Bubbles and Pirates

The largest economy in the world is the Global Economy. No single "country" whatever that means, or even Continent, can claim to be Number One in a vacuum.

The United States has the largest economy among political systems, and by 2007, China became the 2d largest with the highest growth rate, at 9%.

Japan, with no natural resources and half the population of the US, is in 3d place, with the world's largest banks. Remarkably, considering its location exactly between the US and China, it is still in torpor from the real estate crash of Tokyo decades ago.

India has a growth rate that matches China in many ways, but is economically and radically different. The growth is accelerated not by low-wage manufacturing, but by service industries producing well over half the GDP. Both India and China each have a Middle Class larger than either the United States or Europe.

Russia still enjoys the rich bottom lands and bread baskets of the Ukraine, but these are still locked in with transportation difficulties exposed the the predations of Pirates and the spoliation of pollution. Russia, is not, as DeTocqueville predicted, the "country of the future", but it is the great warning to the future of the damage that piracy and pollution can wreak.

The economies of the countries in the Middle East are extremely small. The Oil billionaires look down on everyone--the Bedouin shepard, other billionaires, and especially the Middle Classes, which almost do not exist. This is the curse of Oil -- it creates controllers and dependents. Dubai, with its glittering architecture, looked promising, but then it collapsed economically -- and names the world's tallest building after a neighboring billionaire.

Back to China. This year, a variety of GDP growth rates and projections have been announced. Most of the numbers are astounding, not just because the rest of the world is suffering as a result of a pirate attack on Wall Street. The Chinese Government still "controls" the announcement of the numbers. And the Government is lying. The figures coming out of China are "political". The concept of gathering the facts and reporting them is still completely "foreign".

The publication and projection of false figures will have the accelerating and inevitable effect of creating a large Bubble in the Chinese economy. Prices are increasing for everything faster than wages. As the power drive of Hong Kong continues to roll across China -- all of its cities are in capitalism's thrall-- they compete with each other to pollute the air, water, and farms.

The rulers of China are elderly and short-sighted. They are stuffing their pockets as fast as they can, and are oblivious to long-term investments or the impact of toxic waste, industrialization, and thoughtless change. The Government officials engage in a crude form of competition which consists of banqueting -- they eat and drink to excess, as a form of political demonstration and power-mongering. This is the kind of anecdotal behavior which presages disaster and reveals character, or lack of character, at the top of their society, which is the bottom.

The Bubble that was created in the coastal real estate of the United States in 2008, causing a rise in prices of homes to a level roughly two times what the members of the middle class could purchase with their dual but decreasing earner households, is now forming in China. There are other similarities -- both spouses work, few children, large "middle" class, many opportunities to make money. There are also differences -- regulations, no privatized "Treasury Department", no Wall Street gamers.

However, it should be noted that in China, the pirates are already IN power. They conquered China quickly after WWII. More recently, in Wall Street USA, the pirates had to buy the Pentagon, the Treasury, all the large newspapers, the Congress, the Presidency, and even the Courts. This took more time.

The historical fact is that Pirates and Bubbles go after each other. Pirates have a crude fascination -- its part of their man-child fantasy -- with things that burst. The Chinese bubble is growing larger, rapidly. They have, like the Russians, polluted the land and rivers of China, which once fed the most successful breeding population on the planet. The Pirates are already in charge.

Bernard L. Madoff - the SEC failed to investigate repeated defalcations

Mr. Madoff was a broker-dealer; he held himself out as a sophisticated "genius" at the craft of investing OPM - Other People's Money. The OPM stake was worth billions. It turns out, he simply operated a Ponzi-scheme. He did not craft a brilliant trading strategy, he made no market, and he managed no portfolios in his exclusive floor of a New York skyscraper. He simply took money from people. How smart does anyone have to be to do this?

The SEC had received numerous complaints against Madoff. In spite of documented fraud claims, however, the SEC failed to scrutinize the Madoff securities "market maker" operations which were clearly within its jurisdiction.

The Madoff swindle is in excess of $50 billion. This type of theft at this scale will carve a large hole in the free market, as investors face the fact that hedge fund managers and investment brokers are not "policed" or regulated in any effective way. Thus, we see the debilitation of market entry -- investors now joined with lenders in an unwillingness to place their funds into a "marketplace" overrun by predators. Capital not already in the hands of the pirates, is held hostage or at bay, and no longer available to productive enterprises.

The Business of Crime

On August 9, 2008, Edison International announced that its NET income nearly TRIPLED, from its publicly-announced second-quarter earnings of one year ago. Edison's President, Theodore Craver Jr., who added the CEO title a week ago, said that this eye-brow raising "success" is the result of "being able to realize our substantial growth potential".

Actually, Mr. Craver, it boils down to being able to be a criminal. You are realizing substantial criminal growth potential, and you are doing it under color of "doing business". Let's look at what Edison is actually achieving:

-- Edison is an "international" entity; it is "off-shore". It is taking money from rate-paying citizens who are always domestic, wherever they are.

-- The rate-payer paying for a utility owned by Edison, and which has No Competition at its point of purchase. The rate-payer is under Edison's monopoly.

-- Edison bought the Congress, and wrote its own laws concerning its "utility" services, building a monopoly for itself into the legal infrastructure. Under Reagan, and then perfected under a series of "conservative" administrations, this public utility proceeded to DE-REGULATE itself, while maintaining its market monopoly. We now have, literally, regulated and restricted Statism for the rate-payer (just TRY generating your own power onto the grid), and un-restricted un-regulated monopolist profiteering by Edison.

-- In the same quarter that Edison announced unprecedented gross profits, and NET profit increases, the price of oil had also increased. In other words, even though the cost to generate electricity increased-- Edison had to pay a lot more for their own fuel costs -- they made even more profit.

-- This same profit increase does not even include a claim made by the IRS (which remains the ONLY "regulator" or government intrusion on Edison's practices) concerning a (wait for it) for ONE AND ONE HALF BILLION in unpaid taxes, involving a "complex lease arrangement" made with a wholly unregulated subsidiary company, and with which Edison's lawyers intend to shield Edison further from tax exposures in the future.

-- This profit increase does not include any purchases of pollution allowances -- even though these costs were supposed to be incurred as part of their own pollution reduction compliance plan. For example, their own Edison Mission Group was required to post $48 million to the program. They clearly signal that won't happen. By setting up unregulated subsidiaries, such as Edison Capital, which supposedly invests in energy and infrastructure, Edison International intends to evade the pollution allowances. They see pollution reduction as an "impairment" to their profits.

-- Edison makes no claim that the profit increase is the result of increased efficiency, a better product or service, a new technology, or a market expansion.

-- Edison also announced its intention to increase rates for 2009, 2010, and 2011. It is almost breath-taking to see their interest in their future profit-taking....

-- The bottom line is that Edison has increased its profits by taking more money from consumers in local arenas served by its monopoly on power delivery, while avoiding the taxes and pollution regulations which would be imposed by the respective public agencies. Proposed rate hikes are based on extortion. There is no free market here. The "hidden hand" is not a free and informed market setting the price, it is Edison's off-shore and unregulated subsidiaries taking the benefits while shifting all the costs and burdens back to ratepayers and tax payers.

This is not Capitalism. This is predation. What ENRON got away with, is what Edison is getting away with: Money, taken under the false pretenses of "business". This profiteering enterprise will collapse because it is predation, it is not actually "business". They produce nothing. There is no informed exchange involved in this "profit".

Where you see the profits increase, in the absence of ANY improved product, service, technology or market expansion, you have to ask just what "business" is Edison in?