Cyprus and Capitalism

It may be time to rethink economic theory. Historically economics was taught with a national perspective and over time it was applied globally. With the advent of fast global transportation and computerization do the old rules apply anymore?

As capitalists should we be in favor of letting the wealth of our citizens flow wherever it finds the greatest return even at the expense of our society? An economic system is created to serve society; society is not created to serve an economic system. Technology today allows capital to flow freely and instantly all over the world.

The Cyprus crisis raises the question whether capitalism works at a national level, but not at global level. Capitalism dictates that money flows freely to wherever it can obtain the greatest financial return, even if it means across borders.

If somebody or some corporation earns its money within its own political borders should it be allowed to use that money outside of its political borders to maximize its wealth.even at the expense of the society in which it lives? By allowing capital to flow across borders, the national society loses out on much of the capital being created.

I only have questions, help me fill in the answers. It is one thing to be in favor of capitalism when wealth is changing hands within our borders. The game changes some when there are no borders.

Europe Unite!

Europe needs to form a more perfect political union. A fiscal plan will only work if there is a political plan. It is time to find out if it is possible to unite parts of Europe under one political body. The only way to do this is to have the citizens of each country vote on whether they want to join such a union.

The individual nations of Europe are too small to compete against countries such as China and the United States. The future tells us that the remaining BRIC nations, Brazil, Russia and India, will soon be competitors that will dwarf the present European nations.
In fifty years add some up coming nations in Africa and just think if Egypt, Iran, Jordan and other Mideast countries decide to unite.

It is not necessary, and maybe not even worthwhile, for all countries in Europe to unite under one political system; however, if it is going to work, Germany and France are a must. It is time to quit playing cat and mouse and take the issue to the people of Europe for a vote. Start the vote in France and Germany.

Euro In Short Term

“The crisis in the euro zone may be easing at long last, Standard & Poor’s said, citing the agreements reached last week by European leaders as important steps toward ending the chaos that has led to questions about the very future of the 17-nation currency zone.”, Relief May Be In Sight For The Euro Zone, Standard & Poor’s Says, New York Times, July 4, 2012

Remember, S&P was one of the rating agencies giving bonds backed by sub-prime loans an investment grade rating. It is true that the current chaos may subside as a result of the recent agreements, however, the core issue of creating a political union is unresolved. More

United State of Europe?

The only way for the euro to survive is if parts of Europe politically unite under one constitution and one governing body elected by the citizens of the new amalgamated country. In order for anyone to believe this will happen, he must be one highly intoxicated optimist. There are 27 countries in the European Union from Germany with a population of 81.7 million to Malta with 417 thousand citizens in 2011. Only 17 of these countries use the euro. 

Europe, and the world, needs to plan for the end game. The dissolution of the euro is inevitable. We need to plan now to minimize the negative impact. The impact will be negative, it is the degree of impact that is yet to be decided.

The six most populated countries of Germany, France, United Kingdom, Italy, Spain and Poland have combined populations of 355 million. This is slightly larger than the United States. In 2010 the GDP of these six countries totaled $12.7 trillion in nominal dollars while the GDP of the U.S. totaled $14.6 trillion.

It becomes easier to trade between “countries” if they are all a part of one sovereign state. It is being Pollyanna to believe this will actually happen. There is much bad history between these countries, pride and tradition for each country runs deep, each country has its own taxing system and all have different social programs for their citizens.

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The combination of these countries would provide more world-wide influence and prestige. When a united Europe would speak, the world would listen.

As Europe is presently structured, the politicians of each country are entrusted with looking out for the interest of its own citizens. What may be good for all of Europe may not be what is best for Germany. What is best for Greece may not be what is best for the remainder of Europe. It is not the responsibility of the politicians in each country to look out for the common good of Europe.

Saving The Economy

For demand to increase, confidence needs to increase. In order for confidence to increase the world leaders need to take action now.

In Europe, Spain needs money to support its banking system. Europe also either needs to create a politically united Europe or implement a plan to unwind the euro. The first step is to save the Spanish and probably Italian banks. Shortly thereafter, they need to unfold a plan to address the unification of Europe politically.

In the United States a stimulus is needed to prop up employment and not let it drift into the abyss. This includes regulations preventing banks from getting too big to fail, and demanding that banks and Wall Street pay retribution for the mortgage crisis that they created with the sub-prime housing fiasco on which they profited. This retribution will act as a stimulus and its cost to the taxpayer will be limited to enforcing the law. Demand in the U.S. will not significantly increase until concrete steps are taken to give back some of the net worth taken away from the American homeowner by the slick bankers and wall street.

These actions by Europe and the United States will provide the confidence and funds needed to save us from the depression of the twenty first century. More: