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The Forum > Article Comments > The Ponzi mania: free markets, free trade, free ride? > Comments

The Ponzi mania: free markets, free trade, free ride? : Comments

By James Cumes, published 11/4/2008

In this financial crisis, Australia is no more than a subordinate, neo-colonial, financial and economic dependency dancing to the tune of Wall Street.

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While Cumes points out certain historical financial facts and incidents his perspective of the cause and effect is somewhat off the mark. Businesses do not go out of business because of some Wall St. High flyers new financial derivative products. Businesses go out of business because of bad business management usually a result of products missing the market, financially over extending, fraud, ineptness, etc.
Businesses also go out of business due to the process of Creative Destruction as defined by Alan Greenspan in his recent book "The Age of Turbulence." The the Creative side of the process is when a company invents and delivers a new product that is accepted by the market. The Destructive side is what happens to the existing product (and associated business and employees)being replaced. The result is companies that can move with their markets will be constantly improving/evolving their products with the Constructive/Destructive process going on in-house while the companies that lose sight of their market will close.

Cumes seems to want to take an economic view that only pertains to Australia while Australia is an international economic player. When Destructive process happens in Australia the Creative process may be happening in another country. Maybe the Creative process can't happen here because there is no speculative funding available from Australian sources to finance the new product hence either funding comes from overseas or the Creative process moves overseas.

It is not a Ponzi scheme. International finance is a very complex area understood by few (including Cumes). Consequently there are many people that lose lots of money playing in this arena while not understanding the thousands of data points to be considered continually. People that do understand can make lots of money through judicious investments.
Posted by Bruce, Friday, 11 April 2008 10:19:10 AM
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"In this financial crisis, Australia is no more than a subordinate, neo-colonial, financial and economic dependency dancing to the tune of Wall Street."

Gee, who knew.
Posted by trade215, Friday, 11 April 2008 11:16:28 AM
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Great stuff---unfortunately.
Very sobering compared to Russell Trood's niave optimism re the emerging "order".

Geoff Davies gives a brilliant analysis of the origins, delusions, and inevitable consequences of our current PONZI based economic system.

1. http://www.geoffdavies.com/Economia.html
Posted by Ho Hum, Friday, 11 April 2008 12:07:12 PM
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So there are options available other than taking China down with the rest of the world ... well, down with the wealthy parts of the West. I completely understand!

I read somewhere once that all the money spent on war in recent times could end world poverty 100 times over.
Posted by Richard_, Friday, 11 April 2008 12:52:56 PM
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All this doom and gloom.Another depression,followed by WW3? Next they'll be telling us that Global warming is bleaching the venetians.

So long as the banks keep the money flowing,there is no need for total economic collapse.Money has no inherent value so if one financial institution fails,just write them off and begin a new more responsible one.

It is only the self importance of these non productive institutions that hold us captive.Money is only the oil that keeps the economic engine producing;since when has the oil become more important than the motor?
Posted by Arjay, Saturday, 12 April 2008 3:11:59 PM
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James

Your comment that: “Australia took to “free” markets, “free” trade, free-floating currencies, deregulation, privatisation, globalisation, derivatives, hedge funds, private equity, wildcat mortgages and leverage-without-limit as a duck to water. Consumerism raged. Industry was gutted. Debts ballooned” pretty well sums up the genesis of the current situation.

There are a lot of things in your article that I never thought about or even heard of before. I thought I would read it as there was the phrase “free markets” and “free ride” in the title.

I wonder, with $50B in tax breaks and concessions (SMH 26Jan2008) given back last financial year, is Australian economy really an example of a ‘free market’?

‘Free ride’ – yes, at least for a portion of the population – in particular, the tax-breaks-r-us brigade of debt lemmings.

But for how much longer will the ride be given free?

I also like your statement: ”Rational economics based on real investment, productivity and production died in favour of speculative and often Ponzi pretensions.”

For some reason, I am now thinking of somehow getting the Liberal and Labor party faithful together to create a new party – the Ponzi Party. What do you think?
Posted by mr nobody, Saturday, 12 April 2008 5:22:52 PM
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