Friday, September 19, 2008

My take on the collapse

I'll admit it straight up: I do not know much about economy. I simply did not study it too much. I did get a grasp of some of the basic concepts. So with my superficial knowledge I'll try to predict where the world economy will be going in the following period. Feel free to lambast me if I write something ludicrous.

First of all, this will mean that the economy will have to get back to basics. And basics means production. The system in which one group of countries accumulate all the investment capital and others produce can not hold. The former group is facing increased unemployment due to outsourcing while the latter are being deprived of income from products that are formally produced on their soil. As unemployment grows in the US and other financial centers and speculative income from stock markets is less to come buy every day the wages will drop and that could be the first incentive to bring back some of the jobs "gone overseas".

Consequently, there will be much more governement regulation in economy all around the world, especially with regards to employment and handling natural resources. This all but spells doom to "free trade and capital flow" and should also lead to the revision of many economic treaties that serve as a foundation for supra-state organizations such as WTA nad even the EU.

As for Serbian economy this could spell a major disaster. Not only could we say goodbye to the little investments that came from various international investment banks, our entire banking system, which since 2000 almost entirely consists of foreign owned banks, could collapse, leaving millions of people without their savings in a repeat of the so-called "old foreign currency savings demise" in the early nineties. Great thinking by the "experts" of the G17 which have been (mis)managing our economy for the past 8 years. Ironically, US and others, touted as role-models by our "reformers", hit by this current crisis are taking steps exactly opposite to what we have been told were "rational": they are pumping governement money to save the banks. Anybody that had suggested that in Serbia 7 or 8 years ago was deemed "isolationist", "enemy of progress" and "advocate of the ancien regime". Should the complete breakdown of the banking system in Serbia happen, the "reformers" will be lucky to escape with only name-calling.

1 comment:

Deucaon said...

An economic system that doesn't produce anything (or very little) can exist and prosper (if combined with the theory of Free Trade) if the (absolute) majority of its workers are skilled (at least in theory) which isn't the case when it comes to the USA or any of its allies. The USA and its allies have gone as far as to import foreign workers of less quality in order to create this utopian economy (but they usually end up as common labourers because they cant speak the language of their chosen country) which is causing the demographic problem we read/hear so much about. Skilled workers would be technicians, machinists, engineers, clerks, etc.