Two Views on the Cause of the Global Crisis – Part II

Lax regulation may have been the lever that pushed the world into the present financial crisis, but the fulcrum was the twin excesses of over-financialization and over-globalization, according to UC Berkeley economist Ashok Bardhan. In the case of over-financialization, financial asset bubbles rose to several times the global GDP, leading to an overheating of the economy. Meanwhile, over-globalization through global trade imbalances and risky cross-border lending created the pathway for the financial virus to spread. But there is also a self-correcting mechanism to these excesses. Global trade is receding and capital flows are falling thanks to the economic crisis. And government stimulus packages tend to squeeze out foreign investment through their focus on domestic growth. But despite this trend, there are larger issues with which to contend: the conflict between globalization, free-market principles, democracy, and national policy independence. All four cannot share center stage, so something will have to give to return to equilibrium. What that will be remains an open question for the moment. – YaleGlobal

Two Views on the Cause of the Global Crisis – Part II

The twin excesses – financialization and globalization – caused the crash

Ashok Bardhan

YaleGlobal, 6 May 2009

	Export overload: China's growing dependence on exports introduced an element of instability in global economy

BERKELEY: In their effort to explain the global crisis analysts have identified lax regulation and other attributes of the financial system as the principal culprits. To grasp fully the reason it also needs to be recognized that this is the first crisis of the modern era of globalization. If the proximate cause is the “laissez faire” to “laissez financer” progression in free-market idolatry, leading to bubbles in asset prices and the subsequent crash, then the facilitating condition was yet another quasi-bubble – a bubble in globalization. It may be easier to appreciate the virulence and speed with which the crisis has spread if we recognize that in addition to over-financialization domestically, there was perhaps over-globalization internationally.

While over-globalization was evident in ever-faster trade and capital flows and increasing off-shoring of production, over-financialization could be seen in rise in the size of financial assets relative to the real economy as indicated by gross domestic product. Globally, the holdings of financial assets, comprising equities, government and private bonds and bank deposits ballooned way out of proportion to global GDP, the primary underlying measure of real economic activity (see Figure 1). Similarly, the gross market value of outstanding derivative contracts more than doubled between mid-2006 and mid-2008. The share of financial services in GDP has increased dramatically in the US and UK in recent years; in the latter it has doubled in the last decade alone. In many countries, the financial sector grew to a size disproportionate to its primary raison d'etre - to efficiently bring savers and borrowers together, allocate savings to viable investments, and manage diversification of risk. Liquid and deep financial markets are necessary; indeed, they are the lifeblood of economic activity, but to extend the analogy, not if they cause high blood pressure to the economy!

	Figure 1. Global Financial Assets to Global GDP Ratio Enlarge image

Globalization too has played its role. A large part of the new trade volumes generated were a result of diversion from potential consumption by domestic consumers to consumption by consumers half-way across the world. There is an ongoing debate in China, for example, whether the economic wisdom of having nearly a 40 percent share of exports in GDP has served the developmental goals of the country well. At least some of the blame for income inequality, lopsided development and consumption stagnation in the country can be laid at the feet of the overgrown external sector.

Global imbalances, on which reams have been written, provided the financing for the insatiable appetite of US and other consumers, met by the unbounded capacity of China’s manufacturing machine. Footloose capital ran hither and thither for better returns and ended up in high risk investments. The US-China globalization axis may have been critical but by no means was it the only game in town. Reckless lending by western banks to East European clients drove much of the importing frenzy in those countries. It was finance that drove and propelled international trade, in addition to that generated by underlying patterns of global specialization and competitiveness.

Together with the financial sector, globalization, as we know it –global trade in goods and services, capital flows and off-shoring of production – seems destined to decline in the short term. The total market value of financial assets held worldwide has declined by about a third, or more than $50 trillion, in 2008 according to a report by the Asian Development Bank. Container traffic in the world’s busiest ports is down by more than 20 percent. While trade volumes show greater volatility than GDP, the figures for the former show a near precipitous decline relative to the former. The IMF expects global GDP to decrease by 1.3 percent in 2009, while economists from the World Trade Organization forecast a 9 percent decline for global trade in the same year, both the largest drops on record since World War II. Export volumes are expected to decrease in every major region of the world. Indeed, double-digit declines in real national variables are so rare that declines in export volumes of over 30 percent, such as in the case of Japan, make one wonder about the “bubble-like” nature of the underlying demand. On the other hand, while Euro area GDP and US GDP are both expected to contract in 2009, emerging economies are the one bright spot with a GDP growth forecast of 1.6 percent.

