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As of the Summer Solstice of 2002,

according to a 22 June 2002 article by Beth Piskora in The New York Post:

"... The dollar fell to 97.06 cents against the euro, down from 96.48 the previous day. That's the dollar's weakest showing against the euro since April, 2000. ... the dollar ... now trades at 120.84 yen, down from 123.53 on Thursday. [Note that Japan is suffering from an asset bubble collapse, perhaps due to the emergence of China as the world's low-wage factory. However, China's currency is not yet freely transferable and therefore not now an alternative reserve currency.]

... The Dow Jones industrial average plummeted 177.98, or 1.89 percent, to 9,253.79.

...The technology-packed Nasdaq composite fell 23.82, or 1.62 percent, to 1,440.95.

The S&P 500 index fell 17.16, or 1.71 percent, to 989.13

... Based on changes in the Wilshire 5000 Total Market Index, the broadest measure of U.S. stock market health, investors have lost $1.52 trillion in U.S. stock investments so far this year. ...".

... The problem is an ongoing lack of investor confidence, a declining dollar, concerns about more terrorist attacks and disappointing profits. ... President George W. Bush... said business "must clean up its act" to eliminate the "overhang of distrust" stemming from scandals at Enron, Arthur Andersen, Tyco, ImClone and Martha Stewart Omnimedia. ...".

Why has this happened ?

How we get in this condition?

Will Marxism triumph in the long run?


Click here for a view from the Davos 2003 World Economic Forum.

To try to understand what is going on, look at the History of how we got to where we are, and the prospects of our

Future History - Distant and Immediate

From the Beginning of History through 2000 = 5760 humans used transportation, communication, and industry to create a Global World Order

with human technology to light up

the Earth at night;


to turn low-Earth-orbit into a space junkyard of debris

that may have brought down Space Shuttle Columbia on 1 February 2003;


to consume Cetaceans,

Rain Forests,

and Fish.

( 1958-1980 fish graphic adapated from Ransom A. Myers & Boris Worm (Nature 423 (15 MAY 2003) 280-283), who say: "... Industrialized fisheries typically reduced community biomass by 80% within 15 years of exploitation. Compensatory increases in fast-growing species were observed, but often reversed within a decade. ... the global ocean has lost more than 90% of large predatory fishes. ...[as indicated by the above graphic showing]... Spatial patterns of relative predator biomass in ...1958 ... and ... 1980 ... Colour codes depict the number of fish caught per 100 hooks on pelagic longlines set by the Japanese fleet. ...". See also the book Empty Ocean, by Richard Ellis (Island Press (2003), and a 25 May 2003 review in The New York Times by Thurston Clarke, who says: "... Ellis writes in summary, ''... the rampant destruction of the ocean floor and its endemic fauna is one of the greatest environmental disasters in history, and it is occurring virtually unnoticed.'' ...". )


As to the Immediate Future:

In the years up to 2000 the USA has been the only global superpower, so it is useful to consider Global population and USA stock market values, as shown in this chart through 1997. Note the unsustainable exponential growth.  

According to a series of five articles running 15-19 February 1999 in The New York Times: "... Charles Kindleberger, an economic historian and author of the book "Manias, Panics and Crashes," said ... "I've been thinking for two or three years that the market was too high ... When it collapsed in August [of 1998 (green line)], I thought it might be becoming sensible again. But ..."

... On Labor Day 1998, as financial markets worldwide were tumbling in the aftermath of Russia's financial turmoil, an impatient and annoyed Bill Clinton summoned his top advisers to the Yellow Oval Room on the third floor of the White House. ... President Clinton went into overdrive in September, welcoming three interest rate cuts by the Federal Reserve, pressing Europe and others to cut rates as well, and finally getting money out of Congress for the International Monetary Fund. The Federal Reserve even coordinated the rescue of Long-Term Capital Management ... The American stock market ... soared to its highest ratio of market capitalization to gross national product (140 percent) ever recorded in history, a ratio that compares with a previous peak of 81 percent in 1929. ...

Since May of 1999 (red line) the Dow Jones average has been stabilized at about 11,000 plus or minus about 1,000. This may be due to a policy of controlling, not only inflation in narrowly defined money, but also inflation in asset value. According to the 25 September 1999 issue of The Economist: "... America's broad measure of money, M3, has grown at an average rate of 9% over the past two years, its fastest since the mid-1980s; in real terms broad-money growth has been faster than at any time in the past quarter-century ... the blurring of boundaries between banks and other financial institutions, have made money-supply figures hard to understand. ... The consumer-price index is a flawed measure of inflation. Ideally, an effective measure should include ... asset prices ...".

How large is the asset value represented by the current level of the USA stock market ?

According to the series of five articles running 15-19 February 1999 in The New York Times:

"... a 15 percent increase in U.S. stock prices bolsters American wealth by $1.7 trillion, which is considerably more than the value of all the manufacturing that takes place in a year in the entire United States. ...". If 10 per cent of U. S. stock prices correspond to about $1 trillion, and if the Dow Jones average represents the U. S. stock market, then

the total USA stock market value at 1999 levels would be about $10 trillion.


Does stabilizing the Dow Jones average fully control asset inflation ?

What about the technology-internet-oriented Nasdaq exchange ?

Although the Nasdaq also had a collapse in August of 1998 (green line), it was not stabilized after May of 1999 (red line). The Nasdaq doubled in value from May of 1999 (red line) to about March of 2000, adding (according to a 21 December 2000 article the BBC) about $3 trillion to reach a total value of about $6 trillion. Since the Nasdaq was heavily oriented toward technology-internet-oriented companies, many of which produced far more hype than profits, the Nasdaq might have been considered to be even more highly overvalued than the Dow Jones.

If the Dow Jones and Nasdaq values are considered to be separate,

the total USA stock market asset value at its March 2000 peak was ($6 + $10) = $16 trillion.

The Nasdaq decline during 2000 after its March 2000 peak took it down to its May of 1999 (red line) level, and took away about $3 trillion of its asset value, so that

the total USA stock market asset value at the end of 2000 was ($3 + $10) = $13 trillion.


Some questions facing the Bush Presidency of the USA:


To try to answer those and other questions, look at how we got where we are, and also at some

Factors that might influence the course of Future History:

Click here for a view from the Davos 2003 World Economic Forum.  

Click here to see History prior to World War II.

Who Rebuilt the World after World War II ?

"... John Maynard Keynes ... was at the centre of dramatic world events: the economic aftermath of the First World War, the Great Depression, the rebuilding of the world after the Second World War. ..."

according to a 14 December 2000 article in The London Telegraph by Robert Matthews, which article continued:

"... [An] aspect of Keynes that makes him such an appealing route into economics is the lack of arcane mathematics in his work. ... Keynes believed that economics is intimately tied to human conduct, and that this could not be reduced to simple equations. ... There is ... a lot of feedback and non-linearity swilling around in economics - and to anyone with a mathematical training, that means equations that are not just hard to solve using algebra but actually impossible. Keynes may well have realised all this, and decided to be honest about the fact that neither he nor anyone else had the skills to solve the necessary equations. Certainly his refreshing reluctance to bamboozle with bogus mathematics is well summed up by his declaration that: "I would rather be vaguely right than precisely wrong." ...

... Open a leading economics journal today and you find yourself wondering if you hadn't inadvertently picked up a report on theoretical physics, so dense is the algebra and calculus. ...".

Who Abandoned Keynesian Common Sense ?

Charles River Intellectuals - compare the designers of the USA's Vietnam War;


Math and Physics Theorists - compare the lack of contact with reality of SuperString Theory.

Myron Scholes, then of MIT and now of Stanford Business School, and Fischer Black invented the Black-Sholes Model of Stock Option Pricing. Robert Merton, of Harvard Business School, demonstrated the broad applicability of the Black-Scholes options-pricing formula. Scholes and Merton shared the 1997 Nobel Prize for Economics (Black had died in 1995, and there have been no posthumous Nobel Prizes). Scholes and Merton are the Brains behind Long-Term Capital Management LP. Awestruck by the brainpower and storied pasts of the LTC partners, some of the best financial minds on Wall Street backed the firm to the hilt, sending it wealthy clients, lending it money at extremely favorable terms and investing their own funds. LTC used sophisticated mathematical models to predict how various markets would act and react in essentially normal times. However, LTC's models failed to take into account what might happen in the event of a world-wide financial crisis that caused unusual reactions in markets, and consequently on 23 September 1998 LTC had to receive a $3.65 billion bailout organized by the Federal Reserve from over a dozen financial institutions, not to mention a $678.5 million write-off by UBS AG of its entire exposure to LTC. The bailout avoided a possible bankruptcy filing that could have dumped huge amounts of securities onto the markets. How much would have been dumped? LTC had an $80 billion balance sheet and additional exposure in the form of off-balance-sheet agreements. Where does that leave LTC now? In August 1998 LTC was supporting a balance sheet of $125 billion of assets, about 54 times its capital base of $2.3 billion at the time. Now, LTC has capital of roughly $600 million supporting assets of $80 billion. Who benefits from the bailout? Wealthy speculators based in Greenwich, Conn.

