Perspectives on the global economic meltdown- (Nov 28 2010)

VikramS · Post by **VikramS** » 28 Feb 2011 10:22

Hari:

Yes the Euro is doomed. It is just a question of time.

The Irish look at the Icelanders, and ask: "Why Us?". The Greek will follow sooner or later.

And guess where it leaves the USD? There is a chance that it will have one last drop in the next few months, as the Europeans reassure the market and then talk up interest rate hikes. But once it hits the fan.

BTW Neshant, since you follow gold bugs here are two must read news-letters with very inexpensive subscriptions ($200/year)

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devesh · Post by **devesh** » 28 Feb 2011 10:26

the thought about PRC sinking untold resources into Europe only for it to go down the drain is an interesting one, though not impossible. it could be one of those convoluted schemes that Uncle comes up with. very amusing, complicated, tail twisting, mind warping, and ultimately full of unknown/unexpected/unwanted consequences.

although, at this point, Uncle is pretty going one day at a time. sh** has hit the fan so spectacularly that even Uncle's formidable financial networks and presence are not able to control the "Black Swan" events. i expect to see many more of this events to unfold over the next few years. some will be instigated by Uncle, but the majority will most likely occur on their own and the rest of the world will be left scratching its head.

Neshant · Post by **Neshant** » 28 Feb 2011 11:06

VikramS wrote:Specifically, it ignores the impact of the huge emerging economies which still have multiple decades of growth ahead, simply to catch up with the developed world; and their size dwarfs anything in developed world.

I don't know what impact you are talking about but most of the wealth generated will be in those emerging countries themselves, NOT in western economies.

While some western companies in those emerging countries may benefit, the vast majority will face increasing competiton, lower profit margin, wage pressure, and not be in control of the laws and access to those emerging markets. Those difficulties however pale in comparison to the pilfering going on by the useless middleman industry in the west which is destroying the productive - the only hope of ever getting out of this mess.

As for life cycle of an invention, the first question I'd ask is WHAT invention has there been in the last 10 years that is producing well paying jobs on a vast scale in western economies? You cannot identify a single one (!) yet keep harping on inventions where the bulk of the productivity gains have already been realised long ago. You may as well be talking about the enormous improvement in productivity expected next year due to the invention of the wheel 50,000 years ago. You can't bring the same song & dance out of the cupboard each year and point to it as the reason for the stock market going up. Nobody is getting any major gans out of moving from MS Office 10 to MS Office 11 bloatware. The invention of the word processor in the 80s/90s is where the bulk of that gain was already realised.

VikramS wrote:You refuse to answer specific questions about your hypothesis, make tenuous connections without any rational explanation, and ignore any real life examples I provide. It is hard to have a meaningful discussion in that environment.

I repeat - there has not been a single productive industry since the year 2000 that has created well paying jobs on a mass scale in the west. The whole reason a bogus economy based on house flipping arose is BECAUSE there was no productive industry from 2000 to the present. Let that sink in for a minute.

If all the financing & market rigging + same old song & dance of yesterday's technology you speak of did nothing from 2000 to 2008, how do you suppose its suddenly working miracles from mid 2009 to 2010 in 18 months? Especially when an enormous destruction of wealth took place since 2008 with the house flipping and banking leveraging having blown sky high. Perhaps you can address that as opposed to sweeping it under the carpet and giving a marketing department's vision of wealth based on a mirage of stock market going up with no new productive industry powering it.

Stock market going up and so called recovery is as bogus as the phoney wealth created during the real estate bubble. Only difference is when the scam is realised, the wealth will vaporize twices as fast and this time with devastating consequences. The illusion of recovery is being propped up under a mountain of dynamite which is debt, money printing, stock market rigging and scamming and it will end in disaster. That is the lesson of 2008 which you have totally forgot. Its just a question now of which sucker is going to be left holding the bag.

VikramS · Post by **VikramS** » 28 Feb 2011 11:18

Neshant:

(1) Can you point out a single game-changing invention which reached its peak usage within 10 years? Most inventions take many decades before their impact is truly done and over with. In our current environment, the number of new users of past inventions is unlike what it has ever been in the modern worlds. This is extending the timeline during which their impact can be felt.

BTW, the number of jobs added is not the only metric you judge the impact of invention. You also have to take into account how the use of the invention, helps makes other tasks more easier, hence increasing productivity and profitability.

At the end of the day it is profits which spurs the creation of new jobs. New inventions just provide the opportunity to make those profits. However, those profits can also come from doing your current tasks, better; i.e. higher productivity. You have to recognize that link between profits, productivity and inventions. New inventions without a profit potential will lie buried in the patent office.

(2) Do yourself a favor, and try to find some numbers about the amount of revenue generated outside the US by S&P 500 companies. Also try to look at their profitability numbers and the source of their profits. One number which is making the news is the amount of money Cisco has parked outside the US; i.e. overseas profit it is yet to bring back to the US due to tax issues.

(3) The entire global system of the past two decades has been turned upside down thanks to Chinese mercantile policies. So I agree with you that the system is on very shaky grounds. However, how asset prices respond to those shaky grounds is not a given.

Christopher Sidor · Post by **Christopher Sidor** » 28 Feb 2011 13:07

Euro should not die. It is a trail brazer of what I hope will occur in South Asian region in the next two decades.

Euro is going through growing pains. That is normal. Every currency will face challenges. But if it survives this and comes out, then it will be stronger and more dependable. Consider the current euro troubles as "baptism by fire" for this currency.

vina · Post by **vina** » 28 Feb 2011 13:25

Christopher Sidor wrote:Euro should not die. It is a trail brazer of what I hope will occur in South Asian region in the next two decades..

Err. Thanks. If that is your rationale, I would rather that the Oiero is snuffed out right now.

Somehow, I dont fancy tax payers in Bangalore Kerala, bailing out the scum in Pakiland and feeding the untold millions in Bangladesh and in addition the Nepalis and Sri Lankans and paying for their prolifigacy all in return for their hatred, thank you.

If there is every talk of a "South Asian" currency union, it needs to be nipped in the bud in it's infancy. The only "currency union" will be the itsy bitsy parts like Nepal, Bhutan, Bangladesh and Sri Lanka (the Pakis wont coz of H&D reasons), to put in a peg with the INR when their trade with India in a couple of years will make up a massive bulk of their international trade and the INR becomes convertible fully.

