Tuesday, October 27, 2009

State of Our World: Open_Notes 19

a recession scenario looming in the US, a moderate correction with a longer-lasting effect on the stock market, but the economy with weather well with nothing more than a slowdown [profits lower on capital investments] in consumer spending and capital investment with some increase in unemployment -- the crisis of 1997-1999 weakened the banking systems of the emerging nations and Japan [still undergoing recession] -- Soros claims he made an analytical mistake in 1997 by not recognizing that the Federal Reserve would act, which it did, it responded, so his prophesied collapse did not happen -- Soros Fund (est. 1969) a "Hedge Fund" [manager rewarded by his performance not by the amount of money he manages; high risk, high reward] -- totally free markets [market fundamentalism] are *not* suited to making collective choices [for collective needs; public law and order]; markets cannot take care of social justice issues, they create wealth, but, allocation is a political process -- markets are unstable, financial markets are unstable by nature, they need institutions to maintain stability - this goes against the prevailing theory that markets gravitate toward equilibrium - markets attempt to predict the future, but in effect, determine the future [SAGE CONTROL] - the insistence on equilibrium is mistaken - there is a lack of international institutions in the global economy.

derivatives, a synthetic instrument [ie., an option to buy a currency; a stock index], are dangerous if there are too many people on one side of a transaction, pushing in one direction, becoming unbalanced - the unbalance must be watched, and this is not being done -- the international banking system is threatened; political instability, ie., China's repressive regime, Russia's "robber capitalism" [the battle in Russia was lost because the west did not do enough to ensure that monies got to the people and the scientists, where it was needed, the IMF failed] -- "global public goods" on a grant basis must be implemented, ie., free public education -- the US must abandon the "war on drugs" and implement programs vs. "harm damage," ie., legal and prison reforms, needle exchange programs, social justice reforms, etc. -- the "Tobin Tax' [-Tobin, Noble Prize Economics] an excise tax on international currency speculations is a move in the right direction. -- [NPR, Talk of the Nation, interview George Soros (70), retired Chmn. Soros Fund Management, Open Society Foundation; author "Open Society, Reforming Global Capitalism"; "The Crisis of Global Capitalism", Jan.22.01, with [insert]]

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