Who Owns the Stock in the USA Stock Market ?


According to Jacob M. Schlesinger writing in The Wall Street Journal: "... Only 43.3% of all households owned any stock in 1997, the most recent year for which data are available, according to New York University economist Edward Wolff. Of those, many portfolios were relatively small.

Nearly 90% of all shares were held by the wealthiest 10% of households. The bottom line: That top 10% held 73.2% of the country's net worth in 1997, up from 68.2% in 1983. ...

[Over half of all shares were owned by the richest 1%.]

... Stock options have pushed the ratio of executive pay to factory-worker pay to 419 to 1 in 1998, from 42 to 1 in 1980. ... From bigger cars to higher tuition for the best schools, the richer rich will ratchet up prices for everyone else. "Extra spending at the top," he says, "raises the price of admission." ...".

Where do the USA Rich spend their Money? - Unfortunately for workers in the USA, instead of spending it on infrastructure and factories in the USA, much of it goes:

Consequently, the USA future history looks bleak for due to its middle class job loss and its infrastructure decays as seen in 2003 by the Columbia Space Shuttle disaster on 1 February and the New York Blackout on 14 August.


Is such a system stable ?

Yes, in the Short Term. Here are some reasons why:


Maybe not, in the Long Term. Here are some reasons why:

An interesting question is:

When does the Short Term end and the Long Term begin ?


(See a 25 September 1998 Wall Street Journal article by Steven Lipin, Matt Murray and Jacob M. Schlesinger, a 27 September 1998 New York Times article by Diana B. Henriques, a 30 September 1998 Wall Street Journal article by Gerald F. Seib, and a 13 September 1999 Wall Street Journal Outlook article by Jacob M. Schlesinger (from which the image above was taken).) (For more politics, see Bill Dekle's OpEd web page.)


Global Economy

After World War II, the USA was the only industrialized country that had not been a battlefield. Internally, the USA developed its economy through Centrally Planned Growth based on the Military, which produced the Interstate Highway System and the Technology for Jet Aircraft Transportation, Computer Computation and Communication, Optical and Satellite Communication, and Molecular Biology. Regulated Competition was used in the production and distribution of Consumer Goods that used the Technology.

To expand the size of its Markets and its Resource Base, the USA sent massive amounts of money to Europe and Japan to rebuild their industrial base, and secured Persian Gulf oilfields as a primary energy source.

Most of the money was actually used to build Industrial Base, with only a small amount, probably less than 20%, going to graft and corruption.

During 1970-1972, USA President Richard Nixon doubled the USA Dollar money supply, insuring liquidity for the massive USA-Europe-Japan economic complex.

The 1970s were a pivotal time for USA domestic economic policies. The USA had decided to become a service economy, forgoing manufacturing (for example, during the 1960s, USA steel mills had begun to import their iron ore, and during the 1970s the USA began to close its steel mills). The USA cut off money for infrastructure (sewers, roads, etc.) in New Towns of socially optimal population size (about 200,000 to 1,000,000). Funds were redirected to the largest existing cities. According to The New York Times (18 Oct 98 article by Louis Uchitelle), "... in the early 1970s, the United States tumbled into a rut of tepid economic growth, which still prevails. ... [in the 1990s] private indebtedness, particularly for consumers, has risen to record levels, giving the economy the sort of boost that government deficits did in the 1980s. ... If a recession should hit, layoffs and wage freezes could rattle families that have gone deeply into debt in the '90s to maintain their spending patterns. ... After adjustment for inflation, the median household's annual income, $37,005 in 1997, is ... only $1,260 above 1973's income of $35,745. ..."

With an expanding Money Supply and an expanding industrial Production Supply, the wage scale for jobs in European and Japanese industries rose to match the USA wage scale, so that the European and Japanese populations became consumers, thus expanding Labor Base Consumer Demand.

Although the expanded Money Supply produced increases in some commodity prices, particularly oil prices during 1972-1974, the High Money Supply was adequate to finance

a balanced prosperity of High Production Supply and High Labor Base Consumer Demand within USA-Europe-Japan.

What about the Rest of the Earth?

The Rest of the Earth could be roughly described by 3 categories:

Multi-National Corporations of USA-Europe-Japan decided that they could increase profits if they cut labor expenses. How to cut labor expenses? Move factories from within USA-Europe-Japan to low-wage areas outside USA-Europe-Japan.

Where should the new factories be built ?

The low-wage population had to be politically stable and educated or educable, so

China, and Latin America, India/Pakistan, SouthEast Asia, and Korea were the chosen regions.

What about the USSR and Eastern Europe ?

The USSR under Stalin had defeated Germany in World War II. After World War II, the USSR produced massive numbers of nuclear warheads deliverable by submarines, by land-based ballistic missiles, and by aircraft, so that strategically the USSR was on equal footing with the USA. However, the political system of the USSR had a fatal flaw. Within the USSR, monetary wealth (in rubles) relatively insignificant compared to political power. As long as an official was in office, that official could get goods and services by command, but when that official left office, that official had no political power and was effectively impoverished. Therefore, to corrupt an official, all you had to do was offer money from USA-Europe-Japan (either in $100 bills or Swiss bank accounts) because that would give the official wealth after leaving office, something that the USSR system did not provide. The fatal flaw of corruptiblility led to the destruction of the Berlin wall between East and West Europe in 1989, and to the dissolution of the USSR itself in 1991. The USSR fragmented into many newly independent nations, the largest of which was Russia. Post-USSR Russia was run by the same corrupt leaders who had overseen the dissolution of the USSR. Unlike the USA at the end of World War II, USA-Europe-Japan did not provide Russia with enough money to modernize its civilian industry. Even worse, whatever money USA-Europe-Japan did provide was not applied over 80% to industrial modernization with under 20% to graft and corruption, but was applied over 90% to graft and corruption and under 10% to industrial modernization. The resulting instability had, by August 1998, caused the ruble to become virtually worthless and the Russian internal economy reduced to a barter economy. The major danger to USA-Europe-Japan is that if the Russian people become hopelessly miserable, the Russian military can use its nuclear capability to ensure that USA-Europe-Japan shares its misery. Under Putin, Russia may be be undertaking a more assertive foreign policy, and increasing friendship with Iran and China, and an increasingly adversarial relationship with the USA.


What about Former Colonies of USA-Europe-Japan ?

Former Colonies of USA-Europe-Japan included Latin America, Africa, the Islamic Middle East, India/Pakistan, SouthEast Asia, and Korea. These culturally varied regions had some common characteristics:

For example, in Brazil, timber is used for charcoal to make cheap iron and steel.

The large populations of the Islamic Middle East and Africa were in areas with very valuable natural resources, such as Persian Gulf Oil fields. If those areas were industrialized to a high level, the people might assert independent control over those critically important (to USA-Europe-Japan) resources. Therefore, the Multi-National Corporations of USA-Europe-Japan by-passed Africa and the Islamic Middle East. In fact, industrialization of the Islamic Middle East was regarded as such a serious threat that attempts by Iraq and Sudan to industrialize were destroyed by military actions such as the Persian Gulf War and the 1998 USA cruise missile attacks on Sudan. The declared hostility of the Islamic Middle East to the State of Israel was an additional reason for preventing such industrialization.

However, the rest of the Former Colonies of USA-Europe-Japan, Latin America, India/Pakistan, SouthEast Asia, and Korea, were suitable for new low-wage factories.


What about China ?

The defeat of Japan in World War II and the decision of USA President Richard Nixon to prevent the USSR from launching a pre-emptive air and missile strike against Chinese nuclear and industrial facilities enabled China to emerge after 600 years of dormancy to become a Global Power, with Shanghai being developed as the next major city of Earth.

Asia, dominated by China, will account for 45% of the Gross Domestic Product of Earth in the year 2015, while the U.S. will account for 25% and the European Union for 15%,  

according to an article in the Wall Street Journal of 1997 March 20 by Charles Wolf, dean of the RAND Graduate School of Policy Studies and a corporate fellow in international economics at RAND.

Here are his projections for 2015 and data for 1997, 
for Gross Domestic Product (GDP) and Military Capital (MC) 
in billions of 1997 dollars
               1997 GDP    2015 GDP    1997 MC    2015 MC
China           $5,000     $11,500       $200       $410
Japan            3,000       4,500         90        173
India            1,300       4,000         90        353
Korea              430       2,000                   129
Indonesia          545       1,500                    60
U.S.            $7,500     $11,500     $1,200       $895
European Union  $4,250      $6,750    

With its large politically stable population of low-wage labor, China was very suitable for low-wage factories. With its relatively well-organized government and stablizing PLA, China encouraged location of industrial factories within its borders, both to raise its industrial productivity and to secure techology needed to modernize and develop its indigenouse industrial base. Therfore, China was a prime region for the Multi-National Corporations of USA-Europe-Japan to build new factories.

