The Soviet Union also was disbanded, and Russia began to behave more like a normal government.
What is the background to September, 2008. Russia has benefited from the world economic situation since it exports large amounts of oil, gas and minerals at high world prices. Russia has not carried through thorough market reforms so that the economy generally remains unsatisfactory. The bureaucracy remains in place, including in the military. Russia´s military has not been improved; it has old weapons and missiles, as well as its one aircraft carrier not fit for combat. But the US position in the world is not improving. One hundred years ago the US, Mexico and Russia´s Caspian Sea (Baku) vied for being first in annual oil production. Mexico´s state oil company has not invested for decades and continues to decline in production. The US Congress and George H. W. Bush placed extreme limits on oil exploration in the US as well as restrictions on oil refining installations (which are many decades old). Russia has not improved its oil technology and has been excluding foreign oil companies with the expertise to increase production.
The US economy appears to be in good shape. It is the financial institutions which are suffering from years of the Federal Reserve´s low interest rates which printed money poured into US financial institutions which then sought to make loans to less and less solvent home buyers. The low interest rate meant almost a decade of zero US savings. The collectivization of the sub-prime mortgage debt proposed by the US Treasury and the Federal Reserve will further expand the national debt beyond the high increases during the current Administration. It has been noted that this year the Baby Boom generation has begun to retire, meaning a much larger deficit from the Social Security pension and medical plans. This will increase the debt during the foreseeable future. As in the 1988-92 period, the financial debt of the US government will strongly limit not only its domestic policies but also its foreign policy. The weakness then of the socialist economy of the Soviet Union meant a thankfully different Russian role abroad. The weakness of a proposed Socialization of US financial institutions could have a similar consequence for the US role abroad. Any new Administration will be forced to make choices and cuts in the spending. Fearfully, it will seek increases in the tax burdens on productive Americans, further impeding economic recovery. The printing of dollars by the Federal Reserve and the deficit spending of the past decade as well as in the future will mean a reduced ability of the US foreign policy to influence decisions.
Copyright © 2010 The Atlas Network.
Developed by The Liberty Lab
Though it might be tough to find a bright side during the economic crisis at hand, this blog post gives some good tips for using this as an opportunity for positive change. Dr. Toni Galardi coined this as a “LifeQuake™†and talks about looking on the bright side – i.e, no money to dine out means more meals spent at home with the family and downsizing to a smaller house means living in closer quarters and getting to know your loved ones better. Check it out for inspiration: http://lifequake.blogspot.com/.
I have just finished reading “The Black Swan” by Nassim Nicholas Taleb, an author of rare insight and with a background in trading. Although he was probably not the only one to be skeptical of government intervention in the financial markets, he remarks “… the government-sponsored institution Fanny Mae, when I look at their risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deemed these events ‘unlikely’.”
The book’s subtitle: “The Impact of the Highly Improbable”. Probably the best book in several decades.