Where Will the Money Go? When Will Inflation Recur?

December 2, 2010 in Global Crisis Blog, Innovation Blog | 1 comment

Global Crisis/ Innovation Blog

Where Will the Money Go? When Will Inflation Recur?

By Shlomo Maital

  Simplify!  Simplify!  In an age of uncertainty and enormous fog enfolding the global marketplace, how can we make sense of the rapid and often startling events that occur? For example, yesterday’s Financial Times reports that Ireland, Portugal, even Spain, cannot sell either government bonds or any corporate bonds any longer.  Since neither government nor business can do business without borrowing, unless this situation unfreezes soon there will be crisis.  The unthinkable appears increasingly likely – withdrawal of periphery states of Europe from the euro system, returning to their original currencies.  The key will be Spain, whose government owes 250 b. euros this year in maturing debt. If Spain cannot roll over the debt – what will happen? Spain’s socialist Prime Minister Zapatero appears angry and in total denial, blaming everyone and anyone for Spain’s woes – except his own government’s ineptness.

     Let’s simplify and look at the issue of money. America is engaged in an enormous and irresponsible experiment, flooding the world with money. (It is called QE2, it should be called PRINT ONE TRILLION MORE AND RUIN THE DOLLAR).  There already is a huge amount of money, not only dollars but euros and yen and yuan, in the world, after Central Banks tried to battle the crisis with credit expansion.  That money is at present earning nothing.  A quick look at the back page of The Economist reveals that real interest rates worldwide are near zero. Even where nominal interest rates are high (India, Brazil, Vietnam), inflation is equally high, and the different is nil.  So huge amounts of money are parked, waiting, waiting. It is like a football (soccer game), the final game of the World Cup 2012.  The pitch is ready. The players are on the sidelines waiting.  They have not yet taken the field. The referee is waiting to blow his whistle…..and we wait.  WHERE WILL ALL THAT MONEY GO?  It has to go somewhere – the opportunity cost of lost interest while it is waiting is huge, and pensioners, for instance, need their monthly payments, so pension funds, institutional investors, insurance companies, all need to find some reasonable return somewhere, adjusted for risk.

    Where????

    When will the money “go onto the field” and begin to play?  Where will it go? How will it be invested? With enormous uncertainty surrounding global capital markets, and risk hysteria (the next step beyond severe risk aversion) prevalent, with bond markets frozen, banks unwilling to lend – when will the money begin to ‘play’?  If you can innovate a new and attract investment vehicle, one which offers attractive return and transparent easy-to-measure clear risk, you can do very well.  The old vehicles are tired and unsuitable.

     I recently looked  at this question:   Why has the world not had inflation, if so much money has flooded into the world, in Europe, America and Asia?  Answer:  the ‘velocity’ of money has slowed everywhere, without exception.  The money is not in play.  Since economic momentum is the product of the amount of money times its velocity,   even if M money has grown,  V velocity has fallen to offset it, leaving momentum stagnant. 

    When will inflation again rear its ugly head?  When the money begins to move again.  When velocity begins to rise.   Watch that number closely.   You will have to calculate velocity yourself  (nominal GDP divided by Money),  the World Bank, which provides 1,158 data series,   sees fit NOT to provide one of the most vital ones, velocity of money.    

Insanity: 1997/8, 2007/8 — 2017/8 ?

December 1, 2010 in Global Crisis Blog, Innovation Blog | Leave a comment

 Global Crisis/ Innovation Blog

Insanity:  1997/8, 2007/8 —  2017/8 ?

By Shlomo Maital

    In 1997/8,  a housing bubble and a wrongheaded decision not to rescue those ruined by it created a global crisis.

    In 2007/8, a housing bubble and a wrongheaded decision not to rescue those ruined by it created a global crisis. 

     It is not a misprint.  The events of 97/8 and 07/8 are strikingly similar. Only the names of a few of the players and the countries are different. 

    In 1997, Thailand found it had created an enormous housing bubble, including an entire ‘city’ that could house 700,000 people (about the size of Boston) between central Bangkok and the airport, funded by numerous fly-by-night banks. On July 2, the baht, the Thai currency, collapsed, helped by forex speculators.  America chose not to provide emergency loans to Thailand, via the IMF.  It was a horrendous decision. The ‘contagion’ quickly spread to the rest of Asia, and ultimately, on Aug. 18, 1998, led to Russia’s default on its debt (as Asia sank into recession, the price of oil plummeted, Russia’s oil revenues collapsed, and the Russian government couldn’t pay its debts). 