Even if the Multi-National Corporations of USA-Europe-Japan fail in their effort to maximize their profits form a Global Economy, China might prosper based on its own internal resources of industry, raw materials, labor, and social stability. In a series of five articles running 15-19 February 1999, The New York Times said: "... As for China, it has evaded the [financial] crisis, and what saved it from catastrophe may in part have been its unwillingness to listen to Western economists. Urged to make its currency freely tradable with the dollar, it resisted. If the Chinese yuan had been convertible, then Chinese would have sent their money fleeing as Thais and Indonesians did, and China might also be mired in a major financial crisis. China claims economic growth last year of almost 8 percent -- a tribute to the government's $1.2 trillion stimulus plan ...".

The growth of China came under the rule of Deng Xiaoping. Whether the growth will continue after his death is problematical, because his successor Jiang Zemin seems to be returning to doctrinaire Marxism and repressive actions reminiscent of the Cultural Revolution, and, under Jiang Zemin, China may be drifting into an adversarial relationship with the USA.

Although Jiang Zemin and his successor Hu Jintao are severely oppressive toward Taoist freedom, they are continuing the economic growth policies of Deng Xiaoping ( and thus avoiding the Confucian stagnation of China in the 1400s AD ) as is discussed in a 13 January 2003 article in The New York Times by Joseph Kahn:

"... China cannot rely on consumer spending to spur growth the way most industrialized nations can. China also needs to expand faster than wealthy countries to generate jobs for workers laid off by state-run factories and for farmers flocking to cities to seek something better than subsistence income. ... China's top leaders ... are monopolizing the country's private savings for a building boom that dwarfs the New Deal and the Marshall Plan. ... [They, ] ... trained in the mechanical sciences, are not just making mountain cities into transportation hubs. They also want to pump 48 billion cubic meters of water each year from south to north, transport natural gas from Central Asia to China's southeast coast, and construct the world's largest dam, longest bridge, fastest train and highest railroad. ... China is using heavy government investment to escape the worldwide slowdown and maintain growth above the 7 percent level that the government deems crucial to avoiding mass unemployment and urban unrest. The plan has worked, so far. China last year reported defiantly robust growth of 8 percent, attributed to surging exports and a nearly 25 percent increase in state-directed investment. ...

... Even for the nation that built the Great Wall and the Grand Canal, the scale of construction is extraordinary. ... By 2005, China plans to add 8,500 miles of railroad, half of that to places that now have no rail service. Shanghai just opened the world's first magnetic levitation train that zips to its new airport at up to 270 miles per hour, faster than any other commercial train. Railroad officials are completing plans for a $22 billion high-speed track from Beijing to Shanghai. Meanwhile, workers carrying oxygen tanks are pounding spikes for the 670-mile-long Qinghai-Tibet railroad, which will operate at elevations of up to 16,600 feet on its way to Lhasa, Tibet's capital. The Three Gorges Dam, designed to tame the mighty Yangtze river and generate the power of 18 ordinary nuclear power plants, was for years considered the world's most expensive project, with a price tag of $30 billion. It has now been eclipsed by China's latest engineering colossus, a $60 billion system of channels and pump stations to divert water from the Yangtze in the central part of the country to the Yellow River in the north. In late December, Chinese officials broke ground on the first phase of the project, which they say will alleviate desertification and drought. ...

... The government, state banks and companies and foreign investors collectively spent $200 billion in the first 11 months of last year on basic infrastructure projects, one quarter more than they spent in 2001, according to the State Statistics Bureau. That represents about 15 percent of China's gross domestic product, or about the proportion that the United States spends on health care. ... $200 billion ...[is]... a bit more than the United States Congress spent, in adjusted dollars, to build the American interstate highway system in the 1950's. ...".

China's massive state investment is not restricted to Earth. According to a 19 August 2002 article in the Washington Times by Damien McElroy of the London Sunday Telegraph:

"... Despite the cost, estimated at hundreds of billions of dollars, and immense technical difficulties, China boasts that it will beat the United States with a manned mission to Mars. ... Preparations for a manned flight have been intensified as scientists rush to complete the program ahead of a 2005 deadline for placing astronauts on an orbiting space station. The calendar for getting to Mars is slightly vaguer, although the year 2010 is frequently mentioned as a target date. ... officials have boasted that, by 2040, a Chinese base on Mars will be a reality. ...".
Such heavy investment in infrastructure and space is consistent with heavy investment and rapid expansion of global military capability.

Even with such heavy investment, future rapid growth in China is not guaranteed. According to an 8 May 2003 Independent article by Jasper Becker: "... In January [2003], China was described as the motor of economic growth. ... the effect of Sars is being compared in Asia to the disastrous plunge after the 1997 Asian financial crisis ... every foreigner who can is leaving [China] ... Chinese businessmen also fear going abroad in case they are put into quarantine ... Hong Kong's Dragonair airline, which serves mainland cities, says it is carrying only 700 passengers a day, compared with 13,000 at the year's start, and has grounded nine of its 21 aircraft. ... Sales of computers in China, the world's second-biggest market, are dropping so quickly that the price of computer chips is already down. ... Big state companies that were planning to lift spirits in the world's ailing financial services sector with big public stock offerings are holding off. The huge People's Insurance Company is delaying its $600m stock market float until the autumn, as are Sinotrans, Shanghai Forte Land and Soho China. Standard & Poor's is predicting that bank profits could slide this year by as much as 45 per cent in Hong Kong and 25 per cent in Singapore if the slowdown lasts until the end of the year. ... Foreign investment is also bound to fall steeply. The number of contracts signed at the Guangzhou trade fair this year was down by three quarters ... The 1997 Asian financial crisis had political as well as economic ramifications across the region, including the downfall of the Suharto regime in Indonesia and the independence of East Timor. China escaped unscathed then, but it may not be so lucky this time. ...".

However, according to a 26 August 2003 Yahoo! News article by Frances Williams in Geneva and Christopher Swann in London: "... The global stock of FDI [Foreign Direct Investment] jumped more than tenfold between 1980 and 2002 to $7,100bn, as transnational companies spread their production and distribution systems around the world. ...

Further, according to a 15 September 2003 World Tribune article by John Metzler: "... Global foreign direct investment (FDI) flows, already down by 40 percent in 2001, fell by another 21 percent last year. ... the US is expected to produce the largest source of FDI outflows in the coming years ...


As China's low wages attract manufacturing plants to move to China from the USA and Japan, conflict may arise as the USA and Japan lose not only jobs but the ability to manufacture goods within their own borders, thus possibly making Chinese labor unions the dominant political force on Earth by 2020.


To the extent that the USA is no longer a player in the manufacturing game, its major assets in the world economic system are Intellectual Property rights for technology, pharmaceuticals, agriculture, movies, music, etc., coupled with the political/military means to force the rest of the world to pay royalties for Intellectual Property. Someone from China once told me that China should only pay Intellectual Property royalties to the USA after the USA pays China for its use of such things as electromagnetism, optical lenses, chemical energy sources, medical technology based on blood circulation, etc. A 30 January 2003 article by Andrew Orlowski in The Register indicates the attitude of the government of China:

"... 3G [third-generation wireless technology] is CDMA-based. ... CDMA's heritage ...[is]... a technology favored by the US military ... Qualcomm ...[holds]... (40 per cent) ... of CDMA patents. ... The existing wireless leaders engaged in much patent trading to build a market from which they could all benefit. But Qualcomm didn't want to play by those rules. Qualcomm's patent portfolio wasn't enough to take over the world, but crucially, it was enough to screw everyone else if they chose to play dirty, and that's what Qualcomm chose to do. ... It ...[came]... to the negotiating table with the assumption that it had simply invented everything already, that the furreners across the table were a bunch of ignorant, and very definitely European hicks, and should pay what was required. ... the Europeans ...[agreed]... to pay a 5 per cent royalty to Qualcomm for using their patents in their own flavor of CDMA, WCDMA ...

... what would the Chinese do? Shunning both Qualcomm's CDMA and the multi-vendor alternative WCDMA, it developed a cheap overlay to the popular GSM networks that are the already most prevalent in China, that it calls TD-SCDMA. Qualcomm made noises that all CDMA-type technologies developed in China naturally deserve to earn Qualcomm a royalty. The instruction was aimed at China's Datung, which had developed the TD-SCDMA technology with Siemens. And Datung told Qualcomm to piss off. ...

what's a Qualcomm to do when China refuses to pay the CDMA tax that it requests from the rest of the world?

... China as the new Microsoft or Intel? ... that future is almost here. ...".

China's attacks on the USA Intellectual Property system may win it allies in much of the rest of the world, especially since the USA insists on enforcement of Intellectual Property Rights at the expense of the health and welfare of many of Earth's people, as exemplified by a 16 February 2003 BBC web article that said:

"... trade talks in Tokyo failed to bring the multiple warring sides any closer together. ... the big pharmaceutical companies - represented by the US - refused to relent on the tight controls they want on countries' rights to break drug patents in emergencies. ... For developing countries, the mood was dark. Most of sub-Saharan Africa, and much of Asia and Latin America, is threatened with social and economic devastation from the Aids pandemic. Two deadlines for allowing access to patent-protected expensive drugs have been missed already, the most recent on 16 December failing because the US - alone out of 145 WTO members - blocked a deal. Brazil, one of the few countries to have used its existing rights to produced generic drugs to the limit despite threats from both drug companies and the US government, put forward a proposal to let the World Health Organisation decide whether a country can make its own drugs or should be allowed to import them at special prices. ...".