There is no need whatsoever to pick up the tab for the liability of those folks and pay for their prolifigacy and welfare handouts like the Germans stupidly did for the rest of the Oiero trash.

abhischekcc · Post by **abhischekcc** » 28 Feb 2011 15:15

VikramS, about your this point:

(1) Can you point out a single game-changing invention which reached its peak usage within 10 years? Most inventions take many decades before their impact is truly done and over with. In our current environment, the number of new users of past inventions is unlike what it has ever been in the modern worlds. This is extending the timeline during which their impact can be felt.

Actually, the effective product life cycles are shrinking. This is because competition has become so intense (increase in no of players, availability of finance/marketing/etc) that technologies diffuse much faster than before. In addition, constant innovation ensures that every technology has a limited shelf life before something better comes. Many promising technologies die before their peak time because a new even more promising technology comes along.

VikramS · Post by **VikramS** » 28 Feb 2011 21:12

abhishek: I am not pointing to specific products but life-cycle of the impact of technology. i.e. for how long will the impact of a new generation of silicon be felt, and continue to increase productivity. That has gone up simply because of the emergence of the huge markets outside the First World which does not mind being a few years behind the adoption curve, but still enjoy the benefits which come with access to new technology. The context is Neshant's claim that there is nothing productive happening in this world...

Also the shortening of life-cycles has bottomed. People no longer change PCs every three years; they do change cell phones as the feature set continues to advance. And even within cell phones the total product life-cycle (first user, second user etc.) is increasing to the extent that reselling of working used electronics is becoming a major business. Even EBay was offering $200 for a working previous generation iPhone! Best Buy now offer buyback guarantees. It has truly reached a state where it is seen as a viable business to invest in.

RamaY · Post by **RamaY** » 28 Feb 2011 23:35

vina wrote:
Christopher Sidor wrote:Euro should not die. It is a trail brazer of what I hope will occur in South Asian region in the next two decades..
Err. Thanks. If that is your rationale, I would rather that the Oiero is snuffed out right now.

Somehow, I dont fancy tax payers in Bangalore Kerala, bailing out the scum in Pakiland and feeding the untold millions in Bangladesh and in addition the Nepalis and Sri Lankans and paying for their prolifigacy all in return for their hatred, thank you.

If there is every talk of a "South Asian" currency union, it needs to be nipped in the bud in it's infancy. The only "currency union" will be the itsy bitsy parts like Nepal, Bhutan, Bangladesh and Sri Lanka (the Pakis wont coz of H&D reasons), to put in a peg with the INR when their trade with India in a couple of years will make up a massive bulk of their international trade and the INR becomes convertible fully.

There is no need whatsoever to pick up the tab for the liability of those folks and pay for their prolifigacy and welfare handouts like the Germans stupidly did for the rest of the Oiero trash.

++1 Vinaji. Thanks for nipping this thought in the bud.

svinayak · Post by **svinayak** » 28 Feb 2011 23:58

RamaY wrote: Euro should not die. It is a trail brazer of what I hope will occur in South Asian region in the next two decades..
I would rather that the Oiero is snuffed out right now.

There is no need whatsoever to pick up the tab for the liability of those folks and pay for their prolifigacy and welfare handouts like the Germans stupidly did for the rest of the Oiero trash.

++1 Vinaji. Thanks for nipping this thought in the bud.

Euro is a failed project created first to bring alternate global currency to dollar. This was seen as a threat to by the US elite in mid 1990s. My college dean head of the finance dept was talking as if it was enemy to the US supremacy. This competition and rivalry between the elites of US and EU since then has resulted in the current global financial mess. The EU countries started giving guarantees to the debt in EU zone to compete against the US system. Creative financing and excessive spending made US boomer's to spend and reach for the stars in the wall street market.

But Euro has achieved what the final objective of the backers had in mind. The US dollar now has to make for correction and bring normalcy to the global trade and economy. This will create some hardship and pain in the global system but it is inevitable.

ramana · Post by **ramana** » 01 Mar 2011 04:42

Hari Seldon,
"Inside Job" got the Oscar for the best documentary! The director made the point that not one bank executive went to jail for the fraud.

Neshant · Post by **Neshant** » 01 Mar 2011 07:55

VikramS wrote:(1) Can you point out a single game-changing invention which reached its peak usage within 10 years?

Perhaps you can define what peak means. Peak bang for the buck occurs not long after a good deal of industry absorbs it. Cell phones are not new, they came about in the 80s. The internet came about in the 80s as well for public usage though took off in the 90s. By 2000, all large and mid scale companies were connected to the Internet and practically all of the major online retailers today were established already. Most of the returns on productivity had already occured by then.

The fact is that there hasn't been a single industry that has emerged since 2000 to create well paying jobs. No matter what song and dance is brought out, that remains an irrefutable and unescapable fact. Meanwhile debt has done a moon shot with no clear indication of how (more like IF) it will be repaid.

2008 totally destroys your claim that yesterday's technology was creating gains in productivity as there are today numerically fewer (and lower quality and less productive) jobs as compared to then (2000).

Most inventions take many decades before their impact is truly done and over with.

We know that nothing is being impacted because a productive economy is profitable & expands creating jobs - which isn't currently the case. The current economy is not sound because its just based on money printing, running up massive debt, stock market rigging and scamming - and inspite of that wreckless pissing away of money, is still destroying jobs!

This is not a healthy economy as the foolish oracle at the top has convinced himself he knows what's best. How a guy who practically created the current mess and slept his way into the biggest bubble in history can still be pretending he knows what to do is mind boggling. His ass would have been fired long ago in any industry in the productive economy.

Do yourself a favor, and try to find some numbers about the amount of revenue generated outside the US by S&P 500 companies.

Irrelavant as we have not seen any productive jobs being created domestically (US) despite all the alleged overseas profitability.

What's needed is for a productive, new industry to emerge that can create well paying jobs on a vast scale. Not the same song & dance as that won't cut it. Unless and until that happens, there is no hope of recovey out of thin air - especially with the massive debt overhang which threatens the immediate future. If anything, just the opposite of a recovery is unfolding.

Ambar · Post by **Ambar** » 01 Mar 2011 09:23

Scientists say humans have been around for over 250K years now.A new life changing 'invention' every decade that generates massive employment ? Hmmm..that's quite a lot of work ahead of Neshant if he tries atleast once to back his rants. Forget about the entire history of mankind, if i just have to look at the last 2 centuries, the Brits reigned supreme thanks to de-engineering of their colonies. The yanks reigned supreme, thanks to self-immobilization of Europeans through great wars, and the ability of US to attract the best talent from around the world and give them a fair chance. Now how many 'life changing','massive job creating' inventions have we seen in the last century? Automobiles ? No.19th century 'obsolete tech' as Neshant would say. Electricity? No.Again 19th century junk.Textiles? Mining? Mills? Agriculture? Telecommunications? None! The bottomline is, job creation in large numbers are rarely dependent on advent of life changing inventions alone. China and India have not changed the world though innovation, but have created massive number of jobs and improved lifestyle by transforming from an agrarian society to one based on service sector and manufacturing.

