Paulson,Hat in Hand to Moscow
My how times have changed. In the early 90′s the Russians were begging for American financial aid and investment. Yesterday, Russian President Medvedev talked about the recent visit of Treasury Secretary Paulson to Moscow, in search of Russian investment in a faltering U.S. economy.
Mr. Medvedev made his comments on Tuesday in a meeting with a small group of foreign journalists a day after the American treasury secretary, Henry M. Paulson Jr., appealed in Moscow for Russian investment in the United States. The symbolism of the visit resonated here, in that only a decade had passed since the Russian economy was in shambles and the country was desperate for Western aid.
Whether Paulson can convince the Russians to invest some of their new Sovereign Wealth fund in our failing banking system will be a true test of his negotiating skills. The sight of him sucking up to Putin and Medvedev is a true snapshot of a changed world order. As I pointed out last week, the Russians and the Chinese are already the largest holders of our Treasury Bills. I’m not sure even Karl Marx would have understood the irony that the countries that rose to power in the 20th Century under Communism, would end up bailing out the world’s largest Capitalist power.
Not to mention that Siberia has all that crude oil. Not that we need oil or anything.
This must be the famous ‘rope’, a few decades overdue.
The other irony though in the new economic model of liquidity is that the reason Secretary Paulson has to go begging for more foreign investment is because Americans don’t save their money. Why’s that? Because we’re told that consumer spending is patriotic and the engine that drives growth and keeps us employed flipping burgers and making lattes. Meanwhile the vast sums of cash that companies and individuals are sitting on and not investing is draining the spark out of that engine.
Liquid can’t be compressed and when M is a liquid, it pushes the economy around searching for the highest returns no matter what or who gets drowned in the process.
Not to mention that Siberia has all that crude oil. Not that we need oil or anything.
This must be the famous ‘rope’, a few decades overdue.
The other irony though in the new economic model of liquidity is that the reason Secretary Paulson has to go begging for more foreign investment is because Americans don’t save their money. Why’s that? Because we’re told that consumer spending is patriotic and the engine that drives growth and keeps us employed flipping burgers and making lattes. Meanwhile the vast sums of cash that companies and individuals are sitting on and not investing is draining the spark out of that engine.
Liquid can’t be compressed and when M is a liquid, it pushes the economy around searching for the highest returns no matter what or who gets drowned in the process.
Paulson recently said that the weak dollar is not responsible for higher oil prices. I’m no economist, but it seems to me that when a currency is worth less, then you need more of that currency to buy a given quantity of a commodity. He says that the dollar has depreciated by 25% but oil has gone up by 500%. So if the dollar depreciates by 25%, then oil goes up by 33% right there. But beyond that, is it not reasonable to think that a good bit of the wild speculating in the oil market is due to fears that the bottom is about to fall out of the dollar, due to our comically bloated debt, our continued massive deficits, and our hundred year entanglement in Iraq? The same factors that are weakening the dollar?
Anyway, now Russia, as a ready source of credit to the home of the brave, can finally leave its Communism behind, as China did more than a decade ago.
I wonder what the next communism will be.
I’m pulling for violent video games!
Paulson recently said that the weak dollar is not responsible for higher oil prices. I’m no economist, but it seems to me that when a currency is worth less, then you need more of that currency to buy a given quantity of a commodity. He says that the dollar has depreciated by 25% but oil has gone up by 500%. So if the dollar depreciates by 25%, then oil goes up by 33% right there. But beyond that, is it not reasonable to think that a good bit of the wild speculating in the oil market is due to fears that the bottom is about to fall out of the dollar, due to our comically bloated debt, our continued massive deficits, and our hundred year entanglement in Iraq? The same factors that are weakening the dollar?
Anyway, now Russia, as a ready source of credit to the home of the brave, can finally leave its Communism behind, as China did more than a decade ago.
I wonder what the next communism will be.
I’m pulling for violent video games!