    The decision not to bail out Thailand was taken by U.S. Sec. of the Treasury Robert Rubin, who had been co-Chair of Goldman Sachs, where he worked for 26 years.  He was joined by Fed Chair Allan Greenspan.  I am certain they hugely regret it.

      In 2007/8, America found it had created an enormous housing bubble, including entire neighborhoods in California that emptied when mortgagees defaulted.   On Sept. 17, 2008, U.S. Secretary of the Treasury Henry (Hank) Paulsen, who had led Goldman, Sachs, along with Ben Bernanke, Fed Chair, chose NOT to rescue Lehman Brothers, facing bankruptcy. It was a horrendous decision.  The Lehman “contagion” led to a 20 % drop in stocks in one week, biggest in decade, and greatly worsened the global crisis.  I am certain Paulsen and Bernanke hugely regret this disastrous mistake. 

   The similarity between those two events is staggering, is it not? 

   Albert Einstein once wrote, “insanity is doing the same thing over and over and over, and expecting different results.”

    Those who run the global capital market system are making the same mistakes over and over.  Why would we expect anything other than recurring global crises?   Why is it totally justified to call this situation “insanity”?  

     And when will sanity be restored?   Before, or after, the crisis in 2017/8?  Can we expect from those who control our money and economy, an “innovation” — acting sanely, after learning minimally from history? 

Happiness – What Neuroscience Shows

November 28, 2010 in Global Crisis Blog, Innovation Blog | 2 comments

Global Crisis/ Innovation Blog

Happiness – What Neuroscience Shows

By Shlomo Maital

  BBC has been running a four-year series on the science of happiness.  The results are truly fascinating.  In some ways, they are encouraging, because they indicate that there are many ways to be happy, or more happy, without gaining wealth or income – good news in an era when many people, in the U.S. and Europe, are struggling to find employment.

   Here is a short précis on what scientists studying happiness have found:

***Happy people live a lot longer:   According to Professor Diener the evidence suggests that happy people live longer than depressed people. “In one study, the difference was nine years between the happiest group and the unhappiest group, so that’s a huge effect”.

*** We’re richer but often not happier:  “Standard of living has increased dramatically and happiness has increased not at all, and in some cases has diminished slightly,” said Professor Daniel Kahneman of the University of Princeton.  “There is a lot of evidence that being richer… isn’t making us happier”.

**** Above the minimum, money doesn’t count much:  “Once you have a home, food and clothes, then extra money does not seem to make people much happier.”

***  Why money doesn’t make us happier?  Two reasons.  We go for things which give us short bursts of pleasure whether it is a chocolate bar or buying a new car.  But it quickly wears off.  Secondly, it is thought that we tend to see our life as judged against other people. As we get richer, so do our peers, often.”

 *** What DOES bring happiness?  Ed Diener:  First, family and friends are crucial – the wider and deeper the relationships with those around you the better.   It is even suggested that friendship can ward off germs. Our brains control many of the mechanisms in our bodies which are responsible for disease.   Just as stress can trigger ill health, it is thought that friendship and happiness can have a protective effect.  According to happiness research, friendship has a much bigger effect on average on happiness than a typical person’s income itself.  [One economist, Professor Oswald at Warwick University, has a formula to work out how much extra cash we would need to make up for not having friends.  The answer is £50,000. ]   Marriage also seems to be very important. According to research the effect of marriage adds an average seven years to the life of a man and something like four for a woman.  The second vital ingredient is having meaning in life, a belief in something bigger than yourself – from religion, spirituality or a philosophy of life.

 The third element is having goals embedded in your long term values that you’re working for, but also that you find enjoyable.  Psychologists argue that we need to find fulfilment through having goals that are interesting to work on and which use our strengths and abilities.

   None of this is new or surprising, and all of it is consistent with common sense.  Yet, remarkably, how many of us pursue wealth and income, in the pursuit of happiness, often at the expense of those very things that do bring us happiness?  Why?

Not Innovative? Blame Marketing!

November 25, 2010 in Innovation Blog | Leave a comment

Innovation Blog

Not Innovative? Blame Marketing!

By Shlomo Maital

      

 

 

 

 Apple iPhone

   Writing in Market Leader (Quarter 4 2010),   John Kearon  (founder, CEO and ChiefJuicer at BrainJuicer Group) writes provocatively that:   “….the adoption of ‘marketing science’ is the reason why large corporations no longer seem capable of creating the kinds of new category innovations that made them big in the first place. ….. it is freedom from the constraints of marketing science that has enabled small startups to innovate and initiate new behaviours”. 