Blaming fed or the government is useless unless you come up with solutions. Having anarchy or dismantling the feds wont bring back millions of jobs lost in a globalized world. But what can be salvaged is by strict dumping laws,getting people off the addiction to cheap goods/oil,incentives to companies that add jobs. When a waiter makes more money than a software engineer, you know there's something wrong with the system.

Why blame the government or the fed when a large portion of S&P500 companies are sitting on billions of dollars in free cashflow that they don't want to reinvest by re-hiring?

Stock market going up and so called recovery is as bogus as the phoney wealth created during the real estate bubble.

I've asked you this before, and let me ask again : Pick atleast ONE s&P 500 listed company,dig through its 10-K and 10-Qs and prove that their profits are phony. Your rants are like me saying "I'm sure there are aliens, because I've heard from the alternative media that a couple of martians have been locked up in Roswell AFB!" . And please come up with a better suggestion than Peter Schiff's books! Atleast, professional journalists like Roger Lowenstein and Gillian Tett have painstakingly explained the economic crisis,reasons from the perspective of social-anthropologists,than a self-aggrandizement,rant filled 'manifesto' of Schiff.

devesh · Post by **devesh** » 01 Mar 2011 10:03

all of you are unnecessarily trashing Neshant. the guy has a point. he's saying that the so called fictional growth in America since the 2000's is just a fake growth based on debt. he is fundamentally right about that. US has turned into an economic and financial basket case addicted to debt/spending and fiat paper printing. it is not only sowing the seeds of its own collapse, but will take down the rest of the world with it.

as for Austrian theory, i'm not always sure of their ideas, but i completely agree with Peter Schiff when he says that US is on a path to self destruction b/c of debt/fiat money and the vaporization of manufacturing and production.

regardless of all these discussions, i am very confident in my assessment that the consequence of this scam perpetuated by the US govt and their Globalist allies in finance/banking will be a massive revolt by the American populace against every kind of globalist dreams of the US elite. America is heading in this direction. unnecessary and cumbersome wars, utopian internationalist institutions like IMF, etc, and non-sensical anti-human ideas like carbon-is-evil/Global Warming, all of these globalist ideas and institutions will be increasingly trashed and ultimately either thoroughly abolished or vastly reduced in size, if America wants to survive and keep the last remnants of its freedoms and liberties.

the Tea Party is essentially the beginning of this strain of American thought process. it will take time, and considering the Neocons are doing every thing they can to co-opt them, it will take some time before enlightenment comes, but it will happen. American is facing the kind of problems right now that can't be papered over. you can't put a lid on these problems.

and i'll make a parting observation. Indians in American or in India mustn't let their political views cloud their observations when it comes to America. i've seen this happen more than once w.r.t. Indian liberals. the Tea Party movement is considered by many Indian Americans as a neo-Nazi manifestation of the 21st century. my observation is that is a complete misread of American history and American populism. American right wing populism has as much suspicion for the elites as Leftist populism. this is a fundamental aspect of American politics that has to be understood. suspicion of entrenched power is a nightmarish fear for Rightist populists in America, perhaps even more so than for Leftists. read Pat Buchannan and you will understand where this comes from.

VikramS · Post by **VikramS** » 01 Mar 2011 10:04

Neshant:

1. The foreign revenues and earnings of S&P 500 are important because that is where the economic growth is. The S&P 500 is heavily leveraged to global GDP growth, and that has been up at a pretty clip. Go back and read your own posts when you claimed that earnings and revenues can not be growing since the US is so screwed. But when offered an explanation on where your hypothesis is wrong you go back to your jobs yada yada rant.

2. In case you have forgotten, the current discussion is on scrutinizing the hypothesis that inventions that create jobs are required for profits and equity prices to grow. I have been trying to explain to you, giving very simple real-world examples, that the impact of inventions on productivity continues for a long time, as more and more people make use of it. In fact the most impact is felt when the invention almost becomes like a utility, something commoditized which everyone can take for granted. And there is a very direct correlation between productivity, profits, economic growth, and equity prices.

3. If you truly believe that all productivity gains from the internet were achieved in the 90s then at least I have nothing to learn from you or offer you. I hope others can, when I clearly have failed. At least here in the valley, people looking for jobs are getting multiple offers. And the unemployment rate among the college educated is gradually creeping down to levels near the peak. And many of these job offers are internet related; from better search, to content streaming, to mobile computing and what not. You must truly be working in a miserable organization, in a miserable location to have such a D&G view of where technology is heading.

devesh · Post by **devesh** » 01 Mar 2011 10:14

the question is not whether IT revolution has run its course, as it is if the productive side of the economy is being bamboozled by the cancerous rise of the Finance oligarchy.

productive sectors are being crowded out by the vast power of the Banking mobsters. this is what is hindering growth of productive sectors and concentrating more wealth and power in the hands of the financiers.

Hari Seldon · Post by **Hari Seldon** » 01 Mar 2011 10:15

ramana wrote:Hari Seldon,
"Inside Job" got the Oscar for the best documentary! The director made the point that not one bank executive went to jail for the fraud.

Yes, I heard. Haven't the patience to sit through the oscars - IMVVHO a semi-megalomaniacal manifestation of hollywood narcissism and a mutual backslapping/ backscratching luvfest.

I hear that even sri obama got little applause when he showed up at the oscars. One would have expected the left-libby oscar type audience to give standing ovations and all, no?

Here's from naked capitalism:

The politics of the night belonged to Charles Ferguson, who won the Oscar for Best Documentary for Inside Job. He said at the end of his acceptance speech:

Forgive me, I must start by pointing out that three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail and that’s wrong.”
Ferguson has a very mild manner, but he is utterly fearless. He wants prosecutions, and he used one of the biggest stages in the world to ask for them. Ferguson has gone after the Obama administration and spares no one, as when he called Eric Holder and Andrew Cuomo “partners in crime".

Ouch.

link

somnath · Post by **somnath** » 01 Mar 2011 10:23

devesh wrote:as for Austrian theory, i'm not always sure of their ideas, but i completely agree with Peter Schiff when he says that US is on a path to self destruction b/c of debt/fiat money and the vaporization of manufacturing and production

There is nothing "wrong" about the Austrian school...They can be as right or wrong as the Keynesians..However, general motherhood ranting on banks and central banks has nothing to do with an economic school...Friedrich Hayek would be turning in his grave if he heard that!

