Friday, September 26, 2008

The Underlying Cause of This Mess

Fingers will be pointed for some time and debates will rage about the causes of this "crisis". If one looks deeper though, the cause is obvious. The cause is the Cold War. America didn't win the Cold War, the Russians just went broke before we did. This was what my high school mentor, Jerry Workman, told me over ten years ago. He was quite prescient. Americans were living on borrowed time and credit. Well, there is no credit any more and we went broke. Both the United States of America and the U.S.S.R. drove themselves into economic ruin fighting the Cold War. Neither unfettered capitalism or communism are the answer. Both nations were the victims of their own ideologies. The question is now, " Will America suffer the same fate as Russia?" Will an oligarchy form and take over the government and economy? Clearly, capitalism on a local or regional scale is a good and resilent system. On a national or global scale, "too big to fail" is a recipe for disaster be it a capitalist or communist institution.

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Not to mention that the Russians have lots of oil and with oil prices sky high Russia's relative wealth is rising rapidly compared to America's.
 
Pete,

True, though Russia has to rebuild much of its infrastructure. Oil production is still inefficient, and they are having foreign oil companies come in to develop the fields and then forcing them out after they have done so (BP for instance). Foreign investment in Russia will die up if companies perceive that they have nothing to gain and everything to lose in Russian dealings. Russian healthcare is still recovering as is the Defense sector. They may actually be doing better in aerospace than the U.S. At least they can still get people to the ISS after 2010.

John
 
Oops, die, not die up. Must have mixed metaphors die/dry up.
 
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