Our financial house of cards. . .

is collapsing. So the government is working to bail out the big investment firms that have made easy credit possible. It seems that everyone is a free market capitalist during good times, but once a downturn happens, everybody wants to state to intervene into the economy after all.

See E. J. Dionne Jr. – The Street on Welfare – washingtonpost.com

Perhaps these interventions are necessary. (We need our resident economist, EconJeff, to advise us.) But I worry that this is just the beginning of a turn back to a state run economy.

I sense that liberalism is rising from the dead, that a Democratic president and a Democratic Congress will re-regulate the whole economy and utterly undo the Reagan revolution.

$15 million for two pounds of chicken

Inflation in the South African nation of Zimbabwe has reached Weimar-republic-like proportions. Michael Gerson writes how that nation’s dictator President Mugabe–who famously confiscated the land of all white farmers, who had supplied much of the food supply for generations–is funding his predatory government by simply printing money.   Back in 1980, a Zimbabwe dollar was worth about as much as ours.  Today, a newspaper costs $3 million, and a two pounds of chicken costs $15 million.  People have to carry around boxes of money.  If someone doesn’t collect a bill within 48 hours, it isn’t worth collecting anymore, since by then the hourly inflation will have rendered the original amount into chump change. 

The Fall of Japan

Japan used to be the world’s economic success story. Now, after a decades-long slide, its own government officials are saying that Japan no longer has a “first-class economy.” According to this article, its woes include too much government regulation, declining productivity, stagnant innovation, and. . .

the petering out of the population. Japan has the world’s highest proportion of elderly people and the lowest proportion of children.By 2050, population decline will have reduced economic growth to zero, according to the Japan Center for Economic Research. Seventy percent of the country’s labor force will have disappeared.

You know something else? Some business educators, using their old notes and research from twenty years ago–are STILL hailing Japanese management techniques and saying that we need to emulate them.

Microsoft vs. Google

Microsoft once ruled as the computer leviathan that everyone loved to hate, yet utterly depended on. But now in the high-tech world the computing power of individual computers has become secondary to online computing. Now the leviathan is Google, which not only invented the search engine everyone relies on but found a way to make money off the web with omnipresent advertising.

Now Microsoft is trying to buy the one rival search engine and portal website Yahoo. (See
this.) The company’s goal is to compete with Google. Some fear that Microsoft could build into its operating systems elements that could work only with Yahoo.

Is there a good guy vs. bad guy theme in this fight? What technological developments might suddenly make both of these companies obsolete?

Another credit problem

The woes of the credit industry that are dragging down the economy cannot all be blamed on the housing sector. According to this article, banks are finding it impossible to unload some $220 billion of corporate buyout debt. No one will buy those bonds, so banks are having to keep all of that debt on their books, making it harder for them to make other loans.

Your $600 rebate

Well, getting $600 apiece has its charms. According to this report, a deal has been struck in Congress that will give each taxpayer $600, plus $300 per child. A family of four would thus get $1800. (Earlier versions would have given $800 to taxpayers, but this agreed-upon plan is a little less so as to give $300 to those who pay no taxes.) The checks will be cut between May and July. The cost will be some $150 billion, about the cost of an average year in Iraq. But it IS our money, after all, just given back. Yes, getting that check will be nice, but is it a good idea?


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