Here is the ORacle of Omaha on America's prospects..He is hardly a dispassionate observer, but still his words count for a lot..

http://www.berkshirehathaway.com/letters/2010ltr.pdf

Last year – in the face of widespread pessimism about our economy – we demonstrated our enthusiasm
for capital investment at Berkshire by spending $6 billion on property and equipment. Of this amount,
$5.4 billion – or 90% of the total – was spent in the United States. Certainly our businesses will expand abroad in
the future, but an overwhelming part of their future investments will be at home. In 2011, we will set a new
record for capital spending – $8 billion – and spend all of the $2 billion increase in the United States.

Hari Seldon · Post by **Hari Seldon** » 01 Mar 2011 10:26

devesh wrote:the question is not whether IT revolution has run its course, as it is if the productive side of the economy is being bamboozled by the cancerous rise of the Finance oligarchy.

productive sectors are being crowded out by the vast power of the Banking mobsters. this is what is hindering growth of productive sectors and concentrating more wealth and power in the hands of the financiers.

Well, well.... anyone recall the critters in congress who killed the superconducting super-colliding project for want of a piffling 1 billion USD back in the early nineties? And the way the same critters miraculously authorized mass-production of untold billions (well, $700+ bn for TARP I to start with) when the fin elite establishment crashed the car into the hard wall of mathematical reality (leverage reaching 50,60,70, even 80:1 in some cases...wow or wow or what?!?! WHat were they effing thinking?!)

Anyway, here's more on the charles ferguson saga:
“The Financial Industry Has Become So Politically Powerful That It Is Able To Inhibit the Normal Process of Justice And Law Enforcement”

In his acceptance speech for winner for best documentary at the Oscars, director Craig Ferguson said:

Three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.
But none of the mainstream, corporate networks covered it. Not CBS, ABC, NBC or MSNBC. WOW

Ferguson told Reuters:

“The biggest surprise to me personally and biggest disappointment was that nobody in the Obama administration would speak with me even off the record — including people that I’ve known for many, many years,” Ferguson said backstage.

He believes Americans, who lost homes and jobs in the millions because of shady mortgage lending and bank collapses, are disappointed that “nothing has been done.”

“Unfortunately, I think that the reason is predominantly that the financial industry has become so politically powerful that it is able to inhibit the normal process of justice and law enforcement,” said Ferguson.

ding ding ding ding ding...

Ambar · Post by **Ambar** » 01 Mar 2011 10:35

devesh wrote:the question is not whether IT revolution has run its course, as it is if the productive side of the economy is being bamboozled by the cancerous rise of the Finance oligarchy.

productive sectors are being crowded out by the vast power of the Banking mobsters. this is what is hindering growth of productive sectors and concentrating more wealth and power in the hands of the financiers.

Which productive sector has been crowded out by the banking 'mobsters' and how? If i'm in money market or capital market for my company, i know of no better alternatives than the US. The non-banking companies are sitting on record free-cashflow that they neither want to hike the dividends nor re-hire. The government can increase the tax on this cash, but then the Goldilocks CEOs will howl on CNBC how "regulations and taxation is killing the economy". There's only so much the govt can do.

VikramS · Post by **VikramS** » 01 Mar 2011 10:39

devesh:

All what you are saying makes sense. America lost it its manufacturing base to China. China did not let its currency float; to keep that artificial imbalanced situation alive, it serviced the debt addiction of the US. Now that the genie is out, everyone is trying to find a fix.

The Chinese are reluctant to let their export driven economy come to a halt since the PRC does not have a representative government, and the commies are worried that the masses will revolt. The US is fighting back via QE.

As I have written before, while the primary domestic objective of QE is to provide economic stimulus, the bigger international objective is to devalue the dollar to a point where the US can regain its competitiveness. The inflation threat triggered by QE is already forcing emerging economies which spend a much larger percentage on commodities to consider increasing rates, and ending the cycle of competitive devaluation. This is how the US wants to regain its competitiveness.

The Tea Party is already making waves. Look at what is happening in Wisconsin. In NJ, Gov Christie is going after sacred institutions. Hopefully the wave will travel to other parts of the country also. The good thing about the US is that when things get bad, they do try to fix them. Compared to Japan, US banks have written of massive amount of losses, instead of hiding them, when faced with a similar collapse in asset prices.

Also note that the Fed's efforts are primary directed to preserve the nominal value of the asset backing the debt. So far they have succeeded. It is true that we are seeing commodity inflation. But the US and other advanced economies are much less sensitive to commodity inflation than the third world. It will slow down growth, and especially hurt the poor but the overall pain is much less than in the emerging markets.

You just need to look at the price of Gold and Silver to see that the growth in last ten years, has all been in nominal value; assuming you believe that Gold is a true barometer of value.

I believe that the relative valuation of paper and gold goes through cycles, and right now gold is rising while fiat is falling; a reflection of the global debasement of fiat.
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I have heard these "End the Fed", the banker are looting us, they are hindering growth arguments for a long time. The problem is that I have yet to see even a single viable alternative proposed (except for the Gold Standard) or a cogent hypothesis on how the productive side of the economy is being bamboozled and destroyed. The Gold standard itself has its own problems.

And the looting of the poor argument is quite specious. The average American enjoys a significantly higher standard of living than an Indian or Chinese with the same level of intellect, education and work-ethic. That higher standard is sustained by the power of the US system.

Globalization of the work-force meant that those Americans who were grossly over compensated for the work they were doing lost their jobs. This includes the $250K typist pretending to be a computer consultant in 2000, and the auto-factory worker who was pulling in $50K plus benefits with barely a high-school diploma, and questionable work ethics.

It is easy to scream and yell about how unfair the system was, but it was the same system which allowed middle-America to have this huge advantage over similar workers in the emerging world. Without the system middle America would not have had those advantages in the first place.

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For us as individuals, all this high flying talk about bankers and looters is meaningless. We are just a small part of the system. Our job is to benefit from whatever the system throws at us.

Arjun · Post by **Arjun** » 01 Mar 2011 10:40

devesh wrote:the question is not whether IT revolution has run its course, as it is if the productive side of the economy is being bamboozled by the cancerous rise of the Finance oligarchy.

productive sectors are being crowded out by the vast power of the Banking mobsters. this is what is hindering growth of productive sectors and concentrating more wealth and power in the hands of the financiers.

And how exactly is Banking / Wall St crowding out the productive side?

The only possibility where your claim makes some sense is in the war for talent - and possibly talented minds who would otherwise have gone into Tech / Life Sciences get into Wall St - but then again, as in everything else, supply and demand will even things out. Wall Street needs fast-growing firms to invest in - and will bet significant amounts of capital in promising firms so they can hire the best offering competitive terms.

