06/19/08 :: [OTHER] Interesting Economic News [permalink]
I always suspected that the main reason behind the wars in Iraq and Afghanistan were to keep a strong hand on oil production and distribution (A pipeline to deliver oil from Russia to Asia runs through Afghanistan) and basically control the world's oil prices by controlling a small fraction of the oil production and distribution. Well, well, well, today Iraq announced that it was ready to award contracts to western oil companies. The faucet is going to open up a notch... Of course it is totally coincidental that Iraq's oil production has been so crippled for the last 5 years (and actually beyond that with the sanctions).
Now the other very interesting news I found watching the French TV tonight was an explanation of the speculation on raw materials. It's clear to me that productivity gains of the last 20 years have created an accumulation of wealth that is quite "un-common" (if you know what I mean). For me money represents "activity", if you can't buy "activity" because it takes too little time/activity to produce anything you need, then you are left out with a bunch of money that you don't know what to do with, this is when inflation moves in. There are only so many Porsches, Mansions or Yachts you can own, not that I own any, but at some point even the wealthy don't know what to do with their money. The capitalistic system (which I truly support) would normally use this "extra" activity to innovate and fulfill new needs by creating new products and markets. But it looks like that the current generation of entrepreneurs got lazy and instead of innovating, it invested all this "un-common" wealth in good old "raw materials". That's a great way to park wealth. This apparently was the only way wealth was parked before the industrial revolution. I personally know a much better way to park wealth: build schools and hospitals, improve the world's population quality of life and the environment. But hey, that's boring.
Of course, government could tax this "new" wealth to bring it back into the system precisely as infrastructure. This is actually what Bill Gates, Sr is arguing. But it seems that the wealthy have gone really smart at that too. They were reporting that in France 150 of our millionaires did not pay any taxes last year (legally).
The question of course is where are they going to park the excess wealth generated on the speculation for raw materials? (How many wealthy idiots are working on a Space Tourism project?)