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March 17, 2008 11:13 IST
President George W Bush was speaking to a group of senior economic figures at the Economic club of New York Friday, quipping merrily, as he usually does. He was trying to reassure his elite audience, saying the U.S. should allow access to its markets just as others should allow the U.S. to access theirs.
Of course this rings true for the collected great and the good as the sheer size and scale of the U.S. economy can wreak a profitable mayhem when allowed access to other country's fiscal systems. It has worked brilliantly in the past, cotton farmers can attest to that, in the U.S. they are more of a protected species than the bald eagle.
One of the special items President Bush pointed out was that sovereign wealth funds -- many of them from the middle east - should be allowed to buy up assets in the U.S. "because it is our money anyway," he said to his only round of applause and much laughter. "We might as well get it back," he added.
Of course what he means was the money owned by sovereign wealth funds is money that the U.S. has spent on importing oil -- as well as a little bit of LNG -- from the region. The very idea that a sovereign wealth fund should not be allowed to buy into the U.S. would at first light seem an odd one. After all the U.S. economy is based on the premise that it has something to do with 'free markets'. Any half awake observer knows this to be false.
The U.S. economy is an economy that plays on both sides of the fence. One can single out things like the enormous state subsidies received by groups such as U.S. farmers, bio-fuel producers, airlines and so on. Chapter 11 status is a state subsidy, off-shoring is a state subsidy and things like hand outs - where bio-fuel producers in the U.S. reap 50 per cent of their income straight out of your pocket via taxation -- are just that, hand outs.
The other side of the question is even less palatable. Why should sovereign wealth funds not be allowed access to U.S. markets? Because they are middle eastern? Because they are Arabic, or Semitic, or Persian or Turkmen? Is this serious?
Thirdly comes the appalling arrogance of both President Bush and his laughing, applauding audience. The idea that the money in sovereign wealth funds is somehow 'Americas money' is like saying when you buy a sweater, a burger or fill up the tank in your car that somehow both the item you bought and the money you paid for it are still your property.
If you want to try this trick, walk into a shop tomorrow and see the utter incredulity you will get from the vendor.
There have been many times that President Bush has given cause for worry -- and we are just talking about economics at the moment -- in his time as President. His idiotic idea that the U.S. can become "energy independent" when it is patently obvious that we all need to become energy interdependent -- and fast -- was both stupid and politically motivated, in order to justify his administration's terrible war crime in Iraq.
As if it were not obvious, the U.S. economy is also interdependent and in many ways dependent. Especially on oil. In a week where the Nymex price for a barrel of crude reached $111 this really should be apparent. Yet this does not seem to have deterred the recklessness driving the U.S. fiscal outlook.
As we said last week, were it not for China rationing its energy consumption, in order to stop the price of energy sky rocketing, the U.S. economy -- and the rest of the world's -- would have come off its ridiculous 'free market' rails long ago. The U.S. is faced with being in debt to communist China, welfare state Europe and the middle east for a generation but the U.S. elite think that it all belongs to them, that it is all their money. Not any more it isn't.
Courtesy: www.resourceinvestor.com
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