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As of theSummer Solstice of2002,

according to a 22June 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 longrun?


Click here for aview from the Davos 2003 World Economic Forum.

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

Future History - Distantand Immediate

From theBeginning of History through 2000 = 5760humans used transportation, communication, and industry to create aGlobal World Order

with human technology tolight up

the Earth at night;


to turn low-Earth-orbit into aspace junkyard of debris

that mayhave brought down Space Shuttle Columbia on 1February 2003;


to consume Cetaceans,

Rain Forests,

and Fish.

( 1958-1980 fish graphic adapated from Ransom A.Myers & Boris Worm (Nature423 (15 MAY 2003) 280-283), who say: "... Industrialized fisheriestypically reduced community biomass by 80% within 15 years ofexploitation. Compensatory increases in fast-growing species wereobserved, but often reversed within a decade. ... the global oceanhas lost more than 90% of large predatory fishes. ...[asindicated by the above graphic showing]... Spatial patterns ofrelative predator biomass in ...1958 ... and ... 1980 ... Colourcodes depict the number of fish caught per 100 hooks on pelagiclonglines set by the Japanese fleet. ...". See also the book EmptyOcean, by Richard Ellis (Island Press (2003), and a 25 May 2003review in TheNew York Times by Thurston Clarke, whosays: "... Ellis writes in summary, ''... the rampant destructionof the ocean floor and its endemic fauna is one of the greatestenvironmental disasters in history, and it is occurring virtuallyunnoticed.'' ...". )


As to theImmediate Future:

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

According to aseries of five articles running 15-19 February 1999 in The New YorkTimes: "... Charles Kindleberger,an economic historian and author of the book "Manias, Panics andCrashes," said ... "I've been thinking for two or three years thatthe market was too high ... When it collapsed in August [of1998 (green line)], Ithought it might be becoming sensible again. But ..."

... On Labor Day 1998, as financial markets worldwide weretumbling in the aftermath of Russia's financial turmoil, an impatientand annoyed Bill Clinton summoned his top advisers to the Yellow OvalRoom on the third floor of the White House. ... President Clintonwent into overdrive in September, welcoming three interest rate cutsby the Federal Reserve, pressing Europe and others to cut rates aswell, and finally getting money out of Congress for the InternationalMonetary Fund. The Federal Reserve even coordinated therescue of Long-Term Capital Management ... The Americanstock market ... soared to its highest ratio of market capitalizationto gross national product (140 percent) ever recorded in history, aratio that compares with a previous peak of 81 percent in 1929....

Since May of 1999 (redline) the Dow Jones average has been stabilized atabout 11,000 plus or minus about 1,000. This may be due to apolicy of controlling, not only inflation in narrowly defined money,but also inflation in asset value. According tothe 25 September 1999 issue of TheEconomist: "... America's broadmeasure of money, M3, has grown at an average rate of 9% over thepast two years, its fastest since the mid-1980s; in real termsbroad-money growth has been faster than at any time in the pastquarter-century ... the blurring of boundaries between banks andother financial institutions, have made money-supply figures hard tounderstand. ... The consumer-price index is a flawed measure ofinflation. Ideally, an effective measure should include ... assetprices ...".

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

According tothe seriesof five articles running 15-19 February 1999 in The New YorkTimes:

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

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


Does stabilizing the Dow Jones average fully control assetinflation ?

What about thetechnology-internet-oriented Nasdaq exchange ?

Although the Nasdaq also had a collapse in August of 1998(green line), it was notstabilized after May of 1999 (redline). The Nasdaq doubled in value from May of 1999(red line) to about March of 2000,adding (according to a21 December 2000 article theBBC)about $3 trillion to reach a total value of about $6 trillion. Sincethe Nasdaq was heavily oriented toward technology-internet-orientedcompanies, many of which produced far more hype than profits, theNasdaq might have been considered to be even more highly overvaluedthan the Dow Jones.

If the Dow Jones and Nasdaq values are considered to beseparate,

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

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

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


Some questions facing the BushPresidency of the USA:


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

Factors that might influence the course of FutureHistory:

Click here for aview from the Davos 2003 World Economic Forum

Click here to see History prior to World WarII.

Who Rebuilt the World after World War II ?

