Davos cross-post: Morning in Davos

Two quotes:
Was Marx's critique of capitalism right after all? "It lasted longer than you expected back in the 19th century," he writes, "but could it be that capitalism is just an episode of history that will end at some point because the system will collapse as a result of its internal contradictions?"
_
and
_
The pay, at $105 a month, was much more than the 22-year-old could ever earn back in his farming village of Hau Loc in central Vietnam. But two months ago, the world's severe economic slowdown hit home. Orders at Ti's factory dried up; his manager furloughed him indefinitely. Ti can no longer help his family in Hau Loc by sending them extra cash. As he chain-smokes at a makeshift tea stall near Hanoi, he longs to get back on the road to prosperity. "I'm trying to stay here to find another [factory] job," he says, "because life is even more difficult back home."
_
here's this guy who was making the princely sum of $105/month, with no income and few prospects, complaining that things are "even more difficult at back home." Yet one doubts that the 'collapse of the global economy' has put the farmers back home out of work. Perhaps more to the point, his "road to prosperity" has always been dependent upon bringing food in from the countryside to the city at prices that maintained the low standard of living of those in his agragian village -- while the wealth being generated by his labor lines the pockets of a few lucky vietnamese, and the foreign owners of the company he once worked for who has abandoned him. (Imagine! Greed so pervasive that South Korean jobs are exported to Vietnan to take advantage of lower labor costs!)
_
So how is Hau Loc now supporting himself? How does he buy food? How does he pay rent? (not to mention, where does he get the money to buy cigarettes to chain smoke?) Are the taxes assessed on his farming village now supporting him -- maintaining the low standard of living in that village?
_
These are the internal contradictions that Karl Marx was talking about, and Schuman does a nice job of pointing out how the new found 'wealth' of Asian nations is being distributed, and is not finding its way to the 'breadbaskets' of these nations (and indeed, how some of these nations have been importing food to feed their urban populations.) Unfortunately, Schuman avoids the real question -- whether the third world's highly competitive export-based 'economic prosperity' is structurally flawed -- dependent upon maintaining low living standards among its peasantry in order to create the illusion of prosperity in their cities.
_
One of the very real problems that may/will occur is something akin to what we've already seen in the United States -- the deterioration of 'rust belt' urban areas as American companies moved south to take advantage of cheaper labor. There is an overabundance of cheap labor in the third world, and the 'leadership' of those nations that missed out on this first round of 'prosperity' will be offering even cheaper wages, and living and working standards, to achieve their own version of 'prosperity'.

FOR IMMEDIATE RELEASE

DAVOS, SWITZERLAND
WORLD ECONOMIC FORUM
January 28,2009

KLAUS SCHWAB, FOUNDER OF WORLD ECONOMIC FORUM ANNOUNCES SURPRISE PANEL

GLOBAL PONZINOMICS: THE VIEW FROM WALL STREET

The following are excerpts from today's surprise panel discussion:

KLAUS SCHWAB: Distinguished guests, today we have arranged a surprise panel to lead us through the cutting edge of Global Ponzinomics. As you all know, the modern day version of Ponzinomics has its origins on Wall Street. I know you are all keen to hear directly from the leaders of Wall Street as well as the regulators all of whom made this remarkable feat of financial wizardry possible. The organisers of the Forum have spared no expense in bringing you a first rate panel. I would like to thank the Unitied States Marshall Service for its cooperation in making it possible for Mr. Madoff to attend the Forum. Mr. Madoff requires no introduction. His genius and modesty is well known. We thought it would be appropriate for Bernie to lead today's discussion. At this time I would also like to thank Citigroup for providing special air transport services to bring the panel participants straight to Davos on such short notice. Without further delay, I turn the discussion over to Bernie.

BERNIE MADOFF: "I would like to express my sincere gratitude to many of the participants in this forum. Without their undying support for so many years, my achievements would not have been possible. They deserve much of the credit for making the modern paradigm of this fascinating art possible. As you all know, Ponzinomics were invented by Charles Ponzi some 100 years ago. Who would have thought that the genius of this humble man would become the driving force behind today's global financial markets."

DICK FULD: "We thought we had all the bases covered. We were hedged up the wazoo. I was certain that we managed to make ourselves too big to fail. In the end I was wrong. I underestimated the financial tsunami of 2009. My big mistake was not finding a way to put a Lehman banker in the Treasury. Lloyd you snookered me on that one."

JOHN THAIN: "I would like to start by saying three things: First, I have posted my French Commode along with my resume on Craig's list and Monster.com, Second, Ken you can take that faux hand Grenade sitting on your desk and shove it you know where. As we shall see, BAC is one big live hand grenade and Ken has already pulled the pin, Third, can anyone tell me where I can find a reputable antique dealer in Davos? Oh, and one more thing, Stan O Neal owes me my bonus."

KEN LEWIS: "John, you and I both know that I'm the CEO of BAC and you are not. You did not jump on the bailout hand grenade like a good bailout soldier. For this you must suffer the consequences. If this is not good enough, I will meet you on the top of the Weissfluhgipfel at O-700 hours for a Chinese downhill. The downhill will decide everything."

HANK GREENBURG: "You are all a bunch of rascals, give me back my Company so I can lose it fairly!"

LLOYD BLANKFEIN: "As I have said on many occasions, the Goldman investment banking model remains sound. We concentrated our efforts on putting men of Gold in the halls of power. This has paid off handsomely. Hank Paulsen saved us from the AIG explosion. The primary purpose of TARP was to save Goldman Sachs and this goal was achieved magnificently. Hopefully, the hiccups we are experiencing will dissappear in due course. Then we can all get back to business as usual."

VIKRAM PANDIT: "In response to yesterday's negative press we have decided to divide the Citigroup jet fleet into two halves consisting of good jets and bad jets..."

JIMMIE CAYNE: "Anyone know where I can find a decent bridge game around here?"

PHIL GRAMM: "If we could just stop all the whining."

ALAN GREENSPAN: "Where am I"

CHRISTOPHER COX: "I did what I was supposed to do."

>>"but could it be that capitalism is just an episode of history that will end at some point because the system will collapse as a result of its internal contradictions?"
-
Well, probably (although I wouldn't write it off just yet). I am an unabashed capitalist, but nothing lasts forever. And whatever it will be replaced with almost certainly doesn't exist today, at least not on a large scale.

@banzai7: The funniest thing you have done!

Just wanted to say that I thought the choice of "frabjous" was particularly apt.

What a gloomy opening for Davos!

The Dow surges 2.5%, it seems encouraging. But it could be just a flash.

Unemployment rate in US continues to rise, with 14000 jobs erased in one day. The situation is no better in many other countries. IMF predicts global growth to be less than 0.5% this year. Though the Dow surges 2.5% and seems encouraging, it could be just a flash.

More money to stimulate the economy! Good move, except where do the near trillion dollars come from (by printing more money)? What will be the ramification or repercussion (short term and long term)? The administration is keeping mum on these. Something is not right somewhere. Does anyone not think so?
(Tan Boon Tee)

Thanks cumudgeon. More in the works...