The cry of the smart

"How the world works" alerted me to this story about an economic affairs reporter who inspite of his inside knowledge of the shennanigans on Wall Street just could not find his way out of involvement in not one but three crippling mortgages.

I know this is finger pointing but does'nt it look like a "proof story" for the thing I learnt from the scripture about how the intelligence of men is not a measure of how well they arrange their lives.

Sudden Heat

I have to say it although it may sound like I am belittling those who are suffering due to the activities surrounding the economic chaos in the U.S.A.

I wish there would be an economic collapse of the financial system. I have loved ones in the U.S. who would suffer. So would I, because most of my current savings are U.S. dollar denominated. But, and this is a really bit but, I would choose to suffer now because the cancerous economic system in the U.S. is the progenitor of almost every other nations model. There are obviously big differences between India's policies and the U.S. but ultimately the only measure accepted by both systems is a quantifiable value - something that can be measured in cold Dollars or Rupees.

The food crisis of a few months back is said to have been caused by unfounded rumors but the real fact is that prices of all food commodities have risen far more than they have in the previous five years put together. I know I cannot talk in detailed economic terms but I do know that the major reason for price rises is that demand outstrips supply. I know there are a host of mitigating factors and what I said sounds too cut and dried.

I think a collapse of the financial networks and there obscene power to destroy anything that stands in their way would work wonders for all of us. There may be a magnitude of suffering rivaling the tsunami but it will not be the end of the world. Right now we are like the proverbial frog that is slowly being cooked in water that is being warmed on a slow fire of environmental rapine and social anomie. The financial collapse would be like a sudden full flame that would perhaps make us the foolish frog jump out of this mess in sudden reflex.

Subsidizing our way to stupidity

Another example of hypocrisy in the so called free market economy that we idolize so much both in the West and in the keeping up with the Jones's economies of the developing coutries. I don't know of any way of getting out of this hole that we keep digging ourselves into. Pouring money into the private sector which at other times always cries "wolf" when any hint of regulation threatens their ability to make money, seems to me the ultimate betrayal of government.

Break in India

For my devoted reader, I will be off for a one month break till July 24th to the land of my ancestors - India, specifically Kerala.

Till then I am excited about increasing oil prices. Why? Andrew Leonard says it far more better than I can. Higher oil prices and increasing transportation costs means heavy physical goods shipped from our friendly manufacturing giant, China become more expensive than the same goods made locally.

There is no food shortage

There is no food shortage: "It's that the ability to fill up a gas tank with gasoline is, in the 'wisdom' of the marketplace, the highest value use of the food crop."

An article you have to read by Michael Tobis about how the growing gap between the rich and the poor means the rich can buy food related resources and convert them to biofuel or anything they want because their money does the talking for them.

In other words the price mechanism of the market is not capable of allocating resources most efficiently because higher prices means a kilo of meat for one rich person is more valuable than 10 kilos of grain for 10 poor people, since the seller can get more selling 1 kilo of meat than 10 kilos of grain. Of course this probably would not work if every farmer / farm corp. only sold meat. But the general principle is that the "invisible hand" on its own does not satisfy.