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

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 anappealing route into economics is the lack of arcane mathematics inhis work. ... Keynes believed that economics is intimately tied tohuman conduct, and that this could not be reduced to simpleequations. ... There is ... a lot of feedback and non-linearityswilling around in economics - and to anyone with a mathematicaltraining, that means equations that are not just hard to solve usingalgebra but actually impossible. Keynes may well have realisedall this, and decided to be honest about the fact that neither henor anyone else had the skills to solve the necessary equations.Certainly his refreshing reluctance to bamboozle with bogusmathematics is well summed up by his declaration that: "I wouldrather be vaguely right than precisely wrong." ...

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

Who Abandoned Keynesian Common Sense ?

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


Math and Physics Theorists - compare the lack of contact withreality of SuperStringTheory.

Myron Scholes, then of MIT and now of StanfordBusiness School, and Fischer Black invented the Black-Sholes Modelof Stock Option Pricing. Robert Merton, of HarvardBusiness School, demonstrated the broad applicability of theBlack-Scholes options-pricing formula. Scholes and Merton shared the1997 Nobel Prize for Economics (Black had died in 1995, andthere have been no posthumous Nobel Prizes). Scholes and Merton arethe Brains behind Long-Term Capital ManagementLP. Awestruck by the brainpower and storied pasts of the LTCpartners, some of the best financial minds on Wall Street backed thefirm to the hilt, sending it wealthy clients, lending it money atextremely favorable terms and investing their own funds. LTCused sophisticated mathematical models to predict how various marketswould act and react in essentially normal times. However, LTC'smodels failed to take into account what might happen in the eventof a world-wide financial crisis that caused unusual reactions inmarkets, and consequently on 23 September 1998 LTC had to receivea $3.65 billion bailout organized by the Federal Reserve from over adozen financial institutions, not to mention a $678.5 millionwrite-off by UBS AG of its entire exposure to LTC. The bailoutavoided a possible bankruptcy filing that could have dumped hugeamounts of securities onto the markets. How much would have beendumped? LTC had an $80 billion balance sheet and additional exposurein the form of off-balance-sheet agreements. Where does that leaveLTC now? In August 1998 LTC was supporting a balance sheet of $125billion of assets, about 54 times its capital base of $2.3 billion atthe time. Now, LTC has capital of roughly $600 million supportingassets of $80 billion. Who benefits from the bailout? Wealthyspeculators based in Greenwich, Conn.

Who Owns the Stock in the USA StockMarket ?


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

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

[Over half of all shares were owned by the richest1%.]

... Stock options have pushed the ratio of executive pay tofactory-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 richerrich will ratchet up prices for everyone else. "Extra spending at thetop," he says, "raises the price of admission." ...".

Where do the USA Rich spend theirMoney? - Unfortunately for workers in the USA, instead ofspending it on infrastructure and factories in the USA, much of itgoes:

Consequently, the USA future history looksbleak for due to its middle class job loss and its infrastructuredecays as seen in 2003 by the ColumbiaSpace Shuttle disaster on 1 February and the New York Blackout on 14August.


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 25September 1998 Wall Street Journal article by Steven Lipin, MattMurray and Jacob M. Schlesinger, a 27 September 1998 NewYork Times article by Diana B. Henriques, a 30September 1998 Wall Street Journal article by Gerald F. Seib, anda 13September 1999 Wall Street Journal Outlook article by Jacob M.Schlesinger (from which the image above was taken).) (For morepolitics, see BillDekle's OpEd web page.)


Global Economy

After World War II, the USA wasthe only industrialized country that had not been a battlefield.Internally, the USA developed its economy through CentrallyPlanned Growth based on the Military, which produced theInterstate Highway System and the Technology for Jet AircraftTransportation, Computer Computation and Communication, Optical andSatellite Communication, and Molecular Biology. RegulatedCompetition was used in the production and distribution ofConsumer Goods that used the Technology.

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

Most of the money was actually used to build Industrial Base, withonly a small amount, probably less than 20%, going to graft andcorruption.

During 1970-1972, USA President Richard Nixon doubled the USADollar money supply, insuring liquidity for the massiveUSA-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 industrialProduction Supply, the wage scale for jobs in European and Japaneseindustries rose to match the USA wage scale, so that the European andJapanese populations became consumers, thus expanding Labor BaseConsumer Demand.

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

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

What about the Rest of the Earth?