In addition to trade, global financial flows and cross-border investments are also expected to be adversely affected. The most dynamic economic region of the world, Emerging Asia, is expected to attract 40 percent less net private capital flows (which include portfolio and direct investments) in 2009. It is as if both ships and funds in search of a safe harbor are docked at home ports.

The prospect of offshoring, that recent offspring of globalization, presents a mixed picture. While any downturn can only serve to further intensify the ever-present cost-cutting impulse on the part of management, the fundamental nature of downsizing and restructuring underway in the US in key sectors, and the sharp cutbacks in many parent operations in the financial services sector suggest that even the seemingly unstoppable phenomenon of offshoring may slow down. Already, there have been some cutbacks in the number of employees of offshore call centers.

Increasing interventions by national governments in the economic management of individual nation-states also tend to slow down the globalization process. National stimulus packages have a domestic stance and are inward-oriented, regardless of whether there is an explicit “buy domestic” provision, since greater reliance on government spending inevitably leads to less “leakage” internationally. The mounting job losses, complexity of the financial crisis, increasing range of conflicting interests, issues of inequality and fairness, and last, but not least, compulsions of electoral politics in an increasingly democratic world will all lead to greater state intervention, curbing the power of the market.

Far too rapid and distorted growth in global economic linkages and the financial services sector, as well as their mutual feeding off each other, have brought into sharper focus contradictions facing the future evolution of the global economy, the resolution of which is bound to affect globalization. While the future shape of regulatory reform is being vigorously debated, it is not clear how continued globalization will be affected in the medium-term by the crisis.

All of this leads us to the following question: can we eat our cake, have it too, and trade it in on the global markets? Dani Rodrik has long pointed out the “inescapable trilemma of the world economy,” that “democracy, national sovereignty and global economic integration are mutually incompatible.” The present crisis shows that it is actually a quadrilemma. The international policy establishment must manage and reconcile the simultaneously conflicting pulls and pushes of, first, universal free market economic principles, operating; secondly, in individual nation-states, the primary arena of economic policy, which are largely shaped by, thirdly, a democratic polity that is in turn apprehensive and insecure about, fourthly, increasing free trade and international economic integration. It is difficult to see how the tenuous co-habitation of these four – globalization, free-market principles, democracy, and national policy independence – can survive in the present circumstances. Something may have to give way, if just a little...

Ashok Bardhan is an economist at UC Berkeley.

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ht 2009 Yale Center for the Study of Globalization

Premonition and Time Travel

Premonition and Time Travel

According to its definition, a premonition is a foretelling of the future. Dreams are often premonitions of the subconscious. But what is the scientific basis of premonition? Seeing the future before it happens in your own current reality is time travel. Einstein's well accepted relativity physics states that time travel is possible, when one object is traveling faster than another object, especially as one object approaches the speed of light, relative to the other.

The earth and all of its inhabitants are traveling near the speed of light relative to a number of other objects in the universe. So let's explore the Twin Paradox theory of Time Travel and its relationship to dreams and premonitions. Einstein concluded that if there were two twins born on earth, and one of them boarded a space craft, traveled a round trip near the speed of light relative to his twin and returned to earth, his twin would be long dead. Scientists that examine sub-atomic particles confirm the factual nature of the Twin Paradox over and over again as they accelerate particles in large accelerators such as the CERN laboratory.

So based on this assumption, it is not a stretch to conclude that the twin that returns to earth after his travels, could examine the history books or a diary of his dead twin and see the entire life in a moment, relative to a short year or two that had passed on his own journey.

