Now the Asian Development Bank notices that, by golly!, prices are rising and they may even have a bad effect on people…especially poor people! Who woulda thunk it? From Bloomberg:
Asia faces a “serious setback” from surging oil and food prices that are fueling inflation and threatening to push millions into extreme poverty, the Asian Development Bank said.
The region’s growth may be reduced by as much as 1.5 percentage points should the pace of gains in oil and food prices seen so far this year persist for the rest of 2011, the Manila-based lender said in a statement today. Domestic food inflation in many Asian economies has averaged 10 percent this year, an increase in prices that may push an additional 64 million people into extreme poverty, defined as living on less than $1.25 a day, it said…
So, 64 million more people in Asia may be shoved under a buck and a quarter a day to live on. Keep that in mind the next time someone tells you that the Asian economy is bound to predominate…$1.25 gets you a soda at the convenience store here in America. In a lot of Asia, that is what you live on for a whole day. The Asian economy has done some good things but for the most part is is a scam – an exploitation of people in order to serve the needs of the global financial system, which has to keep costs low so returns are high enough to “beat the street” in the major financial centers. Of course, most of what Asians make is increasingly low quality crap…so, they are not really building as much wealth as the official statistics show.
But, here’s the kicker – some Asians have gotten quite fabulously wealthy in this economic bubble while most Asians have been able to hang on…now the people hanging on are finding their food and fuel costs skyrocketing while those who were raking it in are about to lose a massive amount of paper wealth as various bubbles (real estate, especially) go POP! This will not be pretty.
Not that we’re likely to do too well out of this – we are still (and will remain for the foreseeable future) the pivot of the global economy. But our problem is that we’ve ham strung ourselves. Taxes and regulations prevent Americans from creating wealth, but our large population and still relatively wealthy (compared, especially, to Asia) people provide the demand-engine for the world. But without new wealth, we cannot continue to import as much as we have been…and with prices rising and our wages flat or down, our ability to buy what the world wants – even on credit – will become increasingly crimped. Nice little economic death cycle, isn’t it? They need to sell to us in order to live, but the only way they can sell is if we keep up our de-industrialization policies…but if we don’t make/mine/grow stuff, we just don’t have the extra wealth to buy in sufficient quantity; not from them, and not even from ourselves.
The cure for us is easier – kick out Obama and the liberals and start creating wealth again. Asia’s problem is trickier because their “growth” for the past 30 years has been fueled by our wealth-destruction coupled with borrowing. Asia will find, after the crash, that there never really was a quick and easy path to wealth…just as it took us 100 years to rise from agrarian backwater to industrial power, so it will take them. You really can’t jam it in to 30 years and get a long term, good result.
It will be a long, hard road out of this fake money and borrowing mess – just get ready for it.
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