      A perfect example is Nokia vs. Apple.  Nokia carried out perhaps the largest market survey ever conducted by a major corporation. Surveying 300,000 cellphone users, in 2006-7, Nokia sliced and diced its market, segmented it into a 2×2  “aspiration vs. involvement” map, identified 12 different market segments, and tailored its “N” phones and its “E” phones precisely to the needs and wants of each segment.  In a presentation I heard personally by a brilliant young Nokia VP, Nokia spoke (this is in 2007) of multi-media devices, not cell phones (what we now call smart phones), and spoke of the fourth screen (the first three were movies, TV, computers, and the fourth – cell phones), being different from the other three, in that it created ‘connectivity’, ‘connection’….   So Nokia ‘got it’.  Perfectly.  And then Steve Jobs ate their lunch…and their supper, breakfast, and everything else in the cupboard. Nokia has now lost the profitable U.S. smart phone market.  What happened?

        Over-management. Over-marketing.  Over-slice/and/dice.  Failure to grasp the need for buzz and excitement when a new ‘category innovation’ like a smart phone is being launched, something Steve Jobs understands intuitively.  Apple has never had anything like the market survey excellence that Nokia has.  In spite of this – perhaps because of it? – Apple has triumphed.

    Kearon sums up the problem perfectly:

    “The problem with putting the consumer first when it comes to originating new categories is that people instinctively reject new behaviours, and it takes inventors/entrepreneurs to ignore these reactions and do it anyway.”

    If you are a startup, or dream of one, you have a huge advantage in category innovation.  If you are a big market-survey-driven organization, you have a huge problem – unless you can find a way to enable inventors/entrepreneurs to thrive within your bureaucratic humdrum disciplined button-down culture.  

Allan Sandage and a Proof of God’s Existence

November 24, 2010 in Innovation Blog | 2 comments

Innovation Blog

Allan Sandage and a Proof of God’s Existence

By Shlomo Maital

   Allan Sandage, perhaps the world’s greatest living astronomer, passed away 10 days ago in California. He was 84.  Sandage was the right-hand man of Edwin Hubbell, the astronomer who discovered galaxies other than our own (“Milky Way”), and whose Doppler effect discovery led astonishingly to the conclusion that the universe was expanding outward rapidly.  Here, briefly, is what the Global New York Times wrote about how Sandage ‘corrected’ Hubble’s estimates:

     Mr. Hubble’s original estimate was that for every million parsecs ( 3.26 million light years) a galaxy was farther away from us, it was retreating 530 kilometers per second            (around 300 miles per second) faster.  Mr. Hubble’s original estimate, however, corresponded to an age for the universe of only 1.8 billion years, at odds with both geological calculations of the Earth’s age and Mr. Sandage’s later estimate of the ages of star clusters.   But Mr. Hubble had made mistakes, and as Mr. Sandage  … delved into the subject, the problematic constant came down and the imputed age of the universe rose.  In 1956, Mr. Sandage suggested that the Hubble constant could be as low as 75 kilometers per second per megaparsec. By 1975 the value, they said, was all the way down to 50, corresponding to an age of as much as 20 billion years, comfortably larger than the ages of galaxies and globular clusters. This allowed them to conclude that the universe was not slowing down enough for gravity to reverse the expansion into a Big Crunch. That was in happy agreement with astronomers who had found that there was not enough matter in the universe to generate the necessary gravity.   As Mr. Sandage wrote in The Astrophysical Journal in March 1975, ‘‘.. the Universe has happened only once, and … the expansion will never stop.’’

  Where is the proof of God?  

  Work proceeds apace at the Hadron Accelerator in Switzerland, to simulate the Big Bang – the creation of the universe, when matter imploded intensely, then exploded intensely, expanding outward,  and it still is.  Hubble’s measurements originally showed that the rate of expansion would slow, and the Universe would again implode inward, explode… etc.  This perpetual Creation, perhaps, contradicted abstractly the Biblical account.  Then came Sandage, showing that the Universe would expand outward forever.  That meant that there was only one Big Bang and one act of Creation.  It is thus possible to interpret the Genesis account of Creation, as:   Big Bang,  “…God called the light “day,” and the darkness he called “night.” And there was evening, and there was morning–the first day…”  and that Day lasted several billion years (remember the sun had not yet been created). 