If you understand the nature of vibration in the body, especially relative to eastern chakras, you will begin to understand the nature of time travel in your own body. When your spirit resonates with your 7th and 8th chakras, you are removed from the limitations of your own earthly vessel and can travel near the speed of light, relative to your partner that is lying in bed next to you. This is what allows you, in a state of dreams or meditation, to witness the future before it happens.

Consider for a moment that you are a photon of light, traveling from the sun. According to Einstein's equations, you are traveling at the speed of light, so that you see the complete history of the universe, from beginning to end, in a single moment. This means that the time experienced in the universe from the moment of the big bang to now, around 14 billion years, can be viewed by the light, from beginning to end, in a moment. Cosmic Background Radiation can be thought of as a premonition of the future of the universe.

Because of the unique characteristics of relativity physics, it does not take a leap of understanding to conclude that although the twin that traveled away from the earth is only one or two years older, a much longer time has passed for his long dead twin, and he arrives back to earth to witness "the future" of his twin.

Everything in the universe is traveling near the speed of light, relative to something else in the universe. So it is easy to conclude that our future has already happened, relative to some other observer in the universe, and our dreams and premonitions are simply the electromagnetic signature of that observable future.

When we dream, meditate or otherwise become free from the bondage of our physical vessel, we time travel. We then have the ability to witness the past and the future, all in a moment. We become like God, which is the light of the universe. In the same fashion, we can consciously shape our futures because there are an infinite number of futures for all of us. Knowing what we want in our lives, especially relative to contributing to the higher vibration of humanity, allows us to shape and mold our future, just as an artist would shape a piece of art.

---http://bryanbrandenburg.blog.com/

Cyclists killed in Britain up by 11% in three years

• David Hencke, Westminster correspondent
• The Guardian, Friday 8 May 2009

A Ghost Bike sits at Sussex Downs near Devils Dyke. The plaque reads 'Cyclist Killed Here'. Photograph: Katherine Rose

The number of cyclists killed and seriously injured on Britain's roads rose by 11% between 2004 and 2007 despite no significant increase in cycling, a report by the National Audit Office has disclosed.

It says despite an overall fall in the number of road deaths, the UK is behind other advanced industrial nations in terms of the number of cyclists and pedestrians who are injured and killed on the roads.

The report says that after falling throughout the 1990s the number of cyclists seriously injured or killed increased by 11% from 2004 to 2007. In 2007 alone 646 pedestrians and 136 cyclists were killed and 30,000 pedestrians and 16,000 cyclists injured.

The auditors found that a high profile advertising campaign to cut road deaths called Think! appeared to have little measurable effect on road casualties.

The report says the most dangerous place for cyclists and pedestrians is London. Seventeen pedestrians per 100,000 people are killed in the capital, compared with a national average of 11.

Tory MP Edward Leigh said: "In terms of the number of child pedestrians killed as a proportion of the population, we are way down the league. Our poor performance should be a matter of national debate."

Separate research published by the Cyclists Touring Club (CTC) found that where there are more riders on the roads there is generally a lower accident rate, contradicting a notion that a mass of inexperienced riders taking to the streets brings a spike in injuries and death.

• guardian.co.uk © Guardian News and Media Limited 2009

Eckumsetzer

Mit einem Eckumsetzer werden in Anlagen und Fördersystemen Paletten (Stückgut) 90° zur Förderrichtung umgesetzt.

Abb.: Skizze

DER ECKUMSETZER BESTEHT IM PRINZIP AUS ZWEI KOMPONENTEN:

• der Unterkonstruktion mit Hubsystem und integriertem Hubantrieb.
• dem aufgebautem Förderelement z.B. Rollenförderer, Kettenförderer, usw.

Die jeweiligen Förderelemente werden je nach Anforderung ausgewählt und aufgebaut. Sehen Sie dazu die verschiedenen Produktblätter „Rollenförderer“, „Kettenförderer“ usw.

