Friedman foresaken



Was Milton Friedman right when he said that a government solution to a problem is usually as bad as the problem?

2008 has turned out to be far worse than suggested in my December 2007 post. The US government has shovelled trillions of dollars into financial institutions but the liquidity issue refuses to walk away.

America has seen unprececdented government market intervention. One sees Uncle Sam's hands all over corporate America.
What started off as a subprime mortage fiasco has sipped into the real economy. Everything from commodities through stocks to retail sales has been affected by the financial market implosion.

This crisis has claimed several giants. The Big Three US car manufacturers are living off government goodwill. Fannie Mae and Freddie Mac are under intensive government care. Citigroup, once the biggest bank (market capitalisation), is suckling from the state.


What does the year 2009 have in store for the US economy? Expect to see less US influence in financial markets and a tectonic shift in the global significance of the Far East.

The new year will see consolidation in the banking sector, increased inflationary pressure (as a result of record low interest rates) and depressed oil prices in the 50-70 USD dollar range.
According to Friedman: Governments never learn. Only people learn. Casualties of the credit crisis will hope that he was right.

Comments

Post a Comment

Popular posts from this blog

Free mobile-to-mobile calls

A mobile phone is a miniature telephone exchange. It accepts incoming calls, initiates outgoing calls and can act as a repeater by forwarding calls or as a switch through teleconferencing. These are the basic features of a telephone exchange. TerraNet , a Swedish firm, has exploited these features to facilitate free mobile-to-mobile calls. Using peer-to-peer technology, a cluster of mobile phones can communicate without the need to go through a base station (switch) provided they are within 1,000m of each other. This technology, being trialled in Ecuador and Tanzania, is perfect for developing countries where infrastructure is as limited as disposable income. Because mobile phones can forward calls, the effective communication distance can be extended from a 1 kilometer radius to about 20 kilometers. That is sufficient to cover most rural communities and, for example, university campuses. Like Skype , this is a subvertive, effective and disruptive technology. While manufacturers
Read more

Whose Shilling?

Image
Zimbabwe is Africa's Lazarus. The economy is in tatters, the citizenry of this great nation are despondent but Robert Gabriel Mugabe remains firmly in charge. For the time being. Many believe that only South Africa is in a position to determine the destiny of Zimbabwe. Yet President Thabo Mbeki, save for his quiet diplomacy, appears disinterested in employing enough downward pressure for Mr. Mugabe to repent his sins and thereby rid the Zimbabweans of their current economic woes. What exactly does Mr Mugabe have on Mbeki? In exile Mbeki lived, at different times, in the United Kingdom, Botswana and Zambia. He hardly was guest of the Mugabe's. On that score alone, Mbeki does not owe Robert a good turn. Of the two neighbours, Zimbabwe is most reliant on the other. Zimbabwe relies on South Africa's ports for her exports and imports. She draws electricity and routes her telecommunication traffic through her southern neighbour. South Africa is one of Zimbabwe's m
Read more

RE Funding Call

On 14 May 2018 the Energy and Environment Partnership Trust Fund opened two funding windows i.e EEP Innovation and EEP Catalyst. An application guide in available here .
Read more