Mysterious Economy

Mysterious – that’s what the world crisis made the economy. No one could predict the crisis’s magnitude. Not even the leading economic guru A. Greenspan. He acted like a man and asked his fellow citizens for forgiveness. The U.S. Treasury Secretary H. Paulson did the same, except with actions instead of words. A few years ago, he was the head of Goldman Sachs. He put pressure on regulators and achieved rule relaxations. As a result, the market got flooded with toxic waste. It caught fire. The arsonist became the fireman. Now he’s putting out the fire. The crisis is far from over. The economy is seriously changing and becoming difficult to understand.

Free Money

The Federal Reserve lowered the interest rate to almost zero percent. In other words, credit is virtually free. Regulators’ resources have been exhausted. They’ve put the pedal to the metal. After all, it’s customary to assume that the percentage cannot be negative. The phrase, “I’ll pay you money if you borrow from me,” can be heard only at a mental institution. That’s today. What will happen tomorrow? Who knows. The yield on the three-month Treasury bills fell to 0.02%. And yet there’s a demand for them! And the demand is high. The security is being used as a safe to store money.

Will this produce the desired result? It’s hard to say. After all, the path is not deserted. Japan has been ahead for a long time already, and has been successful by the way. However, this was before the crisis. What about after? Now it’s declining. It’s falling at the fastest speed we’ve seen over the past 50 years.

World Trade: Exchanging Blows

In November, the G20 countries gave their word that they’ll refrain from protectionism. They took their word back immediately, starting a fight for the pathetic remains of world demand. The Chinese locked horns with the Americans. They’re complaining about each other to the WTO. The Europeans are putting together a file on both of them in order to deal a blow by anti-dumping if they get a chance. India is imposing duties on steel imports. Brazil is beating Ukraine via ammonium nitrate. During the upcoming G20 summit, the following question should be raised: are we going to keep talking or finally do something?

Russia does not belong to the WTO, and thank goodness. Because our hands and legs are free. We can kick any foreign price hooligan out if he starts to compete unfairly on any Russian domestic market. We can impose export duties, or cancel them. We can impose a quota on imports or remove it. Times are such that we cannot rule anything out.

The New Socialism

In the U.S., the rescue operation is continuing. Automobile corporations, insurance giants and mortgage monsters are falling under government control. What’s going to happen if the situation doesn’t improve? There’s a serious discussion about further nationalizing banks. They’ll be forced to lend to the real sector. Another option is for the Fed to enter the market and directly purchase shares of stock. The third option is for the Fed to distribute money to enterprises, bypassing private banks. If worst comes to worst, it is possible to use Nobel laureate Milton Friedman’s advise, namely load a helicopter with stacks of money and scatter that money over densely-populated neighborhoods. Remember, we’re not talking about North Korea, we’re talking about North America. How do you like them apples?

I think that even now the U.S. government sector is larger than the one in Russia. And it will get even larger. It has to be managed somehow. And they don’t have any experience. After all, they are the former stronghold of free-market competition. In the 90’s, they sent us a flood of advisers from across the ocean who explained to us the mechanics of the market economy. I propose to make a retaliatory move. Let’s send them a brigade of communists specialized in planning and giving orders. They’ll share our experience with Americans and teach them.

Financial Sloppiness

In 2009, the U.S. federal budget deficit could grow to 1 trillion dollars. It’s a mind-boggling amount. That behavior is absolutely irresponsible. It requires urgent intervention by the International Monetary Fund (IMF). It is time to send a mission. Here’s the plan: exit the IMF building. Drive south on 19th Street. After five minutes, there’s going to be a lawn. Beyond it is the White House. Enter. Get their brains in gear. Cram them full of lectures about the harmful effects of budget deficits. Demand reduction in costs and improve tax collection. Set deadlines. Determine responsibility. And everything will be fixed.

Happy New Year, dear reader! Do not get angry at the government. They’re doing what they can. It’s just that the crisis is too strong. Such things happen only once every century. So it turns out we’re suffering through it for our kids and grandkids. Please, tolerate it. It will get easier by the end of 2009. It’s not a leap year, after all.