Der Eckumsetzer besteht aus einer Unterkonstruktion, die mit dem Boden verschraubt wird. Darauf wird das Hubsystem aufgebaut. Am Hubsystem wird das entsprechende Förderelement aufgebaut. Der Hubantrieb kann auf verschiedene Art und Weise erfolgen. Abhängig von der erforderlichen Hubkraft, Hubhöhe und der zur Verfügung stehenden Bauhöhe kommen Pneumatikzylinder, Getriebemotore oder elektrische Linearantriebe zum Einsatz. Der Hubantrieb ist standardmäßig unter dem Förderelement, positioniert. Durch die verschiedenen konstruktiven Lösungen können die Elemente optimal für Ihren Einsatz abgestimmt werden.

SENSORIK:
Die Übergabeposition wird mittels einem induktiven Sensor definiert. Bei frequenzgeregeltem Hubantrieb werden an der Übergabeposition 2 Sensoren verwendet. Der erste Sensor dient als Bremssensor, der zweite als Stopsensor.

SICHERHEIT:
Auf die Vermeidung von Scher- und Quetschstellen wurde bei der Entwicklung der Komponenten besonderes Augenmerk gelegt.

ABMESSUNGEN:
Bauhöhe	ca. 450 mm
Leistung Hubantrieb z.B. für Paletten mit 3,5 t	ca. 1,10 kW

Abb.: 90° Eckumsetzer unter Rollenförderer mit heb- und absenkbarem Kettenförderer

AUSFÜHRUNGEN:

• Stahl lackiert oder pulverbeschichtet
• Stahl verzinkt
• Edelstahl

Eine Ausführung des Eckumsetzers die zum Einsatz in der Ex-Atmosphäre (Zone 1 bzw. 2 für Gas und Zone 21 bzw. 22 für Staub) geeignet ist, kann ebenfalls geliefert werden.

VORTEILE:

• extrem niedrige Bauhöhe bei großer Hubkraft
• kompakte Bauweise
• flexibel in der Hubhöhe
• genaue und spielarme Positionierung in den Endlagen

Fördermittel

Automatische Hochregallageranbindung mit Palettenrollenbahnen, Kettenförderer, Eckumsetzer, Verfahrwagen mit Kettenförderer, Verfahrwagen mit Rollenbahnen und Ausrichtstation. Automatische Hochregallageranbindung mit Verfahrwagen mit zwei Teleskopgabeln, Stirnregal mit Übergaberegalplätzen für die Regalbediengeräte. Senkrechtförderer für bahngebundene Förderanlagen, Fahrkorbausführung mit Rollenbahnen oder Kettenförderern, ausgelegt für eine oder zwei Paletten, mit Brandschutztor für bahngebundene Förderanlagen, ausgebildet für Euro-, Industrie-, Chemie- oder Sonderpaletten oder Gitterboxen, optional mit Stahlbaubühne. Verfahrwagen mit Teleskopgabel übernimmt Paletten aus dem Stirnregal eines Hochregallagers und übergibt diese an Gefällerollenbahnen zur Versandbereitstellung für den LKW. Beispiel 2 zeigt eine Palettenausrichtstation für Europaletten. Automatisches Fließlager Bestückung automatisch über einen verfahrbaren Senkrechtförderer, optimale Ausnutzung der Lagerhalle, einfache und sichere Palettenentnahme in der untersten Ebene mit Gabelhubwagen möglich, optimale Bereitstellung für LKW-Touren, automatische Gassenzuordnung durch Scannen der Paletten. Verfahrbarer Senkrechtförderer vollautomatische Bestückung des Fließlagers, kostengünstige und leistungsstarke Alternative zum Regalbediengerät, Konstruktion in solider Stahlausführung. Wareneingang I-Punkt Aufgabeplatz mit Zentriereinrichtung und Anfahrschutz, Palettenkonturenkontrolle nach Länge, Breite und Höhe, Palettenkufenfreiraumkontrolle, Gewichtskontrolle, Ausschleusestrecke mit Anzeige des Palettenfehlers, Identifikation der Palette über Scanner, automatisches Erzeugen eines Transportetikettes, vollautomatischer Weitertransport in ein Hochregallager, Brandschutztor für bahngebundene Förderanlagen mit Notstromversorgung. Bespiel 2: Leerpalettenmagazin zur automatischen Zuführung von Leerpaletten in die Produktion, wahlweise für Euro-, Industrie-, Chemie- oder Sonderpaletten. Gabelhubwagenauf- und -entnahmestation für Förderhöhen von 75 mm auf beliebige Transporthöhe, in solider Ausführung , mit stabilen Anfahrschutz. Kettenförderer Sonderausführung als dreistrangiger Kettenförderer mit Ausrichtstation, Eckumsetzer und Rollenbahn. Beispiel 2: Kistenentstapler dient zum Entstapeln von zwei Kisten übereinander auf eine Transporteinheit. Palettierroboter vollautomatische Palettierzelle mit Palettenzuführung und Ausrichtstation. Palettenkonturenkontrolle Überprüfung von Länge, Breite und Höhe, Kufenfreiraumkontrolle, optische Anzeige des Palettenfehlers. Beispiel 2 zeigt einen Verschiebewagen mit Rollenbahn.