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

Multi-National Corporations of USA-Europe-Japan decidedthat they could increase profits if they cut labor expenses. How tocut labor expenses? Move factories from withinUSA-Europe-Japan to low-wage areas outsideUSA-Europe-Japan.

Where should the new factories be built ?

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

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

What about the USSR and Eastern Europe ?

The USSR under Stalin had defeated Germany in World War II. AfterWorld War II, the USSR produced massive numbers of nuclear warheadsdeliverable by submarines, by land-based ballistic missiles, and byaircraft, so that strategically the USSR was on equal footing withthe USA. However, the political system of the USSR had a fatal flaw.Within the USSR, monetary wealth (in rubles) relatively insignificantcompared to political power. As long as an official was in office,that official could get goods and services by command, but when thatofficial left office, that official had no political power and waseffectively impoverished. Therefore, to corrupt an official, all youhad to do was offer money from USA-Europe-Japan (either in $100 billsor Swiss bank accounts) because that would give the official wealthafter leaving office, something that the USSR system did not provide.The fatal flaw of corruptiblility led to the destruction of theBerlin wall between East and West Europe in 1989, and to thedissolution of the USSR itself in 1991. The USSR fragmented intomany newly independent nations, the largest of which was Russia.Post-USSR Russia was run by the same corrupt leaders who had overseenthe dissolution of the USSR. Unlike the USA at the end of World WarII, USA-Europe-Japan did not provide Russia with enough money tomodernize its civilian industry. Even worse, whatever moneyUSA-Europe-Japan did provide was not applied over 80% to industrialmodernization with under 20% to graft and corruption, but was appliedover 90% to graft and corruption and under 10% to industrialmodernization. The resulting instability had, by August 1998, causedthe ruble to become virtually worthless and the Russian internaleconomy reduced to a barter economy. The major danger toUSA-Europe-Japan is that if the Russian people become hopelesslymiserable, the Russian military can use its nuclear capability toensure that USA-Europe-Japan shares its misery. Under Putin,Russia may be be undertaking a more assertive foreignpolicy, and increasing friendship with Iran and China, and anincreasingly 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, andKorea. These culturally varied regions had some commoncharacteristics:

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 werein areas with very valuable natural resources, such as Persian GulfOil fields. If those areas were industrialized to a high level, thepeople might assert independent control over those criticallyimportant (to USA-Europe-Japan) resources. Therefore, theMulti-National Corporations of USA-Europe-Japan by-passedAfrica and the Islamic Middle East. In fact, industrialization of theIslamic Middle East was regarded as such a serious threat thatattempts by Iraq and Sudan to industrialize were destroyed bymilitary actions such as the Persian Gulf War and the 1998 USA cruisemissile attacks on Sudan. The declared hostility of the IslamicMiddle East to the State of Israel was an additional reason forpreventing such industrialization.

However, the rest of the Former Colonies ofUSA-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 USAPresident Richard Nixon to prevent the USSR from launching apre-emptive air and missile strike against Chinese nuclear andindustrial facilities enabled Chinato 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 March20 by Charles Wolf, dean of the RAND Graduate School of PolicyStudies and a corporate fellow in international economics atRAND.

 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       $410Japan            3,000       4,500         90        173India            1,300       4,000         90        353Korea              430       2,000                   129Indonesia          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 relativelywell-organized government and stablizing PLA, China encouragedlocation of industrial factories within its borders, both to raiseits industrial productivity and to secure techology needed tomodernize and develop its indigenouse industrial base. Therfore,China was a prime region for the Multi-National Corporations ofUSA-Europe-Japan to build new factories.

Even if the Multi-NationalCorporations of USA-Europe-Japan fail in their effort to maximizetheir profits form a Global Economy, China mightprosper based on its own internal resources of industry, rawmaterials, labor, and social stability. In aseries of five articles running 15-19 February 1999, The New YorkTimes said: "... As for China, it has evaded the[financial] crisis, and what saved it from catastrophe may inpart have been its unwillingness to listen to Western economists.Urged to make its currency freely tradable with the dollar, itresisted. If the Chinese yuan had been convertible, then Chinesewould have sent their money fleeing as Thais and Indonesians did, andChina might also be mired in a major financial crisis. China claimseconomic growth last year of almost 8 percent -- a tribute to thegovernment's $1.2 trillion stimulus plan ...".