    We know this wasn’t your intention, Allan.  You simply sought the truth.  But thanks anyway.  Rest in Peace.

Nespresso: Make Meaning, Make Money – Lots and Lots of It!

November 23, 2010 in Innovation Blog | 1 comment

Innovation Blog

Nespresso:  Make Meaning, Make Money – Lots and Lots of It!

By Shlomo Maital

  

 

Nespresso pods

The history of coffee is replete with remarkable innovations, that consistently do what all innovators strive to do – take a simple inexpensive commodity, and move it higher and higher up the value chain.  Nestle, the global food company, is remarkably good at doing this, through branding. But Nespresso?  This is another world entirely.  Nestle, through Nespresso, has created an entirely new culture.  Note that the word “culture” has, as its first four letters, the word “cult”.  This is what Nestle has intentionally created – a Nespresso cult.   It has found a way to take a commodity, coffee, and create not a good, not even a service, but a transformational experience – drinking Nespresso – with a new language (color-coded pods, and flowery descriptions of the varieties of coffee in the pods) and an entirely new level of profit margins on selling coffee.    

      Nespresso is a coffee system in which a Nespresso machine forces steam through a 5-gram aluminum ‘pod’ of coffee, to make tasty espresso.  Nestle makes money both from the Nespresso machines and from selling the pods of coffee.

    According to Wikipedia:

    Espresso pods like those from Nespresso have become one of the fastest growing segments of the coffee market, with pods accounting  for 20 to 40 percent of the value of ground coffee sales in the European coffee market that totals USD 17 billion. In August 2010, it is reported that sales from Nespresso have been growing at an average of 30 percent a year over the past 10 years and more than 20 billion capsules were sold since 2000 at a current selling price equivalent to about $  0.43 to $ 0.62 a capsule.

    Let’s run the numbers. I have just spent some NIS 500 (about $135) to buy 23 sleeves of Nespresso pods, each sleeve containing 10 pods.  One pod, then, costs about 60 cents, which is the cost worldwide, on average.  Bought at retail, a pound of coffee can cost between, say, $1.99, up to, say, $5.99 (Starbucks).   Until now, Starbucks has been the gold standard for selling coffee for exorbitantly high prices ($5.00 or more for a latté).   But Nestle takes the prize.  Five grams of coffee (1/200 of a kg.) at 60 cents each means that a kg. (2.2 pounds) of podded coffee costs 60 cents x 200 or $120.00.   Or, one pound of podded coffee costs $120/2.2 =  $55.   In other words, about 10 times the cost of a premium branded Starbucks bag of coffee.  Nestle has managed to run up the price of coffee by an order of magnitude.  

Part of the secret is technology – the Nespresso machines force steam at high pressure through the pods, and thus require using less coffee.  Part of the secret is marketing – creating a culture of Nespresso pods, color-coded, each with flowery descriptions, thus creaming “meaning” for coffee drinkers.  For instance, my wife likes Rosabaya de Colombia,  Colombian coffee; I prefer Kazaar, a limited experiment with very strong coffee that alas has been discontinued.  You cannot buy the pods in a supermarket – that would demean them, and moreover, would force Nestle to share its margin with the retailer. You buy directly from Nestle, usually on-line or in special outlets.  This ‘channel’ innovation also deserves careful study.

      I cannot think of another innovation that has made so much out of so little.  The Nespresso brand should be carefully studied by all innovators, to learn secrets that can transfer to non-food products. 

America’s 99’ers: BO, Phone Home!

November 20, 2010 in Global Crisis Blog | Leave a comment

 Innovation Blog

America’s 99’ers:  BO, Phone Home!

By Shlomo Maital

 A disturbing and angering segment on the CBS show 60 Minutes featured the 99’ers – Silicon Valley high-tech engineers and managers who are unemployed, and whose unemployment benefits are running out because they have used all 99 weeks – after Congress extended unemployment benefits at a cost of $100 b.  San Jose alone, the capital of Silicon Valley, has 75,000 persons who have lost their jobs.  In October nearly one American in 10 were unemployed.  Some 42 per cent of them had been out of work for 27 weeks or more; and 20 percent, for a year or more.  Many of the 99’ers are about to lose their homes through mortgage foreclosure.  Many are 50 or over, and have no hope of gainful employment, other than working at Wal-Mart or McDonald’s for as much as $9 per hour.  Many have used up their IRA’s, their savings, their 401k’s, believing the jobless period would be temporary – and finding it might well be permanent – at least at the level of skill they worked at previously.    