A view from Kazakhstan of China and the World from 2000 to 2030,

excerpted from articles by Victor Feller on the web pages of the Dao China Site of Dmitry Alemasov:  

"... This prognosis was finished in June 1999 as a sequel to the strategic plan intended for a group of financial companies floundering in the morass of Kazakhstan's privatization. ...

... The Chinese civilization, which is several thousand years old, is based on the ideology of Confucianism (which reminds of Protestant ethics of Europe) and on traditional communal style of life in the countryside. We must remember that labor efficiency and standards of living in China are still more than 10 times lower than those of the U.S are. If we also consider industriousness, trading wit, ingeniousness and diplomatic talents that the Chinese are famous for, we can safely suppose that the "Chinese wonder" is still to be seen. And when it comes, it could make an awful mess for the U.S. and Japan to be in! ... the twenty-first century Chinese expansion has to be performed by economic or political means. Probably, it will be first carefully prepared by diplomats and secret agents, then followed with migrations and backed by the Chinese underground ("Chinese triads") or by local separatist movements, or enforced by threats, or camouflaged for peace-keeping operations in times of Chinese-inspired local conflicts, etc. ...

... Japan, which in the 1980s claimed the economic hegemony in Asia, had been quickly eating into American and European markets, until she picked up an infection in the early 1990s ... in contrast to China, Japan is not likely to restore her domination anymore, even within the limits of the Far East. The best she could count on is a place in the China's anti-American alliance, or, vice versa, in an USA-leaded anti-Chinese bloc. ...

... During the first decade of the twenty-first century the U.S. will be continuing their arrogant imperial policy, which will be greatly to blame for their failure in the East. ...

What great events will most probably happen from 2000 till 2030?

It is almost obvious that principal battle for power and global influence, fought for the possibility to translate one's cultural codes and national strong points into reality, is to be staged between the Atlantic and Pacific civilizations, i.e., between the U.S. and China. By 2015 or 2020 economic potentials of the two will be almost equal. ...

... by 2010, the U.S. will have grown to be a single integrated corporation nation-wide ... Europe will develop into such kind of a corporation by 2025. ...

By 2010 or 2020 ... Hordes of the Chinese will be swarming across the Russian border, after people riots shake several Chinese provinces. The U.S. and Russia will receive about one million refugees each. Europe will give shelter to 500 thousand. ... by 2020, the authoritarian Chinese regime will have expelled another 5 million of its citizens out of China. This time, 90 percent of expats will settle down in Southeast Asia, in order to go back to China in a few years. Their forced expulsion from the homeland will in reality turn out to have been a Trojan horse, meaning a mere migration and "occupying" new territories. ... the regime ... in China .... will [be overthrown by]... a storm of public indignation over cruel treatment of fellow-countrymen ... giving place to a new policy of pragmatism. ... China ... will develop complex hierarchical collectivist systems instead, with personal and group interests ingeniously harmonized inside of them. ... competition in itself will never make a locomotive of the economy ...[in China]... but the tradition to coordinate individual and group interests, rooted in specifically "Oriental", communal and economy-centered psychology, will in return prove super-efficient and beyond the understanding of individualist-thinking Europeans and Americans. ...

... by 2020 ... China will also finish "inventorying" her own missile defense capabilities and be learning how to make holes in her neighbors' nuclear umbrellas. ... The allusions to submarine nuclear mines off the North American coast, as well as other little presents from the Chinese scattered all over North America, will make the U.S. government easier to bargain, with American security services hysterically searching for the mines and actually finding some 50 km off New York. ...

... Within the plans of the Chinese government, both Americas will be "conceded" to the U.S. ... all the nations of Central Asia, plus Iraq, Syria, Saudi Arabia, Iran (to a certain degree) and, perhaps, Turkey will finally be wooed into the orbit of Chinese impact and interests. ...

... New Chinese elite will be quite satisfied with China's place in the world. ...

... By 2030 the Chinese economy will exceed that of the U.S. by 30-35 percent and that of Europe (both Western and Eastern) by 5-15 percent. ...

... By 2030, the levels of economic development and standards of living of China and India will differ strikingly, being approximately 2.5 to 3 times higher in China. By that time China will have left India far behind and be struggling for the world hegemony. India will be isolated within a circle of Chinese allies.

... A new national state likely to unify all the black people may possibly emerge in Africa. The unification may begin from the South or from Central Africa, with South Africa, or Nigeria or Zaire playing the leading role. ...

Conclusions, Or How To Look Upon This Prognosis.

... The above sketch of the world development in 2000-30 is only one of the possible scenarios, one of the most feasible models. ... I have been assuming that the ruling elites of different nations would behave in a reasonable way, that no extraordinarily devastating cataclysms would happen on Earth or, if there will be any, their effect would be shortly neutralized. For such an optimistic hope, I've got solid grounds, concealed in the history of 1945-99. ... I believe this future of mine is quite a reasonable one, good to live in and giving possibilities to achieve what you hope for. ... I would like you not to take it too seriously, or to believe it to be a kind of a plan. History, especially that of shorter periods of time, is made by personalities together with coincidences. If it were not for Lenin, the Communist experiment couldn't last long, and Bolsheviks would have broken their backs already at the time of the Brest-Litovsk peace treaty. Accordingly, there is a possibility of history going its own way, with, say, ...


Multi-National Corporations of USA-Europe-Japan

built new low-wage factories in

Latin America, India/Pakistan, SouthEast Asia, and Korea, and China,

a group of regions which I will call (somewhat inaccurately) Colonies and China.

The Multi-National Corporations of USA-Europe-Japan succeeded in cutting labor costs and in increasing corporate profits. Beyond that, investors remembered that the expansion from the USA to USA-Europe-Japan after World War II had led to a balanced prosperity of High Production Supply and High Labor Base Consumer Demand within USA-Europe-Japan, so they assumed that the same thing would happen with expansion from USA-Europe-Japan to USA-Europe-Japan-Colonies-China, and they priced stock shares assuming similar rapid future growth. Investments went beyond productive factories to such ventures as Muang Thong Thani near Bangkok,

with its two dozen towers, each about two dozen stories high, described by The New York Times in a series of five articles running 15-19 February 1999 as "... a privately owned satellite city for Bangkok. Muang Thong Thani was to have a population of 700,000 ... it is [now] a ghost city. ... Along one street of 100 houses, the windows are mere holes in the walls, and yards have weeds that grow as high as a person. ...".

The New York Times series of articles describes the government and financial policies and their results:

"... [USA President] Bill Clinton ... and Robert E. Rubin, [former] head of Goldman Sachs & Company, who became ... Treasury Secretary in 1995, ... pushed harder to win opportunities for American banks, brokerages and insurance companies. This drive for free movement of capital as well as goods was one factor in the long American-led boom in financial markets around the globe. ... Washington's policies also fostered vulnerabilities that are an underlying cause of the economic crisis that began in Thailand in July 1997, rippled through Asia and Russia, and is now shaking Brazil and Latin America. ... some economists ... say that if those countries had weak foundations, it is partly because Washington helped supply the blueprints. ... a wealth of evidence has shown that overhasty liberalization can lead to banking chaos and financial crises. ... Mickey Kantor, the former trade representative and Commerce Secretary, ... [speaking] of the risks of financial liberalization without modern banking and legal systems, ... compared them to "building a skyscraper with no foundation." ...

... the Clinton Administration ... pushed for free capital flows in part because this was what its supporters in the banking industry wanted. ... Previous administrations had pushed for financial liberalization principally in Japan, but under President Clinton it became a worldwide effort directed at all kinds of countries, even smaller ones much less able to absorb it than Japan. ... His Cabinet approved a "big emerging markets" plan to identify 10 rising economic powers and push relentlessly to win business for American companies there. Under [the late Commerce Secretary Ron] Brown, the Commerce Department even built what it called a war room, where computers tracked big contracts, and everyone from the C.I.A. to ambassadors to the President himself was called upon to help land deals. ...

... When executives of an obscure Indonesian polyester company called Polysindo visited New York in 1996 to discuss issuing bonds, they were squired around and accorded meetings with top executives at Merrill Lynch and Morgan Stanley. No comparable Chicago company could ever have got such a welcome. American investment banks were so eager to arrange stock offerings for the likes of Polysindo that they often charged Asian companies about 3 percent of the value of the deal, compared with 6 percent that they would charge companies in the United States. ... the head of a U.S. corporation plaintively queried a New York investment bank, "Why do I have to pay 6 percent when you charge an Indonesian company only 3 percent?" ...