The growth of China came under the rule of Deng Xiaoping. Whetherthe growth will continue after his death is problematical, becausehis successor Jiang Zemin seems to be returning to doctrinaireMarxism and repressive actions reminiscentof the Cultural Revolution, and, under Jiang Zemin,China may be drifting into an adversarial relationship with theUSA.

Although Jiang Zemin andhis successor Hu Jintao are severely oppressive toward Taoistfreedom, they are continuing the economic growth policies of DengXiaoping ( and thus avoiding theConfucian stagnation of China in the 1400sAD ) as is discussed in a 13January 2003 article in The NewYork 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 a19 August 2002 article in the Washington Times by Damien McElroyof 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 isconsistent with heavy investment and rapid expansion of globalmilitary capability.

Even with such heavy investment, future rapid growth in China isnot guaranteed. According to an8 May 2003 Independent article by JasperBecker: "... InJanuary [2003], China was described as the motor of economicgrowth. ... the effect of Sarsis being compared in Asia to the disastrous plunge after the 1997Asian financial crisis ... every foreigner who can is leaving[China] ... Chinese businessmen also fear going abroad incase they are put into quarantine ... Hong Kong's Dragonair airline,which serves mainland cities, says it is carrying only 700 passengersa day, compared with 13,000 at the year's start, and has groundednine of its 21 aircraft. ... Sales of computers in China, the world'ssecond-biggest market, are dropping so quickly that the price ofcomputer chips is already down. ... Big state companies that wereplanning to lift spirits in the world's ailing financial servicessector with big public stock offerings are holding off. The hugePeople's Insurance Company is delaying its $600m stock market floatuntil the autumn, as are Sinotrans, Shanghai Forte Land and SohoChina. Standard & Poor's is predicting that bank profits couldslide this year by as much as 45 per cent in Hong Kong and 25 percent in Singapore if the slowdown lasts until the end of the year.... Foreign investment is also bound to fall steeply. The number ofcontracts signed at the Guangzhou trade fair this year was down bythree quarters ... The 1997 Asian financial crisis had political aswell as economic ramifications across the region, including thedownfall of the Suharto regime in Indonesia and the independence ofEast Timor. China escaped unscathed then, but it may not be so luckythis time. ...".

However, according to a26 August 2003 Yahoo! News article by Frances Williams in Geneva andChristopher Swann in London: "... The global stock of FDI[Foreign Direct Investment] jumped more than tenfold between1980 and 2002 to $7,100bn, as transnational companies spread theirproduction and distribution systems around the world. ...

Further, according to a15 September 2003 World Tribune article by John Metzler: "...Global foreign direct investment (FDI) flows, already down by 40percent in 2001, fell by another 21 percent last year. ... the US isexpected to produce the largest source of FDI outflows in the comingyears ...


As China's low wages attractmanufacturing plants to move to China from the USA and Japan,conflict may arise as the USA and Japan lose notonly jobs but the ability to manufacture goods within their ownborders, thus possibly making Chinese laborunions the dominant political force on Earth by 2020.


To the extent that the USA is no longera player in the manufacturing game, its major assets in the worldeconomic system are IntellectualProperty rights for technology, pharmaceuticals, agriculture,movies, music, etc., coupled with the political/militarymeans to force the rest ofthe world to pay royalties for Intellectual Property. Someonefrom China once told me that China should only pay IntellectualProperty royalties to the USA after the USA pays Chinafor its use of such things as electromagnetism, optical lenses,chemical energy sources, medical technology based on bloodcirculation, etc. A 30January 2003 article by Andrew Orlowski in TheRegister 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 IntellectualProperty system may win it allies in much of the rest of theworld, especially since the USA insists on enforcement ofIntellectual Property Rights at the expense of the health and welfareof many of Earth's people, as exemplified by a16 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 Chinaand the World from 2000 to 2030,

excerpted from articles by Victor Feller on the webpages of the Dao China Site of DmitryAlemasov:  

"... This prognosis was finished in June 1999 as a sequel to thestrategic plan intended for a group of financial companiesfloundering 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 Protestantethics of Europe) and on traditional communal style of life in thecountryside. We must remember that labor efficiency and standards ofliving in China are still more than 10 times lower than those of theU.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 Japanto be in! ... the twenty-first century Chinese expansion hasto be performed by economic or political means. Probably, it willbe first carefully prepared by diplomats and secret agents, thenfollowed with migrations and backed by the Chinese underground("Chinese triads") or by local separatist movements, or enforced bythreats, or camouflaged for peace-keeping operations in times ofChinese-inspired local conflicts, etc. ...