The IT and Life sciences sectors in the US would be nowhere close to what they are today without VC and PE growth capital poured in from the financial industry.

paramu · Post by **paramu** » 01 Mar 2011 10:57

VikramS wrote:For us as individuals, all this high flying talk about bankers and looters is meaningless. We are just a small part of the system. Our job is to benefit from whatever the system throws at us.

Hmm.... doesn't it sound like an argument in favor of feudalism?

Arjun · Post by **Arjun** » 01 Mar 2011 11:15

paramu wrote:
VikramS wrote:For us as individuals, all this high flying talk about bankers and looters is meaningless. We are just a small part of the system. Our job is to benefit from whatever the system throws at us.
Hmm.... doesn't it sound like an argument in favor of feudalism?

It would be feudalism if a specific set of individuals were garnering all the benefits of 'the system'. Firstly, Wall Street is not necessarily the biggest wealth generator of all sectors (how many Wall Street captains do you find on the billionaires list as opposed to 'old' and 'new economy' entrepreneurs?) - and secondly, Wall St is highly meritocratic...folks making the returns would obtain outsize rewards, else they are out.

devesh · Post by **devesh** » 01 Mar 2011 11:23

it is amazing to me that you guys are so enamored of wall street/bankers. even bashing productive sector CEO's to protect the banksters???? why?

ever heard of competition. in a competitive environment, there are winners and losers. since the 90's, the winners have increasingly been the bankers. look at the % share of finance profits as a part of the total corporate profits of US....the % share of finance sector profits has gone through the roof. to stay competitive, one of the things that industrial and productive sectors have done is outsource hard industries. apart from the whole free trade dogma, i believe the transfer of corporate control over to the hyenas called financiers has been one of the fundamental reasons for the De-industrialization of America. the free trade dogma itself is non-sensical. but combine that with the ever increasing predatory power of financiers, and the productive sectors will do anything to stay alive: like shifting entire production lines to foreign countries.

what has happened in US is a major lesson for India. We must guard against the Free Trade jackals and the Finance mobsters. the fact that Indian govt makes its own currency has been a counterbalance to the power of global financiers in India. in the US, the currency of the realm itself is debt. it is mathematically impossible for the US to ever get out of debt, b/c to do so, it would have to completely withdraw the currency. the very existence of the US Dollar ensures that US is always in debt. it's a predatory ponzi scheme.

Arjun · Post by **Arjun** » 01 Mar 2011 12:00

Speaking of productivity, this whole discussion seems non-productive. There is absolutely no way the modern world can function without banks, insurance & capital markets firms. What would be productive is to discuss what kind of regulation one needs to have on these firms and what leverage ratio caps need to be put in place.

devesh · Post by **devesh** » 01 Mar 2011 12:26

^^^ who said we don't need banks and capital? what Neshant has been saying is that the whole financialization of the US economy has turned the country into a basket case. the entire economy is based on fictitious debt instruments like derivatives which have absolutely no economic purpose. the $1.5 Quadrillion Derivative "industry" is a giant black hole that is sucking wealth from productive workers and industries into itself.

we need banks, insurance, capital, etc. what we don't need is fictitious paper instruments which are in reality Weapons of Mass Economic Destruction (WMED's).

Neshant · Post by **Neshant** » 01 Mar 2011 12:40

VikramS wrote:1. The foreign revenues and earnings of S&P 500 are important because that is where the economic growth is.

My man you started by feeding me a line on cloud computing and stuff being the reason for the stock market going up. After I pointed out it was total bunk, you are now onto foreign markets as being the reason stock market is going up.

This reminds me of the latter days of the housing market collapse. Analysts could not point out a single productive industry in the economy that was generating wealth to support ridiculous real estate valuations. So they started dreaming up all kinds of reasons to justify over-priced real estate and the over-priced stock market until the scam fell apart.

To be sure, productive growth is happening overseas, but NOT domestically in America where the bulk of GDP is derived. Gains in productivity are PRIMARILY to the benefit of the emerging economy and only tangentally to the benefit of American corporations trying to gain access and sell into those markets.

It were as if I was talking about the great academic achievement and career development of a neighbour down the street and started claiming his success as my own. Perhaps with improvement in his earnings, he might buy a few more trinkets at my garage sale. But his gain in productivity is primarily to HIS benefit not mine. I don't have access to his bank account. The situation is even more tricky if one considers the neighbour to be competition as is the case with US & China.

VikramS wrote:I have been trying to explain to you, giving very simple real-world examples, that the impact of inventions on productivity continues for a long time, as more and more people make use of it.

We can go round and round in circles on this. As I have pointed out at least 3 times now, bringing out the same song & dance from the cupboard isn't working. The gains in productivity are largely realised when sectors of society that benefit most from an invention adopt it. That has *already* been the case with computers, cell phone, the internet.. etc in America. A slightly more fancy version of the invention does not add any great increase in productivity. Going from a previous iphone to the current model iphone did not boost my productivity nearly as much as getting my first cell phone.

If any of the above was generating productive jobs, there would not be any need for money printing, running up the debt, stock market rigging and scamming behind a wall of balance sheet secrecy.

From 2000 onwards, there has not been a single productive industry that has generated well paying jobs on a vast scale. The only headway I have made with you on this you are no longer talking cloud computing or MS bloatware as generating a leap in productivity.

VikramS wrote:At least here in the valley, people looking for jobs are getting multiple offers.

I'm sure things in the valley will be looking good while the money printing, running up of debt, govt contracts, research grants, defence projects, assorted subsidies and other goodies keep flowing in.

That being said, there is always a job abound if you are very good at something be it engineering or basket weaving.

Ideally the best kind of capital is private capital and govt should stay out and let the free market find the profits. But if the money is to be squandered by govt as it is now, its better off going into tech & science rather than the worthless middleman economy.

somnath · Post by **somnath** » 01 Mar 2011 12:49

devesh wrote:the entire economy is based on fictitious debt instruments like derivatives which have absolutely no economic purpose. the $1.5 Quadrillion Derivative "industry" is a giant black hole that is sucking wealth from productive workers and industries into itself.

we need banks, insurance, capital, etc. what we don't need is fictitious paper instruments which are in reality Weapons of Mass Economic Destruction (WMED's).

Devesh-ji, derivatives have no economic purpose? Suppose you are the treasurer of a "productive industrial unit"...You need to borrow money for 5 years from a bank..Bank quotes you a floating rate of Libor+4% (say)..Now interest rates are going up, you want to hedge yourself against the risk of rising Libor - how do you do that? the answer might surprise you - through derivatives...