... by Thanksgiving Day 1997, it was clear to all top officials in Washington that South Korea was on the brink of an economic catastrophe. After five hours of conference calls among top American officials, Clinton telephoned President Kim Young-sam of South Korea and told him he had no choice but to accept an international bailout. ... South Koreans lost their businesses and in some cases were even driven to suicide. But foreign banks -- among them Citibank, J.P. Morgan, Chase Manhattan, BankAmerica and Bankers Trust -- were rewarded with sharply higher interest rates (2 to 3 percentage points higher than the London interbank rate) and a government guarantee that passed the risk of default from their shareholders to Korean taxpayers. ...

... China ... evaded the crisis, and what saved it from catastrophe may in part have been its unwillingness to listen to Western economists. Urged to make its currency freely tradable with the dollar, it resisted. ...

... The failure in January [1999] of the $41.5 billion bailout of Brazil demonstrates that the West still has not found a reliable formula for dealing with these crises. Experts continue to worry about the danger of a global recession or worse ... Resentment at U.S. policies ... has also led to a sense in many countries that the global economy is at an ideological turning point. In particular, there is a growing backlash against what some nations regard as an American model of laissez-faire capitalism, which rescues Connecticut hedge funds but sacrifices Indonesian children. ...

David Hale, chief economist of the Zurich Group, describes the financial upheaval of the last year and a half, "a real-estate crisis in Bangkok set in motion something that has no parallel in human history" ...

In a typical day, the total amount of money changing hands in the world's foreign exchange markets alone is $1.5 trillion -- an eightfold increase since 1986 ... equivalent to total world trade for four months.

"It's no longer the real economy driving the financial markets," said Marc Faber, a prominent fund manager in Hong Kong, "but the financial markets driving the real economy."

Economists are still charting this new global economic landscape, but they point out some of its features:

-- The amount of investment capital has exploded. By 1995, mutual funds, pension funds and other institutional investors controlled $20 trillion, 10 times the figure of 1980. The global economy is no longer dominated by trade in cars and steel and wheat, but rather by trade in stocks, bonds and currencies.

-- Far more wealth than ever before is stateless, circulating wherever in the world the owner can find the highest return. Thus spending by investors in industrialized countries on overseas stocks increased 197-fold between 1970 and 1997, and each nation's capital market is beginning to merge into a global capital market.

-- New technologies have vastly reduced the importance of physical distance. In 1930 a three-minute telephone call from New York to London cost $245. Now it runs 36 cents. In cyberspace, every market is next door.

-- Investments are increasingly leveraged, using borrowed money so that a $1 million bet becomes a $5 million bet, or they are channeled through complex financial instruments known as derivatives to multiply the potential profits. Derivatives have grown exponentially, with those traded in 1997 valued at $360 trillion, a figure equivalent to a dozen times the size of the entire global economy, and they bring important benefits but also new risks of turbulence.

-- Public funds are increasingly used to bail out losers, like banks. The latest crisis has forced an international rescue on a scale like nothing before, with roughly $175 billion in public money raised so far for the various international bailouts. At least some of that public money has gone to rescue bankers and politicians from their own mistakes. ...

Paul Samuelson, the Nobel laureate in economics, argues that sophisticated analysis has done a marvelous job in achieving "microefficiency" in financial markets. The result is that share prices adjust almost perfectly to specific news like currency movements or changes in dividends. "But I also believe the evidence is overwhelming that there is no macroefficiency of speculative markets," Samuelson added. "They experience self-fulfilling swings, and they can swing far above and below any kind of sensible fundamental value. There does not exist an efficiency which is self-correcting, except in the case that every bubble will someday burst." ...


The 1998 U.S. trade deficit surged to an all-time high of $168.6 billion, according to a 19 February 1999 AP report in The New York Times, which stated: "... [the 1998] deficit jumped 53 percent from a 1997 imbalance of $110.2 billion, surpassing the old record of $153.4 billion set in 1987. Many economists believe that the deficit for [1999] will be at least $60 billion worse than the 1998 figure as American exporters face continued troubles selling into global markets with one-third of the world in recession. ... For 1998, total exports dropped 0.7 percent to $931.3 billion, the first setback since 1985. Exports had been up 11 percent in 1997. Imports [for 1998] jumped 5 percent to a record $1.10 trillion as the U.S. economy, despite the hits taken by the trade sector, continued to post strong overall domestic demand. ... The ... trade deficits with both Japan and China widened last year. The imbalance with China rose 15 percent to a record $56.9 billion, the highest ever for any country other than Japan. America's deficit with Japan rose 14 percent to $64.1 billion, the second worst showing on record, surpassed only by a $65.7 billion deficit with Japan in 1994. The U.S. deficit with all Pacific Rim countries, the hardest hit region from the global crisis, rose 33 percent in 1998 to $160.4 billion. ...

... The [USA steel] industry is ... pressuring [the US government] to impose worldwide quotas on steel, warning of more layoffs and bankruptcies without government relief. ... The [USA Clinton] administration is concerned that steel will be the first in a long line of U.S. industries seeking increased protection from foreign competition in moves that could trigger retaliation and rising protectionism around the world. ...".


In 1999 and 2000 the USA trade deficit continued to increase. According to a 19 December 2000 AP article in yahoo business by Martin Crutsinger, "...  America's trade deficit declined slightly to $33.2 billion in October [2000] but was still the second-highest on record. ...

Through the first 10 months of the year [2000], the trade deficit is running at an annual rate of $363 billion, almost $100 billion higher than last year's [1999] $265 billion deficit....".


President Jacques Chirac of France, in a speech 18 February 1999 to the World Bank and the International Monetary Fund, urged that the United States, Japan and Europe manage the exchange rates of their currencies, keeping them within specific zones, according to a 19 February 1999 article in The New York Times, which stated: "... That is an idea that Japan and Germany have echoed, but [USA Clinton administration] Treasury Secretary Robert E. Rubin dismissed the suggestion as unworkable and ill thought out. ... [Rubin] noted that if the U.S. economy went into a downturn, and the value of its currency also fell, Europe and Japan might prescribe a rise in U.S. interest rates in an attempt to bring the value of the dollar back up. ... the United States is loath to turn over economic decision-making power to an international organization of any kind. ...".



Is there an easy way to sustain stock prices at a 20 Price/Earnings Ratio and 1.75% Dividend Yield ?

Yes - the USA can (probably secretly) guarantee an unlimited supply of cheap money to Big Wall Street for the purpose of buying stocks, while telling Big Wall Street that anyone taking short positions will be severely punished.

Such an increase of money supply beyond a corresponding increase in production of goods and services would produce INFLATION.


According to a 21 August 1978 editorial in The Wall Street Journal: "... Yale's Robert Triffin wrote ... "... World reserves had already more than doubled over the years 1970, 1971, and 1972,


increasing in this short span of three years by more than in all previous years and centuries since Adam and Eve. ...". Nixon printed money in 1970-72 and won a second term in 1972. Like Clinton, Nixon continued to print money in his second term. Unlike Clinton, Nixon attempted to control inflation by government regulation of wages and prices instead of using global competition to hold down labor and raw material costs. Nixon's repressive regulations did not stop oil price increases in 1973 by foreign suppliers who were not restrained by global competition. Also unlike Clinton, Nixon was removed from office after impeachment. Nixon's removal from office may have been at least in part due to his attempts to enforce central government control by unnatural laws and regulations, a mistake that may be being repeated by Jiang Zemin's return to repressive Marxist doctrine in 1999 China.

What about inflation/deflation of the money supply since Nixon ?

As shown in the above chart adapted from the 25 September 1999 issue of The Economist:


Can stock prices at a 20 Price/Earnings Ratio and 1.75% Dividend Yield be sustained without Inflation ?

Only by following the example of the post World-War II expansion to USA-Europe-Japan and going to a new High level of BOTH Production Supply and Labor Base Consumer Demand.

In 1998, High Production Supply has been achieved, and Consumer Demand of Investors is High because the stock they own is at record high levels.


What about Labor Base Consumer Demand ?

The High Labor Base Consumer Demand assumption of investors that has pushed stock prices to record levels is based on expanding the population base of Labor from USA-Europe-Japan to the population of the entire Earth, which is expanding as shown on the inset graph (from The 1998 World Almanac) in the above figure. This assumption cannot be justified with respect to Russia (due to its instability) or with respect to the Islamic Middle East or Africa (due to lack of industrial development). Unfortunately, it cannot even be justified with respect to other former Colonies and China.

Labor Base Consumer Demand is NOT at the necessary High level, because of a major difference between

the post World-War II expansion of the USA to USA-Europe-Japan and

the present expansion of Multi-National Corporations of USA-Europe-Japan to USA-Europe-Japan-Colonies-China:

after World War II, wages in Europe and Japan rose to the level of wages in the USA, thus expanding Labor Base Consumer Demand;

but, to increase their profits, and therefore their stock prices,

the Multi-National Corporations of USA-Europe-Japan have kept wage rates low in Colonies and China (by moving factories from higher-wage areas to lower wage areas) so that

there is insufficient expansion of Labor Base Consumer Demand to sustain the record high levels of stock prices.

Those policies must be changed to have both high stock market asset values and low inflation.