... Japan, which in the 1980s claimed the economic hegemony inAsia, had been quickly eating into American and European markets,until she picked up an infection in the early 1990s ... in contrastto China, Japan is not likely to restore her dominationanymore, even within the limits of the Far East. The best shecould 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 begreatly to blame for their failure in the East. ...

What great events will most probably happen from 2000 till2030?

It is almost obvious that principal battle for power and globalinfluence, fought for the possibility to translate one's culturalcodes and national strong points into reality, is to be stagedbetween the Atlantic and Pacific civilizations, i.e., between theU.S. and China. By 2015 or 2020 economic potentials of the two willbe almost equal. ...

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

By 2010 or 2020 ... Hordes of the Chinese will be swarming acrossthe Russian border, after people riots shake several Chineseprovinces. The U.S. and Russia will receive about one millionrefugees each. Europe will give shelter to 500 thousand. ... by2020, the authoritarian Chinese regime will have expelled another5 million of its citizens out of China. This time, 90 percent ofexpats will settle down in Southeast Asia, in order to go back toChina in a few years. Their forced expulsion from the homeland willin reality turn out to have been a Trojan horse, meaning a meremigration and "occupying" new territories. ... the regime ... inChina .... will [be overthrown by]... a storm of publicindignation over cruel treatment of fellow-countrymen ... givingplace to a new policy of pragmatism. ... China ... will developcomplex hierarchical collectivist systems instead, with personal andgroup interests ingeniously harmonized inside of them. ...competition in itself will never make a locomotive of the economy...[in China]... but thetradition to coordinate individual and group interests, rooted inspecifically "Oriental", communal and economy-centered psychology,will in return prove super-efficient and beyond the understanding ofindividualist-thinking Europeans and Americans. ...

... by 2020 ... China will also finish "inventorying" herown missile defense capabilities and be learning how to make holes inher neighbors' nuclear umbrellas. ... The allusions to submarinenuclear mines off the North American coast, as well as other littlepresents from the Chinese scattered all over North America, will makethe U.S. government easier to bargain, with American securityservices hysterically searching for the mines and actually findingsome 50 km off New York. ...

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

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

... By 2030 the Chinese economy will exceed that of the U.S. by30-35 percent and that of Europe (both Western and Eastern) by 5-15percent. ...

... By 2030, the levels of economic development and standards ofliving of China and India will differ strikingly, being approximately2.5 to 3 times higher in China. By that time China will have leftIndia far behind and be struggling for the world hegemony. India willbe isolated within a circle of Chinese allies.

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

Conclusions, Or How To Look Upon This Prognosis.

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


Multi-National Corporations ofUSA-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 ofUSA-Europe-Japan succeeded in cutting labor costs and inincreasing corporate profits. Beyond that, investors remembered thatthe expansion from the USA to USA-Europe-Japan after World War II hadled to a balanced prosperity of High ProductionSupply and High Labor Base Consumer Demand withinUSA-Europe-Japan, so they assumed that the same thingwould happen with expansion from USA-Europe-Japan toUSA-Europe-Japan-Colonies-China, and they priced stock sharesassuming similar rapid future growth. Investments went beyondproductive factories to such ventures as Muang Thong Thani nearBangkok,

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

The New York Times series ofarticles describes the government and financial policies andtheir 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 opportunitiesfor American banks, brokerages and insurance companies. This drivefor free movement of capital as well as goods was one factor in thelong American-led boom in financial markets around the globe. ...Washington's policies also fostered vulnerabilities that are anunderlying cause of the economic crisis that began in Thailand inJuly 1997, rippled through Asia and Russia, and is now shaking Braziland Latin America. ... some economists ... say that if thosecountries had weak foundations, it is partly because Washingtonhelped supply the blueprints. ... a wealth of evidence has shown thatoverhasty liberalization can lead to banking chaos and financialcrises. ... Mickey Kantor, the former trade representative andCommerce Secretary, ... [speaking] of the risks of financialliberalization without modern banking and legal systems, ... comparedthem to "building a skyscraper with no foundation." ...