One more example..Your productive industrial unit uses steel as an input - and prices of steel are going up..Your pricing power is significantly lesser than those of steel producers..You want to hedge against rising input costs - how to do that? Simple, derivatives again...

Now anything in excess is bad (barring maybe sex

).....So derivatives used for purposes not intended by instittuions not supposed to and laid off with investors who did not understand them was a problem..And that needs to be tackled...But to therefore argue that proliferation of financial assets is bad in itself is like arguing that proliferation of internet properties in the late '90s was bad as it spawned the dot com crash!

Neshant · Post by **Neshant** » 01 Mar 2011 12:57

somnath wrote: Devesh-ji, derivatives have no economic purpose? Suppose you are the treasurer of a "productive industrial unit"... how do you do that? the answer might surprise you - through derivatives...

Its all well and good when there is no leverage and private entities that earned their money are putting up their own capital to gamble in the casino that is international financing & high rolling.

But when sh&t leveraged 100 to 1 starts blowing up and there is no collateral behind it and the taxpayer (sucker) is put on the hook under some bogus logic of too big to fail..and money is printed, debt is run up by the trillions, the saver who had no part in it gets ripped off and the productive economy gets descimated.. then no, its totally worthless.

It would have been better if there was no derivatives.

Neshant · Post by **Neshant** » 01 Mar 2011 13:11

devesh wrote:ever heard of competition. in a competitive environment, there are winners and losers. since the 90's, the winners have increasingly been the bankers. look at the % share of finance profits as a part of the total corporate profits of US....the % share of finance sector profits has gone through the roof.

what has happened in US is a major lesson for India. We must guard against the Free Trade jackals and the Finance mobsters. the fact that Indian govt makes its own currency has been a counterbalance to the power of global financiers in India. it's a predatory ponzi scheme.

At last someone is making sense!! I agree 100% with all you said.

Its really a warning of how the unchecked influence of paper shufflers can wreak havoc on a nation. By far the biggest threat to India is not a large scale military invasion but some of these financial goons preaching false economics, getting their tenticles into govt and destroying the wealth of generations with their ponzi schemes.

I'm of the opinion that as much as possible, decision making in India should be not concentrated in any one center of power but rather diffuse and spread out. Its really the only protection against the system being hijacked by these trouser bandits from the banking & financing crowd.

I'd further add that the most full proof safeguard against the masses being ripped off by financial crooks at the top through paper games is for the people to OWN their wealth (the fruits of their labor). The only way this is possible now is if the value of the money is intrinsic (physical gold & silver). I'm not talking paper gold either as IMO if you don't hold it, you don't own it. Not all of a person's wealth needs to be in that but at least a portion of it to guard against the useless middleman industry which has spread like cancer.

VikramS · Post by **VikramS** » 01 Mar 2011 14:30

Neshant:

I initially gave the cloud example because it is something which is making a meaningful difference in the way I do things. I thought it would resonate, but clearly it did not since you think that it is all an old invention and old inventions can not improve productivity etc.

You keep up bringing debt, Fed, banksters in an incoherent rant. I tried to point out that profits that companies are making are real; a part of the reason is that a lot of growth is coming from overseas. And that within the US the levels of productivity are enormously high, partly due to the pervasiveness of information, on demand.

I also gave you the example of how the growth in the base of people who have access to newer technologies has a multiplier effect on the utility of that technology as a productivity enhancer. Let me try for the last time.

To make it simpler let us take the case of a fisherman in India who had access to only one port and one trader to sell his wares. Now armed with a cell-phone he can call ahead and negotiate with different traders in different local ports and figure out where the best deal is. So when he rolls in after a few days in sea, he is getting a much better price for his catch. The middleman's cut goes down. So instead of the middleman making Rs. 100 per fisherman, he makes Rs 50, and ten other fishermen have an extra Rs. 50. So while the middleman has Rs 500 less to buy gold, or invest in some black market real estate, each fisherman now has an extra Rs 50 which he spends on better food, education, and perhaps a TV for has family. That same Rs 500 in the hand of 10 fisherman, results in a lot more extra commerce, and increases the velocity of money, than in the hand of the already rich trader. This was an example where there was just redistribution of wealth due to better information.

Now if the fisherman, can get regular weather updates, and real-time information about the status of different fishing grounds, he can catch more fish, burn less fuel, spend less time at sea and take less risks. That sir for you is increase in productivity. All it required was the use of a simple cell-phone, an invention which came to market more than a generation ago, but is only now becoming all pervasive.

The rural employment scheme is successful this time since the money is deposited electronically in the account of the laborer. The laborer has an electronic id card system and does not even have to be literate to get his share. A decade ago a bulk of the laborer's income would have been lost in graft. Like the middleman fish trader who lost his dominant position thanks to the availability of information, the laborer now has enough money to perhaps rise above the subsistence level he has lived all his life.

That is why it is not the day the invention was made or the day the patent was filed which is important, but the time it becomes all pervasive which becomes important. Now that laborer or fisherman may buy more food which increases the demand for fertilizers (benefiting the fertilizer companies in S&P) or energy (benefiting the energy and oil exploration companies) or buy an electronic gadget (benefiting the silicon companies in the valley) (etc. etc.). Though the individual amount being spent is not huge, the numbers are so large that they add up.

And that is why the collective profits of S&P are now near the peak, even though the financials are way down, and the US economy is barely sputtering. The Fed Ponzi scheme does have a part to play in this. But their part is primarily psychological.

But you are stuck in the view that unless they are job creating inventions everything is a mirage. In fact the examples you gave (genetics) is perhaps one which will create the least amount of jobs. Wonder why? Costs. How many nations can spend more on medical care than they are already spending? So even if you discover a wonder therapy which can cure cancer but costs $200K, not many people will be able to afford it, and the number of jobs added is going to be minimal. Make it cost $20 and people will be lining up to take gene-vaccines.

The US will pay a cost of the past excess no doubt. But while the Fed punch bowl is out, enjoy the party..
You already have gold and silver; so why worry??
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Bankers take risk and get compensated for that. Perhaps you have never been on the business side of things trying to secure a fixed price for your inputs, and hedging the price of your output. They lose their jobs often, and work in a cut-throat ultra-competitive environment.