If those policies are not changed, then

How far must stock prices fall to hit a new equilibrium ?

According to the 25 September 1999 issue of The Economist: "... there are remarkable similarities with America in the 1920s and Japan in the 1980s (see chart ...)             

... in the 1920s, people also believed in a new era of faster growth arising from new technology. The only difference was that at that time most of the excitement was generated by cars, aeroplanes, electrification and the radio, rather than by computers, telecoms and the Internet. Convinced, like many others, that the boom-bust cycle was a thing of the past, Irving Fisher, an economist at Yale University, made his infamous observation on the eve of the 1929 crash that "stock prices have reached a permanent and high plateau." ... Today, besides runaway share prices, America shows plenty of other signs of excess. Consumers have been on a borrowing and spending binge, and household saving has turned negative for the first time since the 1930s. ... As imports soar, America's current-account deficit is heading for a record 4% of GDP. The property market is also starting to look frothy: prices of prime residential property in many big cities are soaring. Last, but not least, money-supply growth seems excessive. These are all classic symptoms of a bubble. ...".

According an article by Gretchen Morgenson in The New York Times on 16 August 1998,

over 72 years, the median Price/Earnings Ratio on the Dow Jones stocks has been 15.3. For the Dow Jones Industrial Average to return to that valuation level, it would have to drop to 5291,

and the median Dividend Yield on the Dow Jones stocks has historically been 4.3%. For the Dividend Yield to revert to its median, the Dow Jones Industrial Average would have to fall to 3353.

Would such a fall stop there, or continue to lower levels ?

According an article by Greg Ip in The Wall Street Journal on 26 August 1998, "... deflation ... is becoming a more pressing reality for companies and their shareholders ... A survey taken by Prudential Securities economists in June found that 40% of the industries ... are experiencing declining prices, compared with 26.4% a year earlier, while just 26% are experiencing rising prices, compared with 51% a year earlier. ... Ed Yardeni, chief economist at Deutsche Bank Securities ... says... "In many parts of our economy ... we're in a price recession. It's very difficult to raise prices in a lot of industries -- especially commodities, and now some capital goods like farm equipment." ... citing ... downward pressure on computer and semiconductor prices, a Merrill Lynch analyst downgraded [Intel Corp.] stock last week, predicting that Intel's average selling prices will decline 33% over the next five years. ... Stephen Poloz, managing editor of the International Bank Credit Analyst, a Montreal-based financial forecast journal, thinks ... that this slowdown is starting ... with a drag from overseas economies which has hit profits on two fronts: slowing demand and falling selling prices. ..."

If the deflationary slowdown decreases profits from current levels, then the Dow Jones Industrial Average would have to decline below 5291 to reach a 15.3 Price/Earnings Ratio, and below 3353 to reach a 4.3% Dividend Yield.

Since declining stock prices will reduce the current High level of Investor Consumer Demand, which would decrease profits even further, the stock market decline could be a deep downward spiral.

Another factor supporting the Dow Jones Industrial Average is that the USA stock market, and particularly the Blue Chip Dow Jones stocks, is perceived by investors world-wide as being the only safe haven for investment. In that respect, within USA-Europe-Japan, the USA is dominant rather than equal. As Japan is having major economic difficulties due to its heavy investments in SouthEast Asia and Korea, Japan is not likely to ever compete with the USA as a safe haven.

Possible competing safe havens include Europe, and, if it can go back to the policies of Deng Xiaoping and avoid the mistake of his successor Jiang Zemin in returning to doctrinaire Marxism and repressive actions reminiscent of the Cultural Revolution, China.

If alternative safe havens appear, possibly in Europe and China, another pillar of support for the record high levels of the Dow Jones Industrial Average will disappear.


Perhaps the most potentially destabilizing ( for the economic order in the present developed world ) possibility is that an industrially developed, but fossil-fuel-poor, nation will make available small modular cheap safe fission reactors thus rendering the present fossil-fuel energy system obsolete.

For the long run, that would be a good thing, because only nuclear energy can support a large Earth population with a present-day-energy standard of living.

According to a 22 August 2001 article by Peter Hadfield and Michael Fitzpatrick in The New Scientist:

"... A nuclear reactor designed to generate power in the basement of an apartment block is being developed in Japan. In the past few months government-backed researchers have been testing a fail-safe mechanism for the reactor, which will close down automatically if it overheats. The Rapid-L reactor was conceived as a powerhouse for colonies on the Moon. But at six metres high and only two metres wide this 200-kilowatt reactor could relatively easily fit into the basement of an office building or apartment block, where it would have to be housed in a solid containment building. ...

... Unlike normal nuclear reactors, the Rapid-L has no control rods to regulate the reaction. Instead, it uses reservoirs of molten lithium-6 - an isotope that is effective at absorbing neutrons. The reservoirs are connected to a vertical tube that runs through the reactor core.

During normal operation the tube contains an inert gas. But as the temperature of the reactor rises, the liquid lithium expands, compressing the inert gas and entering the core to absorb neutrons and slow down the reaction. The lithium acts as a liquid control rod. And unlike solid control rods, which have to be inserted mechanically, the liquid expands naturally when the core gets warm. The Rapid-L uses the same principle to start up and close down the reaction. The reactor would be cooled by molten sodium and run at about 530 °C. ... [the] main concern now is to test the fail-safe system's long-term durability. ...".

According to a 21 October 2003 article by Joel Gay in the Anchorage Daily News:

"... A Japanese corporation ... Toshiba Corp. ... wants to thrust the Interior community of Galena into international limelight by donating a new, unconventional electricity-generating plant that would light and heat the Yukon River village pollution-free for 30 years ... It's a nuclear reactor ...

... The Galena design is part of a new generation of small nuclear reactors that can be built in a factory and transported by barge, truck or helicopter. A federal study, funded at Stevens' request and published in May 2001, found they are inherently safe and easy to operate, resistant to sabotage or theft, cost effective and transportable. ... The power comes from a core of non-weapons-grade uranium about 30 inches in diameter and 6 feet tall. It would put out a steady stream of 932-degree heat for three decades but can be removed and replaced like a flashlight battery when the power is depleted ... The reactor core would be constructed and sealed at a factory, then shipped to the site. There it is connected with the other, nonnuclear parts of the power plant to form a steel tube about 70 feet long with the nuclear core welded into the bottom like the eraser in a pencil ... The assembly is then lowered into a concrete housing buried in the ground ... The reactor has almost no moving parts and doesn't need an operator. The nuclear reaction is controlled by a reflector that slowly slides over the uranium core and keeps the nuclear fission "critical." If the reflector stops moving, the reactor loses power. If the shield moves too fast, the core "burns" more quickly, yielding the same amount of power but reducing the reactor's life ... Because of its design and small size, the Toshiba reactor can't overheat or melt down ... The nuclear reaction heats liquid sodium in the upper portion of the reactor assembly. It circulates by convection, eliminating pumps and valves that need maintenance and can cause problems ... The liquid is contained in a separate chamber so it isn't radioactive. Because the reactor assembly is enclosed in a thick steel tube, it will withstand earthquakes and floods ... "What comes out (of the ground) are two pipes with steam that power a turbine," ... said ... Washington, D.C., attorney Doug Rosinski, who represents Toshiba ... "You wouldn't even know it's there," except for the steam generator building above it. ... He estimated the work would cost $600 million or more and take six to eight years. The Galena plant could be online by 2010, he said. Once the first one is complete, Toshiba believes it can build additional plants for about $20 million each, he said. ...".

In the meantime, the developed world is largely dependent on fossil fuel, and particularly on oil.

How Long will Abundant Cheap Oil Last ?

Look at the global Oil Production Sector (adapted from Scientific American, March 1998).

The 1997 total World production was about 25 billion barrels per year, or about 250 billion barrels per decade.

Production in the World Outside Persian Gulf substantially follows the Hubbard curve pattern of increase to peak, then decline. The Caspian Sea of the Former Soviet Union is probably the only area that could possibly break out of its Hubbard curve and increase production dramatically, but political rivalries and instability may interfere with the necessary construction of production and transportation facilities. Even if the Caspian Sea were developed rapidly, it may add no more oil production to the graphs shown above than the total production of the North Sea in the UK and Norway. According to a 5 December 2002 article by Dale Allen Pfeiffer on a From The Wilderness web page:

"... Colin Campbell states that exploration in the Caspian region has been very disappointing, with the discoveries being much smaller than predicted and much of the oil discovered being of poor quality. But the Energy Information Agency (EIA) predicted that the Caspian region would contain in excess of 200 billion barrels of oil. So what is being said elsewhere about the results of Caspian oil exploration? ... Steven Mann, the director of the State Department's Caspian Basin Energy Policy Office stated that the Caspian Sea contains only 50 billion barrels of proven reserves, a far cry from the EIA's projections. "Caspian Oil represents 4 percent of the world's reserves. It will never dominate the world's markets..." ... a study published in PetroStrategies last July stated that the Caspian Sea contains only 39.4 billion barrels of proven oil reserves. The study, conducted by consultants from Wood MacKenzie, criticized IEA figures for the region as being severely inflated and unrealistic. ...".