... the Clinton Administration ... pushed for free capital flowsin part because this was what its supporters in the banking industrywanted. ... Previous administrations had pushed for financialliberalization principally in Japan, but under President Clinton itbecame a worldwide effort directed at all kinds of countries, evensmaller ones much less able to absorb it than Japan. ... His Cabinetapproved a "big emerging markets" plan to identify 10 rising economicpowers and push relentlessly to win business for American companiesthere. Under [the late Commerce Secretary Ron] Brown, theCommerce Department even built what it called a war room, wherecomputers tracked big contracts, and everyone from the C.I.A. toambassadors to the President himself was called upon to help landdeals. ...

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

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

... China ... evaded the crisis, and what saved it fromcatastrophe may in part have been its unwillingness to listen toWestern economists. Urged to make its currency freely tradable withthe dollar, it resisted. ...

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

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

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

"It's no longer the real economy driving the financial markets,"said Marc Faber, a prominent fund manager in Hong Kong, "but thefinancial 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, mutualfunds, pension funds and other institutional investors controlled $20trillion, 10 times the figure of 1980. The global economy is nolonger dominated by trade in cars and steel and wheat, but rather bytrade in stocks, bonds and currencies.

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

-- New technologies have vastly reduced the importance of physicaldistance. In 1930 a three-minute telephone call from New York toLondon cost $245. Now it runs 36 cents. In cyberspace, every marketis next door.

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

-- Public funds are increasingly used to bail out losers, likebanks. The latest crisis has forced an international rescue on ascale like nothing before, with roughly $175 billion in public moneyraised so far for the various international bailouts. At least someof that public money has gone to rescue bankers and politicians fromtheir own mistakes. ...

Paul Samuelson, the Nobel laureate in economics, argues thatsophisticated analysis has done a marvelous job in achieving"microefficiency" in financial markets. The result is that shareprices adjust almost perfectly to specific news like currencymovements or changes in dividends. "But I also believe the evidenceis overwhelming that there is no macroefficiency of speculativemarkets," Samuelson added. "They experience self-fulfilling swings,and they can swing far above and below any kind of sensiblefundamental value. There does not exist an efficiency which isself-correcting, except in the case that every bubble will somedayburst." ...


The 1998 U.S. trade deficit surged to an all-time high of$168.6 billion, according to a 19 February 1999 AP report inThe New York Times, whichstated: "... [the 1998] deficit jumped 53 percent from a 1997imbalance of $110.2 billion, surpassing the old record of $153.4billion set in 1987. Many economists believe that the deficit for[1999] will be at least $60 billion worse than the 1998figure as American exporters face continued troubles selling intoglobal markets with one-third of the world in recession. ... For1998, total exports dropped 0.7 percent to $931.3 billion, the firstsetback since 1985. Exports had been up 11 percent in 1997. Imports[for 1998] jumped 5 percent to a record $1.10 trillion as theU.S. economy, despite the hits taken by the trade sector, continuedto post strong overall domestic demand. ... The ... tradedeficits with both Japan and China widened last year. Theimbalance with China rose 15 percent to a record $56.9billion, 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 billiondeficit with Japan in 1994. The U.S. deficit with all Pacific Rimcountries, the hardest hit region from the global crisis, rose 33percent in 1998 to $160.4 billion. ...

... The [USA steel] industry is ... pressuring [the USgovernment] to impose worldwide quotas on steel, warning of morelayoffs and bankruptcies without government relief. ... The [USAClinton] administration is concerned that steel will be the firstin a long line of U.S. industries seeking increased protection fromforeign competition in moves that could trigger retaliation andrising protectionism around the world. ...".


In 1999 and 2000 the USA trade deficit continued toincrease. According to a 19 December 2000 AP article in yahoobusiness by Martin Crutsinger, "...  America's tradedeficit 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], thetrade deficit is running at an annual rate of $363 billion,almost $100 billion higher than last year's [1999] $265billion deficit....".