Fördergüter

Karton	Kleinladungsträger	Reifen	Felgen
Europaletten	Industrie/Chemiepaletten	Kunststoffpaletten	IBC - Intermediate Bulk Container
Gitterboxen	Stahlbehälter	Automotiveboxen (kleine Auflagefläche /Füsse)
Fässer	Stahl-Coils	Wellpappenstapel	Spahnplattenstapel

Two Views on the Cause of the Global Crisis – Part I

The global financial crisis that has devastated the world economy has spawned a growing literature on its causes. In part one of our two-part series, World Bank economist and Carnegie Endowment scholar Branko Milanovic argues that while analysts can quibble over the contributing factors to the financial meltdown, a deeper, more fundamental problem was the real cause: income inequality. Growing income inequality led to an abundance of investable funds searching for superior returns, which ultimately could only be achieved through riskier investments. But this only tells part of the story. That real income of the middle class has not risen over the past twenty years created a massive political problem: wealth redistribution. The solution came in the form of easier credit, which allowed the middle class, if not to save like the wealthy, at least to spend like them. But had there been less inequality would the outcome have been any different? As Milanovic notes, the middle class have higher priorities than excess investment returns, so there would have been less money chasing riskier assets. This would ultimately have led to more stable development. – YaleGlobal

Two Views on the Cause of the Global Crisis – Part I

Income inequality and speculative investment by the rich and poor in America led to the financial meltdown

Branko Milanovic

YaleGlobal, 4 May 2009

	Grounded: American middle class, with stagnating income, now has to bear the debt burden brought about by the income gap

WASHINGTON: The current financial crisis is generally blamed on feckless bankers, financial deregulation, crony capitalism and the like. While all of these elements may be true, this purely financial explanation of the crisis overlooks its fundamental reasons. They lie in the real sector, and more exactly in the distribution of income across individuals and social classes. Deregulation, by helping irresponsible behavior, just exacerbated the crisis; it did not create it.

To go to the origins of the crisis, one needs to go to rising income inequality within practically all countries in the world, and the United States in particular, over the last thirty years. In the United States, the top 1 percent of the population doubled its share in national income from around 8 percent in the mid-1970s to almost 16 percent in the early 2000s. That eerily replicated the situation that existed just prior to the crash of 1929, when the top 1 percent share reached its previous high watermark American income inequality over the last hundred years thus basically charted a gigantic U, going down from its 1929 peak all the way to the late 1970s, and then rising again for thirty years.

What did the increase mean? Such enormous wealth could not be used for consumption only. There is a limit to the number of Dom Pérignons and Armani suits one can drink or wear. And, of course, it was not reasonable either to “invest” solely in conspicuous consumption when wealth could be further increased by judicious investment. So, a huge pool of available financial capital—the product of increased income inequality—went in search of profitable opportunities into which to invest.

But the richest people and the hundreds of thousands somewhat less rich, could not invest the money themselves. They needed intermediaries, the financial sector. Overwhelmed with such an amount of funds, and short of good opportunities to invest the capital as well as enticed by large fees attending each transaction, the financial sector became more and more reckless, basically throwing money at anyone who would take it. While one cannot prove that investible resources eventually exceeded the number of safe and profitable investment opportunities (since nobody knows a priori how many and where there are good investment opportunities), this is strongly suggested by the increasing riskiness of investments that the financiers had to undertake.