Further, according to an article by W. Clark in ratville times:

"... After three exploratory wells were built and analyzed, it was reported that the Caspian region holds only approximately 10 to 20 billion barrels of oil (although it does have a lot of natural gas) ... The oil is also of poor quality, with high sulfur content. ... this recent realization about the Caspian Sea region has serious implications for the U.S., India, China, Asia and Europe, as the amount of available hydrocarbons for industrialized and developing nations has been decreased downward by 20%. (Global estimates reduced from 1.2 trillion to approximately 1 trillion) ...

The 1997 cost of producing oil varied from about $1 to $2 per barrel in the Persian Gulf to about $5 to $10 per barrel in the North Sea in the UK and Norway. Since the price is set on the margin, and since oil companies make profits, the 1997 oil price was in the $15 to 20 per barrel range.

Either dramatic decrease in oil production, or dramatic increase in oil price, could be so disruptive to the Industrial Sector that it could destabilize the dominant position of the USA in the World Order.

Could substantial oil production at reasonable prices come from unconventional sources?

Higher recovery technology would extend the graphs, but probably not much. Such oil might be so expensive relative to $20 per barrel that the dominant position of the USA in the World Order would be threatened.

Orinoco River heavy oil sludge has reserves of about 1,200 billion barrels and could supply the World at the 1997 level for almost 50 years, but heavy metals and sulfur must be removed from the sludge. Such oil might be so expensive relative to $20 per barrel that the dominant position of the USA in the World Order would be threatened.

Tar sands and shale in Canada and the Former Soviet Union have reserves of about 300 billion barrels and could supply the World at the 1997 level for over 10 years, but oil is produced by strip mining and air-polluting processing. Such oil might be so expensive relative to $20 per barrel that the dominant position of the USA in the World Order would be threatened.

Easily recoverable natural gas cold produce about 500 billion barrels of synthetic crude oil and could supply the World at the 1997 level for about 20 years, and gas that could be recovered with more difficulty might produce another 1,000 billion barrels and could supply the World at the 1997 level for about another 40 years. Such oil might be so expensive relative to $20 per barrel that the dominant position of the USA in the World Order would be threatened.

With the World Outside the Persian Gulf on a declining Hubbard curve, and with high-tech recovery, Orinoco sludge, tar sands and shale, and natural gas very expensive relative to $20 per barrel, the only way to sustain 1997 production levels at reasonable prices is to, during the period

from 2000 to 2010, expand production in the Persian Gulf.

Since Persian Gulf oil is produced for $2 per barrel or less, expanded production will be very profitable.

Can Persian Gulf production be expanded?

The Persian Gulf production curve followed a Hubbard curve until about 1973.

Political restrictions, not normal economic and geological forces, took the Persian Gulf off its Hubbard curve with a flat production for the rest of the 1970s and a dip in production in the early 1980s.

After the early 1980s, the Persian Gulf resumed production growth, but the growth was restrained by political restrictions and not quite as rapid as its Hubbard curve.

The Persian Gulf nations that would be the source of increased production are Saudi Arabia, Kuwait, the United Arab Emirates, Iraq, and Iran.

Most of the 1997 Persian Gulf oil production comes from Saudi Arabia, Kuwait, and the United Arab Emirates, because the USA, exercising its dominant position in the World Order, has enforced restrictions against investing in Iraqi and Iranian production facilities and against sale of oil by Iraq and Iran.

If Saudi Arabia, Kuwait, and the United Arab Emirates keep their production at 1997 levels of about 7 billion barrels per year through 2010,

and if production of the World Outside the Persian Gulf declines according to its Hubbard curve from about 18 billion barrels per year to about 13 billion barrels per year,

then Iraq and Iran would be the most likely nations to pick up the 5 billion barrel per year shortfall from 1997 levels.

If the global Industrial Sector expands to produce more jobs and goods for more people, then even more production would be required of Iraq and Iran.

Can Iraq and Iran provide the needed oil ?

According to articles in The Wall Street Journal of 23 Feb 98 by Bhushan Bahree, quotes Franco Bernabe, chief executive of the Italian company ENI SpA, as saying that

Iraq's proven reserves, more than 112 billion barrels of proven oil reserves, second only to Saudi Arabia's 250 billion barrels, and those of Iran, which are somewhat smaller, will have to come into play,

and that neither Iraq nor Iran has the finances to substantially expand production capacity without foreign capital.

At $2 per barrel or less, production from Iraq and Iran will be very profitable.

Since the USA is not on friendly terms with the governments of Iraq and Iran,

and since the USA will need oil from Iraq and Iran to stabilize the dominance of the USA in the World Order through 2010,

the USA must either change the governments of Iraq and/or Iran

or make friends with the governments of Iraq and/or Iran and end restrictions on investment in, and oil sale by, Iraq and Iran.

Since other countries (notably France, Russia, and China, as well as the Netherlands, Italy, India, and Spain) have begun to invest in Iraq and Iran despite the restrictions advocated by the USA, and since investment in oil that can be produced at $2 per barrel is likely to be very profitable,

failure of the USA to make friends and lift restrictions (or overthrow governments and abrogate contracts with non-USA companies) may change the worldwide flow of oil profits in such a way as to threaten the dominance of the USA in the World Order by 2010.

If the oil of Iraq-Iran is used wisely, then it could buy time to execute a plan to develop alternative energy sources for the future.



If Conflict arises

among nations in the Global World Order, whether it is among the USA, Iraq, China, France, Germany, Russia, or others, the way the Conflict is managed may determine whether the Global World Order produces a harmonious unity of Humanity or whether it produces terribly destructive wars.

Conflicts might involve:

Europe might begin to compete with the USA as a safe haven beginning in 1999. According an article by Helene Cooper and Sara Calian in The Wall Street Journal on 26 August 1998, "... Merrill Lynch and Co. ... [is] ... preparing for the euro. Merrill believes that the the common currency, to be introduced [January 1, 1999,] will spark a European investment boom. ... The total stock-market capitalization in "Euroland," as the 11 countries participating in the new currency are known, is equal to just 60% of the region's gross domestic product, compared with 140% to 150% in the U.S. ...".

If the UK remains aligned with the USA, and if a united Continental Europe based on a Troika of France, Germany, and Russia emerges, it could be a third major power, along with the USA and China. As Thomas Kamm of the Wall Street Journal reported on 9 April 1998, if you only take into account the 1997 data for Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain (the countries likely to be charter members of the European EMU (Economic and Monetary Union)) :

         Population (millions)   world GDP   world trade 
Europe      300                    19.4%       18.6% 
USA         267.7                  19.6%       16.6% 

If you add Russia and Eastern Europe to the figures for a united Continental Europe, you see that the USA would be a good bit smaller in everything except possibly military strength.

As to military strength, according to a 16 December 2000 article by Anton La Guardia in The London Telegraph, "... French officials claimed that the development of an autonomous European defence policy was unstoppable. One French official said: "The train is already moving. Nato is not on board. It is not the engine. It is not in the tender or even in the passenger compartment. It is still on the platform." ... America fears that ... France could push the EU into developing separate operational planning facilities and ultimately "decouple" Europe from America. ... Richard Perle, one of ... Bush's hardline campaign advisers, has described the European defence initiative as "a catastrophe for Nato". ...".


NSA Economic Information to USA Businesses

On 11 April 1999, Tony Paterson of The London ElectronicTelegraph reported that "Security experts in Germany have uncovered new evidence of a big American industrial espionage operation in Europe using satellite listening posts in Britain and Germany. German business is thought to suffer annual losses of at least £7 billion through stolen inventions and development projects. With Europe already locked in a trade war with its American ally over bananas, Germany's high-tech industry wants its government to back a counter-offensive. The main centres used for satellite tapping of millions of confidential company telephone calls, fax and e-mail messages are believed to be terrestrial listening posts run by the American National Security Agency (NSA) at Menwith Hill, near Harrogate, North Yorkshire, and Bad Aibling, Bavaria, with the backing of the American government. ... Victims have included such German firms as the wind generator manufacturer Enercon. Last year it developed what it thought was a secret invention enabling it to generate electricity from wind power at a far cheaper rate than before. However, when the company tried to market its invention in the United States, it was confronted by its American rival, Kenetech, which announced that it had already patented a near-identical development. Kenetech then brought a court order against Enercon banning the sale of its equipment in the US. In a rare public disclosure, a NSA employee, who refused to be named, agreed to appear in silhouette on German television last August to reveal how he had stolen Enercon's secrets. He said he used satellite information to tap the telephone and computer link lines that ran between Enercon's research laboratory near the North Sea and its production unit some 12 miles away. Detailed plans of the company's allegedly secret invention were then passed on to Kenetech. ... Experts have little doubt that the NSA is at the forefront of the European industrial espionage war, not least because Washington has instructed its security services to collect information for the benefit of American industry. Early in his presidency, Bill Clinton decreed that industrial espionage should be one of the main tasks of the CIA. "What is good for Boeing is good for America," he was quoted as saying. The NSA operates a global data surveillance network involving 52 super computers. Specialists in European industrial espionage, such as the journalist Udo Ulfkotte who is to publish a book on the subject, entitled Market for Thieves, later this year, say there is strong evidence that Britain's Menwith Hill is at the forefront of the offensive. "My research suggests that 70 per cent of the spying is done in Yorkshire," Mr Ulfkotte said. From both the Yorkshire and Bavarian sites, data is transferred to the NSA's headquarters at Fort Meade, Maryland where 10,000 military personnel and 30,000 civilian employees trawl the information with the help of the British Memex computer identification system. German industry complains that it is in a particularly vulnerable position because the Bonn government forbids its security services from conducting similar industrial espionage. "German politicians still support the rather naive idea that political allies should not spy on each other's businesses. The Americans and the British do not have such illusions," Mr Ulfkotte said. But for Germany's Association for Industrial Security, which backs the idea of a counter-industrial espionage drive, the situation has become intolerable. "We will have to get used to the fact that industry is a part of our national security," said the association's president Wolfgang Hoffman.".