I completely agree that their compensations are out of whack with the value they add. How much you earn is not correlated to the value you add; it is based on supply and demand, and how much control you have. It might not sound fair, but it is much better than a babu sitting in a government office trying to figure out how much you should be paid. It is a free country and if you feel that they are over compensated, why not join them? When I joined, the bankers were wondering why two guys who created Youtube were getting paid $1.5B for putting up a database and a server on the web. The rewards of life are not fair..
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As noted above a certain class of derivatives were abused. Part of the reason that happened was that yields were so low, that investors would take on unknown risks just to get 20-30 extra basis points (guess why the yields were so low). They stopped doing their due diligence. So the incentive for the banker to turn waste into roses was enormous. But the bankers were neither the first and will not be the last salesperson who did not have a clue about what they were selling. If they had they would not have been stuck with billions of toxic assets on their balance sheets; they never thought it would get so bad. Except perhaps for a few most did not have an idea about the DEGREE of fraud in the trenches..
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And while their income sounds great, these guys also pay a big fat bundle in taxes. After you count NYC taxes, NY State taxes (total is about 11%) and Federal taxes (income, medicare, ssn) you end up giving almost 50% of your income in taxes. Then the sales tax is about 10%. So those 400K average bonus for the GS employee sounds wonderful, but the take home level is not that high. Start factoring in the cost of living, or the high real-estate taxes (about 2-3% in Long Island) and the multi-hour commute if you have a family and cannot afford a multi-million dollar Manhattan condo, and so on.
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And modern world runs on middle-men. Otherwise you will be growing your wheat, milking your cow and baking your own bread. Focus on what went wrong instead of these generic rants. When did you discover the gold bugs?

ramana · Post by **ramana** » 01 Mar 2011 22:42

Wasnt the "Oracle of Omaha" bleating for bailout to protect his investments after the 2008 meltdown!

Some Oracle!

Neshant · Post by **Neshant** » 02 Mar 2011 06:19

ramana wrote:Wasnt the "Oracle of Omaha" bleating for bailout to protect his investments after the 2008 meltdown!

Some Oracle!

The guy was hollering for a bailout back in 2008. When the initial bailout bill got shot down, he started hollering even more until on the second attempt and after much bribery of politicians, it got passed.

Thats about when I lost all respect for the guy. He's no investing genius. He's the oracle of bailouts.

somnath · Post by **somnath** » 02 Mar 2011 06:32

ramana wrote:Wasnt the "Oracle of Omaha" bleating for bailout to protect his investments after the 2008 meltdown!

Some Oracle!

Of course, he is hardly a dispassionate academic! BTW, a large part of even that tribe was asking for a bailout...As a custodian of shareholder money, if Warren Buffet uses his influences to protect that, all power to him!

That doesnt preclude reading into his line of investment thought - as many professionals across the world do...With the monies at his disposal, he can invest anywhere...If he is placing such big time bets on the US, it is useful perspective, even for those who dont agree..

Neshant · Post by **Neshant** » 02 Mar 2011 07:15

VikramS wrote:I initially gave the cloud example because it is something which is making a meaningful difference in the way I do things. ?

As I already mentioned, its nothing but a marketting buzzword - old wine in a new bottle. Its no breakthrough in anything productive other than marketting spin which you fell for hook, line & sinker.

VikramS wrote:I tried to point out that profits that companies are making are real;

No they are not real. If it was real there would be no need for money printing, running up debt, stock market rigging and scamming.

VikramS wrote:And that within the US the levels of productivity are enormously high, partly due to the pervasiveness of information, on demand

Enormously high is highly dependant on what industry is being talked about. Productivity in scamming is enormously high in financing & banking. In the real economy, real productivity is not enormously high but is growing due to layoffs, shipping jobs overseas to lower cost destinations and squeezing more out of the existing work force, not any magic that happened since 2008! By the way why didn't we see this magic from 2000 to 2008 ?

I also gave you the example of how the growth in the base of people who have access to newer technologies has a multiplier effect on the utility of that technology as a productivity enhancer.

And I already pointed out that :

"To be sure, productive growth is happening overseas, but NOT domestically in America where the bulk of GDP is derived. Gains in productivity are PRIMARILY to the benefit of the emerging economy and only tangentally to the benefit of American corporations trying to gain access and sell into those markets."

and...

"As I have pointed out at least 3 times now, bringing out the same song & dance from the cupboard isn't working. The gains in productivity are largely realised when sectors of society that benefit most from an invention adopt it. That has *already* been the case with computers, cell phone, the internet.. etc in America. A slightly more fancy version of the invention does not add any great increase in productivity. Going from a previous iphone to the current model iphone did not boost my productivity nearly as much as getting my first cell phone."

The same song & dance brought out every year does not work.

To make it simpler let us take the case of a fisherman in India

Why not use a fisherman in US as an example. Opps, cell phones are already yesterday's news since the fisherman already has more than a few cell phones since the 90s. But hey he went from Iphone model 3 to model 4 so that doubled his productivity right? Sorry but the major gain in productivity was in getting his first cell phone. A slightly fancier cell phone thereafter does not double anyone's productivity.

Now if the fisherman,

I think you have a very poor understanding of what the issue is. I'm 100% certain it would be easy to con you with a marketing buzzword or some bogus claim of breakthrough technology when in fact its just old wine in a new bottle.

But since you talk about fish, read the book How an Economy Grows and Why it Crashes. It starts with the simple analogy of 3 guys on an island who catch 1 fish a day. Plus its a funny read and you will learn what I'm talking about.

All it required was the use of a simple cell-phone, an invention which came to market more than a generation ago, but is only now becoming all pervasive.

Becoming pervasive to people in China and boosting their productivity. It has almost no impact on America - ONLY TANGENTAL IMPACT as I mentioned. Meaning American companies in China might see some MINOR profits from that great boost in productivity and some profit from selling a cell phone (which China makes already) but the BULK OF THE GAIN IS REALISED BY China/Chinese/Chinese companies, NOT America. The Chinese economy benefits from a boost in productivity, NOT America.

And that is why the collective profits of S&P are now near the peak,

The only thing nearing a peak is inflation due to money printing and a debt bubble due to wreckless borrowing and speculation with that borrowed money. There is no productive industry that is powering the rise of the S&P and you cannot name a single one since 2000. What is happening is lots of unemployment and under-employment *despite* all the money wasting aka stimulus. This in itself is astonishing given the amount of money being dumped into the hole. On average 1.7 trillion per year is being spent in deficit and one can only imagine how this stone is going to sink once the enormous spending is forced to come to an end.

In fact the examples you gave (genetics) is perhaps one which will create the least amount of jobs. Wonder why? Costs. How many nations can spend more on medical care than they are already spending?

Genetics is likely to be the next productive boom industry sometime this century. Based on your top down planning method of thinking you have it ass backwards.