But this is only one part of the equation: how and why large amounts of investable money went in a search of a return on that money. The second part of the equation explains who borrowed that money. There again we go back to the rising inequality. The increased wealth at the top was combined with an absence of real economic growth in the middle. Real median wage in the United States has been stagnant for twenty five years, despite an almost doubling of GDP per capita. About one-half of all real income gains between 1976 and 2006 accrued to the richest 5 percent of households. The new “gilded age” was understandably not very popular among the middle classes that saw their purchasing power not budge for years. Middle class income stagnation became a recurrent theme in the American political life, and an insoluble political problem for both Democrats and Republicans. Politicians obviously had an interest to make their constituents happy for otherwise they may not vote for them. Yet they could not just raise their wages. A way to make it seem that the middle class was earning more than it did was to increase its purchasing power through broader and more accessible credit. People began to live by accumulating ever rising debts on their credit cards, taking on more car debts or higher mortgages. President George W. Bush famously promised that every American family, implicitly regardless of its income, will be able to own a home. Thus was born the great American consumption binge which saw the household debt increase from 48 percent of GDP in the early 1980s to 100 percent of GDP before the crisis.

The interests of several large groups of people became closely aligned. High net-worth individuals and the financial sector were, as we have seen, keen to find new lending opportunities. Politicians were eager to “solve” the irritable problem of middle class income stagnation. The middle class and those poorer than them were happy to see their tight budget constraint removed as if by magic wand, consume all the fine things purchased by the rich, and partake in the longest US post World War II economic expansion. Suddenly, the middle class too felt like the winners.

This is what more than two centuries ago, the great French philosopher Montesquieu mocked when he described the mechanism used by the creators of paper money in France (an experiment that eventually crumbled with a thud): ‘People of Baetica”, wrote Montesquieu, “do you want to be rich? Imagine that I am very much so, and that you are very rich also; every morning tell yourself that your fortune has doubled during the night; and if you have creditors, go pay them with what you have imagined, and tell them to imagine it in their turn”.

The credit-fueled system was further helped by the ability of the US to run large current account deficits; that is, to have several percentage points of its consumption financed by foreigners. The consumption binge also took the edge off class conflict and maintained the American dream of a rising tide that lifts all the boats. But it was not sustainable. Once the middle class began defaulting on its debts, it collapsed.

We should not focus on the superficial aspects of the crisis, on the arcane of how “derivatives” work. If “derivatives” they were, they were the “derivatives” of the model of growth pursued over the last quarter a century. The root cause of the crisis is not to be found in hedge funds and bankers who simply behaved with the greed to which they are accustomed (and for which economists used to praise them). The real cause of the crisis lies in huge inequalities in income distribution which generated much larger investable funds than could be profitably employed. The political problem of insufficient economic growth of the middle class was then “solved” by opening the floodgates of the cheap credit. And the opening of the credit floodgates, to placate the middle class, was needed because in a democratic system, an excessively unequal model of development cannot coexist with political stability.

Could it have worked out differently? Yes, without thirty years of rising inequality, and with the same overall national income, income of the middle class would have been greater. People with middling incomes have many more priority needs to satisfy before they become preoccupied with the best investment opportunities for their excess money. Thus, the structure of consumption would have been different: probably more money would have been spent on home-cooked meals than on restaurants, on near-home vacations than on exotic destinations, on kids’ clothes than on designer apparel. More equitable development would have removed the need for the politicians to look around in order to find palliatives with which to assuage the anger of the middle-class constituents. In other words, there would have been more equitable and stable development which would have spared the United States, and increasingly the world, an unnecessary crisis.

Branko Milanovic is an associate scholar with the Carnegie Endowment for International Peace and a lead economist in the World Bank's research department, where he has been working on the topics of income inequality and globalization.

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© Copyright 2009 Yale Center for the Study of Globalization