India and Pakistan tested nuclear weapons in 1998.

Just as the Russian military might use its nuclear capability if the Russian people become so hopelessly miserable that the might want the rest of the world to share their misery, if India and Pakistan feel that they do not have much to lose by a retaliatory strike, and a lot to gain if they make a first strike, it is unfortunately likely that a nuclear war might occur in India/Pakistan within the next few years. According to a BBC India Timeline: "... A chronology of key events:


USA Policy of Irrationality

a 1995 study "Essentials of Post-Cold War Deterrence" by the USA Defense Department's Strategic Command stated, that, according to a CNN report, stated that "... Because of the value that comes from the ambiguity of what the U.S. may do to an adversary if the acts we seek to deter are carried out, it hurts to portray ourselves as too fully rational and cool-headed ..." and that "The fact that some elements (of the U.S. government) may appear to be potentially 'out of control' can be beneficial to creating and reinforcing fears and doubts within the minds of an adversary's decision makers ..." and that "That the U.S. may become irrational and vindictive if its vital interests are attacked should be a part of the national persona we project to all adversaries."

According to CNN, the Policy of Irrationality dates back at least to the 1960s, when Harvard professor Thomas Schelling, working on game theory and nuclear bargaining, wrote: "It is not a universal advantage in situations of conflict to be inalienably and manifestly rational in decision and motivation ...".

As CNN says, Schelling's deas were adopted by Henry Kissinger and President Nixon in using coercive air strikes on North Vietnam as a way of forcing Hanoi to the bargaining table in the latter stages of the Vietnam War.

To me, the failure of USA policy in Vietnam underscores the ineffectiveness of the Policy of Irrationality.

The Policy of Irrationality is, in my opinion, not only irrational but also counterproductive and wrong. It should be abandoned. Life and History are NOT poker games.

Kosovo, Russia, and China

During the USA/NATO conflict in Kosovo, Russia has been ineffective and USA/NATO has

bombed the Chinese Embassy in Belgrade, and

appointed as Ambassador to China a USA Navy Admiral who in 1996 sent ships into the Straits of Taiwan in order to play war games with China's military forces and to politically intimidate China.

Further, according to a 14 April 1999 CNN report, "... Chinese Premier Zhu Rongji ... criticized Clinton for, in Beijing's view, backing away from a deal ... for China's entry into the World Trade Organization (WTO) ... [during Zhu's April 1999] official visit to the White House ... ".

Are these actions all parts of a USA Policy of Irrationality whereby the USA is using Brinksmanship and Bluffing to try to intimidate China and the Rest of the World,
Does the USA really intend to actually use its military force, including B2 bombers, to destroy China's Nuclear Missile capability in a preemptive strike, and then use USA military superiority to guarantee availability of cheap goods and labor from the Rest of the World for the benefit of USA Multinational Corporations ?

Since Putin has become a New Stalin in Russia, will China attack Taiwan with Russia's help?



Will China's low wages attract so many manufacturing plants to move to China from the USA and Japan that conflict may arise as the USA and Japan lose not only jobs but the ability to manufacture goods within their own borders?


New Technologies

(such as those provided in the USA by DARPA) may enable the Human Civilization of the Global World Order to advance.

What obstacles might prevent development and utilization of New Technology?

The greatest obstacle, in my opinion, is what some have called the Tahiti Syndrome. After some Pacific Islands, such as Tahiti, were settled by migration from Asia, the islanders became content with living in the mild climate and eating the fish and fruit that grew on the island, so they did not care to advance their technology (except in the area of ocean navigation so that they could go fishing, and go to other islands). Technologically, they stagnated and were far behind the Europeans who developed high technology to deal with the harsh European climate and difficult environment of disease and war. Now the late-comer Europeans are politically dominant in the Pacific Islands.

The Tahiti Syndrome was repeated by China in the period 1403-1426, when China decided to look inward and turn its back on new things and the outside world. China then lost its technological advantage over the rest of the world, as well as the military means to export its inflated supply of paper money, or even to prevent coastal raids by wako pirates.

If New Technologies do not enable the Human Civilization of the Global World Order to advance, then what might the be the future of Humanity?

In their paper Finite-time singularity the of the world population, economic and Financial indices, cond-mat/0002075, Johansen and Sornette say [my comments are in brackets]:

"... the Earth's human population and its economic output ... growth rates are compatible with a spontaneous singularity occuring at the same critical time 2052 +/- 10 signaling an abrupt transition to a new regime. ... We now attempt to guess what could be the possible scenarios for mankind close to and beyond the critical time ...



It is possible that one source of New Technology might be contact with


Click Here for References.

Click Here for History prior to 1998.

excerpts from Rudyard Kipling - The Gods of the Copybook Headings:

As I pass through my incarnations in every age and race, I make my proper protestations to the Gods of the Market-Place. Peering through reverent fingers I watch them flourish and fall. And the Gods of the Copybook Headings, I notice, outlast them all. We were living in trees when they met us. They showed us each in turn. That water would certainly wet us, as Fire would certainly burn: ... They denied that Wishes were Horses; they denied that a Pig had Wings. So we worshiped the Gods of the Market Who promised these beautiful things. ... But, though we had plenty of money, there was nothing our money could buy, And the Gods of the Copybook Headings said: 'If you don't work you die.' Then the Gods of the Market tumbled, and their smooth-tounged wizards withdrew, And the hearts of the meanest were humbled and began to belive it was true That All is not Gold that Glitters, and Two and Two make Four--- And the Gods of the Copybook Headings limped up to explain it once more ... As surely as Water will wet us, as surely as Fire will burn, The Gods of the Copybook Headings with terror and slaughter return!  


Will Marxism triumph in the long run?

During 1980-2000 the Soviet Union has collapsed and China's economy has become Capitalist. Does that mean that Marxism died with the Millenium 2000?

Perhaps the most important phenomenon of 1980-2000 is the movement of Modern Industry from high-wage areas of the USA, Europe, and Japan to low-wage areas which I will call China (its largest and dominant component).

In the USA 1980-2000 the Reagan-Bush-Clinton era has seen the destruction of working class unions and the greatest concentration of wealth in the history of Earth.

In China 1980-2000 has seen the beginning of a movement from rural poverty to Modern Industry working class. At first, Chinese workers are happy to be out of rural poverty


during 2000-2020 Chinese workers will realize how realize how far they are below the life-style at the top and begin to form Earth's most powerful unions, which cannot be broken because there is no other "China" to which to export Modern Industry jobs.

Barring war with the USA and/or Japan, the Chinese unions of 2020 will become the dominant political force on Planet Earth and will define the future of humanity as long as it is confined to Earth (unless and until some other life form becomes dominant on Earth).

Will the Chinese unions of 2020 be Taoist or Confucian in spirit?


The process is substantially accurately described by interpreting some excerpts from the Manifesto of the Communist Party by Karl Marx and Frederick Engels (1848) as applied to a Global Economy:

"... as ... capital ... is developed, in the same proportion is ... the modern working class, developed -- a class of laborers, who live only so long as they find work, and who find work only so long as their labor increases capital. These laborers ... are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market.  ...

The lower strata of the middle class ... sink gradually into the [working class], partly because their diminutive capital does not suffice for the scale on which Modern Industry is carried on, and is swamped in the competition with the large capitalists  ...

At this stage, the [working class] still form an incoherent mass scattered over the whole [Earth], and broken up by their mutual competition. ...

But with the development of industry, the [working class] not only increases in number; it becomes concentrated in greater masses ... the workers begin to form combinations (trade unions) ... they club together in order to keep up the rate of wages ... This union is helped on by the improved means of communication that are created by Modern Industry, and that place the workers of different localities in contact with one another. ...

The development of Modern Industry, therefore, cuts from under its feet the very foundation on which [the capitalist class] produces and appropriates products.

What [the capitalist class] therefore produces, above all, are its own grave-diggers.

Its fall and the victory of the [working class] are equally inevitable. ...".


It is interesting to watch inevitable forces at work.


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