The flow is as follows : Genetics results in higher crop yields & delivery of grain, lower farming input costs, higher profit margin for the farmer and all along the chain. The profits come from below through increases in productivity, not from above. Ditto for medical care. People are not tied up in hospitals for years on end waiting for a donor transplant with their productivity going negative. They get their cloned heart transplanted and within a couple of months are back to their (hopefully productive) day job paying back the cost of their operation in installments - not being a burden to society on medicare/ medicaid till the day they die in their hospital bed on their life support. Flip your whole line of thinking away from the bogus economy based on govt money printing, running up debt, fake technology to the real deal.

A productive industry generates productivity, profits and jobs, not consumes it.

So even if you discover a wonder therapy which can cure cancer but costs $200K, not many people will be

Who says it needs to be 200K, how about 20K or 2K? Anti-biotics are a good example of a major boost in productivity.

Bankers take risk and get compensated for that.

They are just shuffling paper they never earned but scammed from the rest of productive society and packing the govt positions with their goons. You really need to educate yourself on fiat money, the federal reserve, the role of commercial banks which are the federal reserve and the whole useless middleman industry that is the banking & financing industry.

I completely agree that their compensations are out of whack with the value they add.

They don't add any value, they destroy it. Its a point that's increasingly obvious to anyone who has any understanding of what's going on.

How much you earn is not correlated to the value you add; it is based on supply and demand

There is no demand among productive society to be scammed any more than there`s a demand to get herpes on your balls. Yet this disease has been plaguing mankind for a long time. The useless middleman industry has set itself up like a parasite in the system. I'll post the Federal Reserve Part 1/5 video again for your benefit.

And modern world runs on middle-men.

There is a difference between middlemen and useless middlemen. Bernard Madoff is a useless middleman. So is a vast majority of banking & financing. The utility component of these institution is next to zero relative to the amount of wealth they suck out of the productive economy. This in an industry that researches nothing, invents nothing, develops nothing and manufactures nothing - except scams.

Anyway, you are way too ignorant to understand any of this. Try the video below and tell me what you think.

Neshant · Post by **Neshant** » 02 Mar 2011 07:23

My favourite video, please everyone give it a listen :

devesh · Post by **devesh** » 02 Mar 2011 08:30

Somnath:

Neshant has already replied to your post and he's covered all the points. any financial scheme which has astronomical leveraging going on is a ponzi scheme. these fictitious paper instruments might be used to build a steel plant or any other productive industry (which they have not done in the first place!!!), but when the leverage ratio is in the multiples of 10 and greater than 100 in many cases, the entire scheme will go down in flames. THERE IS ABSOLUTELY NO DOUBT ABOUT THAT.

the flip side of leveraging is the outright scam perpetrated in assigning these derivatives those astronomical values. there was absolutely no rationality in the valuations that were being assumed for all of these exotic financial non-sense paper assets. it's like i tore off my jacket and then started assigning $100 to each little piece of it and eventually the entire bundle of torn pieces is valued at $20,000. i'm simplifying the complicated process, but that is essentially what happens in the Derivatives "market." Total fraud and scam artistry.

VikramS · Post by **VikramS** » 02 Mar 2011 08:59

Nehsant:

Could you summarize what you want to say in a few paragraphs. Or perhaps, your newly acquired gold bug status means that right now you are unable to think beyond the Flight From Fiat (TM).

If all you are saying that the Fed is running a Ponzi scheme, then I have no disagreement with you. What I may disagree is how is it going to end...

But all the other stuff (invention, productivity etc.) has me confused. Valuations between Paper (Fiat) and Hard (Gold) swing in multi-decade cycles. Right now as a investor you are luck that you have that no-brainer opportunity to go long hard-assets.

Some thoughts:
1. Please go and read up on the amount of foreign revenue for S&P 500 companies. Perhaps then you will change the tune about international growth being tangential to the profitability of US corporations.
Start here:
http://outlook.standardandpoors.com/NAS ... d=15783735
In 2007-2008 that number was around 47-48%. Most likely it has gone up since BRICs are growing at near double digit and are fast replacing Europe as the primary foreign driver.

Perhaps even our definitions of tangential are going to be different. The gain recognized by a Chinese becoming more productive also comes back to US corporations. Do you think that companies like John Deere, Caterpillar, Joy Global or the oil exploration companies do not benefit from growth in China?? Do you think Boeing does not benefit from the 100s of new planes being ordered for China? What about the millions of CPUs Intel sells in China? Or the coking coal exporting US corporations?

You can continue to waive hands and tin-foils but please back your assertions by numbers for a change.

2. Genetically modified crops have been around for decades. The problem is not their availability but their acceptance. I agree that once we can grow organs, it will be a truly revolutionary move.

3. Just because you say does not make it so (Re Cloud). You are viewing everything from a technological perspective; you are not considering the economic impact. The cloud may be a marketing buzzword, but it is having a meaningful positive impact in the way business is conducted. That impact is not a mirage.

The whole concept of IT as a utility is game changing since it provides virtually infinite, on-demand computational capability to the smallest organization. It is like a mainframe, but extremely scalable on the fly, costs orders of magnitude less than main-frames, and is available to all; even the fisherman in India who is checking weather. Fifteen years ago, I needed access to the CM5s to do what I can now do with literally pennies. Perhaps you simply lack the willingness to appreciate that.

4. Calling Madoff a middleman is like calling your Doctor a Middleman. What is the logic of calling a money manager a middleman? He is just doing (or pretending to do) something you want others to handle.

5. Have you ever run a business? Do you have any exposure to Profit-Center in the companies you work at?

Hari Seldon · Post by **Hari Seldon** » 02 Mar 2011 09:02

well, well.... Just wondering only if sri neshant and sri devesh are the same person only? I mean, the amount of concurrence in thinking is nice to see....

More generally, word is getting out that homilies notwithstanding, the TFTA ban-kings are out to screw 'em middle class & below peasantry by design not default.

Ponzis do look good in the interim, I guess. Haven't lived through too many of 'em. But something tells me, will see many unravel in moi lifetime only.

And we're yet to hear any seriousness amongst the rulers that this imbalance will be addressed. None, actually. Republican governors are taking aim at public unions in the khanate (with some justification, I may add). What pi$$ed me off was one governor's description of public unions as the "most organized and dangerous self-interest group out there" or something like that. Diverting public anger from the ban-kings onto public unions now, are we? How better than some infighting among 'em mangoes to keep them distracted, distraught and exhausted, eh? The need of the hour is to see thge wood for the trees, not jumpt onto whatever baits and traps the bangkings lay along the path. Like the old marxist saying "working class of the world, unite!" Only.

An no, gold standard is not a practical solution. In theory, I agree it has some solid advantages.