  The actual unemployment rate is far higher than 1 in 10.  Those who have given up job-hunting are no longer considered part of the labor force, hence do not count as unemployed. The legions of workers who can find only part-time work are also not counted. So, true unemployment rates must be 16 per cent or higher.  And a very large segment of the American workforce believes they might become unemployed in future, living under a sword of Damocles. 

   The only way America will regain well-paying jobs for its middle class is by curing its addiction to inexpensive Chinese imports and producing far more of its consumption goods in America.  This is America’s #1 issue.

    After badly losing the Nov. 2 mid-term elections, President Barack Obama spoke with the press, intimating that basically he felt the American people were ungrateful, and failed to understand what a heroic job he and the Democrats had done in grappling with the worst economic crisis since the Depression, a crisis dumped on him by Bush and the Republicans.  He indicated he thought the election drubbing was caused by his failure to communicate.

     BO, phone home!  Right now you are travelling the world, visiting India, Indonesia and Portugal.  Apparently you think that by playing foreign policy games, somehow the American people will come to admire you more.  Phone home, Obama.  Phone the Silicon Valley unemployed.  Come home!  Stay home, unpack your bags.  Focus every day, all the day, on jobs.  Never since the 1930’s have so  many Americans been unemployed for so long.  They are losing hope.  This is the #1 problem – and #2 and #3.  How is it that neither you nor your Administration get it?  What must happen for you to come home and deal with it?

Innovation Management: If you don’t execute, you WILL be executed

November 18, 2010 in Innovation Blog | Leave a comment

Innovation Blog

Innovation Management: If you don’t execute, you WILL be executed

By Shlomo Maital

In 2007, we visited Nokia headquarters on a benchmarking visit with a group of Israeli managers.  We heard from top Nokia leaders, including Jorma Olilla, and were deeply and profoundly impressed by what they told us. 

    A Nokia VP, Jonas Gøst (pronounced Guest), told us about his “four screen” analysis —  the first screen was movies (individual enjoyment); the second screen, TV (individual enjoymenet),  third screen computer (individual enjoyment), but the fourth screen is MMD (multi-media device),  the experience is communal/networked.  MMD of course is a “smart phone”.  Nokia truly “got it” early.  They did their homework thoroughly.  They surveyed 300,000 cell phone users, understood their needs, and segmented the market into 12 segments, and designed and marketed a phone specially tailored for each.  They invented smart phones.

   By all odds, Nokia should today RULE the smart phone market worldwide.

    The actual result:  as of Q3 2010, Nokia’s global cell phone market share has fallen, in just 12 months, from 36.7 per cent down to 28.2 per cent, a huge drop of 8.5 per cent in just a year. Nokia’s mobile operating system Symbian once ruled the world, and is now plummeting, overtaken by Android.  Nokia has lost the American smart phone market to Apple, and has nearly disappeared from that key market.  Apple ate their lunch.

     What in the world?

     I think it is all about execution.  In innovation, if you don’t execute, you will be executed.

    The mobile OS  Symbian was complex, hard to use, and failed to enlist masses of developers.  Nokia’s decision to make it ‘open source’ Symbian,  spun off into a non-profit foundation, was a huge error.  The Nokia smartphones were well designed, well conceived – and failed to excite, they had no ‘wow’!  Nokia focused on the ‘what’ of product development, not on the ‘for whom?’ (for those who love cool stuff, e.g.). 

     You can have the greatest strategic innovation plan in the world.  If you don’t execute it fl flawlessly, your products will be executed – and so will you  — Olli-Pekka Kallasvua  the  Nokia CEO  has been fired and replaced by former Microsoft executive Stephen Elop.  Elop’s first decision has been to radically revamp Symbian, re-integrate it into Nokia and improve it radically.

Innovative Use of Waste Water: Israel’s Shafdan Treatment Plant

November 15, 2010 in Innovation Blog | Leave a comment

Innovation Blog

Innovative Use of Waste Water: Israel’s Shafdan Treatment Plant

By Shlomo Maital

 

 

Negev Tomato grown  with treated waste water

So far, winter has failed to appear in Israel. Normal winter rains have not occurred.  With a worldwide water shortage, and a particularly fierce water shortage in the Mideast, this is a cause of worry.

    On the plus side, necessity has spurred innovation.  Very quietly, Israel has proved to be a world leader in the recycling of waste water.  Some 75 per cent of total treated raw sewage is reused in agriculture in Israel, or about 350 m. cubic meters of water.  No other country comes close, as this table (provided by the Israeli Water Company, Mekorot, shows):

—————————————————-

      water reuse rates:

 Israel    Spain    Australia Italy     Greece Central Europe and USA 

 75%       12%       9%            8%      5%         1%

 The centerpiece of this innovation is the Shafdan wastewater treatment plant in the densely-populated Greater Tel Aviv region.   This plant alone treats 130 m. cu. m. of water annually.  The water quality is high, making it suitable for all forms of irrigation, including for oranges, carrots, potatoes, lettuce, wheat and flowers.  On a personal note:  My daughter and her family live in the Western Negev and their hothouses use the treated water from Shafdan to grow peppers, cherry tomatoes and other vegetables for export.    A special 90 km. pipeline has been built to the Negev, carrying water from reservoirs and other sources specifically for purposes of agriculture,  in addition to the drinking water pipelines.

   The world is invited to visit Shafdan, in Rishon LeTzion, Israel,   learn about its technology, and adopt and adapt it for its use.  Enormous water savings could result.  The additional water it creates could reduce the cost of fresh food.
 

 

Germany Puts America In Its Place – It’s About Time!

November 14, 2010 in Global Crisis Blog | 2 comments

Global Crisis Blog

Germany Puts America In Its Place – It’s About Time!

By Shlomo Maital

  

 

 

Angela Merkel, German Chancellor

Readers have noticed: This blog has been highly critical of America, America’s President, America’s Treasury Secretary, and the economic (non)-policies they have implemented. Turns out American voters felt the same way on Nov. 2.  Obama apparently thinks the failure was one of communication – he just did not explain how he saved America.  It is the American voters, apparently, whom we need to replace, not the President.  They don’t get it. 

    Following the G-20 summit in Seoul Korea, Obama made an incredible statement detached from reality.  It was tough going, he said, but – we achieved consensus!  

    We did?  Consensus?  On what?   The only consensus reached was on the utter stupidity of America’s current analysis of global problems.  It’s not us, say Obama and Geithner. It’s everybody else.   When will this pair get real?

    Writing in today’s International Herald Tribune, author Stephen Hill tells us what really went on in Seoul.  It did not come close to resembling Obama’s ‘consensus’.  Instead, it featured Angela Merkel telling America to smarten up, with other G20 leaders backing her.  Obama floated an absurd plan to require nations who have NOT screwed up their economy to bail out America by buying American goods (does America still make anything?  If so, what?).  In response, Angela Merkel said:

   The United States is the one that must take the necessary steps to increase its competitiveness, she said. The U.S. should not try to put limits on countries that have figured out how to get the world to buy their goods. “In the task ahead, the benchmark has to be the countries that have been most competitive, not to reduce to the lowest common denominator,” she said. Ouch! — America being called “the lowest common denominator.”  Her finance minister, Wolfgang Schäuble, was even more blunt. He described American policy as “clueless” and said the American growth model is stuck in a deep crisis: “The U.S.A. lived off credit for too long, inflated its financial sector massively and neglected its industrial base.” Ouch again. Germany — previously sneered at by U.S. pundits for its “weak and sclerotic” economy — lecturing America about how to grow its economy.  Merkel said something else that is even more of a game changer: “It is essential to return to a sustainable growth path.” One cause of the crisis was that “we did not have sustainable growth. In many countries growth was built on debt and bubbles.”   What Merkel was saying is that the era of U.S.-style consumption-driven economics is over. The world needs to figure out how advanced economies can provide for their people without having roaring growth rates driven by asset bubbles, and how to develop in a way that is ecologically sustainable.

If consumer-driven growth was the order of the day in the post-World War II era, in the new era of Pax Germania it will be steady-state economic growth — not too fast, but not too slowly — and producing value-added products that the rest of the world wants to buy.  Utilizing more conservation and renewable energy technologies than the United States, Germany already has reduced its carbon footprint to half that of America’s — and it provides universal health care and has less inequality.    

    America ruined both its own economy and that of the world.  It and its leaders should remain perfectly silent for, say, 20 years, and listen carefully to others who have done better.  America is financially and morally broke.  Good for Angela for speaking out.  She said what many other world leaders have been thinking for years but have hesitated to say out loud.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital

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