President Jacques Chirac ofFrance, in a speech 18 February 1999 to the World Bank and theInternational Monetary Fund, urged that the United States, Japanand Europe manage the exchange rates of their currencies, keepingthem within specific zones, according to a 19 February 1999article in The New York Times,which stated: "... That is an idea that Japan and Germany haveechoed, but [USA Clinton administration] Treasury SecretaryRobert E. Rubin dismissed the suggestion as unworkable and illthought out. ... [Rubin] noted thatif the U.S. economy went into a downturn, and the value of itscurrency also fell, Europe and Japan might prescribe a rise in U.S.interest rates in an attempt to bring the value of the dollar backup. ... the United States is loath to turn over economicdecision-making power to an international organization of any kind....".



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

Yes - the USA can (probably secretly) guarantee an unlimitedsupply of cheap money to Big Wall Street for the purpose of buyingstocks, while telling Big Wall Street that anyone taking shortpositions will be severely punished.

Such an increase of money supply beyond a correspondingincrease in production of goods and services would produceINFLATION.


According to a 21 August 1978 editorial in The Wall StreetJournal: "... Yale's Robert Triffin wrote ... "... World reserveshad already more than doubled over the years 1970, 1971, and1972,


increasing in this short span of three years by more than inall 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 governmentregulation of wages and prices instead of using global competition tohold down labor and raw material costs. Nixon's repressiveregulations did not stop oil price increases in 1973 by foreignsuppliers who were not restrained by global competition. Also unlikeClinton, Nixon was removed from office after impeachment. Nixon'sremoval from office may have been at least in part due to hisattempts to enforce central government control by unnatural laws andregulations, a mistake that may be being repeated by JiangZemin's return to repressive Marxist doctrine in 1999 China.

What about inflation/deflation of the money supply sinceNixon ?

As shown in the above chart adapted from the 25 September 1999issue 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 IIexpansion to USA-Europe-Japan and going to a new High level of BOTHProduction Supply and Labor Base Consumer Demand.

In 1998, High Production Supply has been achieved, and ConsumerDemand of Investors is High because the stock they own is at recordhigh levels.


What about Labor Base Consumer Demand ?

The High Labor Base Consumer Demand assumption of investors thathas pushed stock prices to record levels is based on expanding thepopulation base of Labor from USA-Europe-Japan to the population ofthe entire Earth, which is expanding as shown on the inset graph(from The 1998 World Almanac) in the abovefigure. This assumption cannot be justified with respect toRussia (due to its instability) or with respectto the Islamic Middle East or Africa (dueto lack of industrial development). Unfortunately, it cannot evenbe justified with respect to other former Coloniesand China.

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

the post World-War II expansion of the USA to USA-Europe-Japanand

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

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

but, to increase their profits, and therefore their stockprices,

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

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

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

If those policies are not changed, then

How far must stock prices fallto hit a new equilibrium ?

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

... in the 1920s, people also believed in a new era of fastergrowth arising from new technology. The only difference was that atthat time most of the excitement was generated by cars, aeroplanes,electrification and the radio, rather than by computers, telecoms andthe Internet. Convinced, like many others, that the boom-bust cyclewas a thing of the past, Irving Fisher, an economist at YaleUniversity, made his infamous observation on the eve of the 1929crash that "stock prices have reached a permanent and high plateau."... Today, besides runaway share prices, America shows plenty ofother signs of excess. Consumers have been on a borrowing andspending binge, and household saving has turned negative for thefirst time since the 1930s. ... As imports soar, America'scurrent-account deficit is heading for a record 4% of GDP. Theproperty market is also starting to look frothy: prices of primeresidential property in many big cities are soaring. Last, but notleast, money-supply growth seemsexcessive. These are all classic symptoms of a bubble. ...".

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

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

and the median Dividend Yield on the Dow Jones stocks hashistorically been 4.3%. For the Dividend Yield to revert to itsmedian, the Dow Jones Industrial Average would have to fall to3353.

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

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

If the deflationary slowdown decreases profits fromcurrent levels, then the Dow Jones Industrial Average would have todecline below 5291 to reach a 15.3 Price/Earnings Ratio, and below3353 to reach a 4.3% Dividend Yield.

Since declining stock prices will reduce the current Highlevel of Investor Consumer Demand, which would decrease profits evenfurther, the stock market decline could be a deep downwardspiral.

Another factor supporting the Dow JonesIndustrial Average is that the USA stock market, and particularly theBlue Chip Dow Jones stocks, is perceived by investors world-wide asbeing the only safe haven for investment. In that respect, withinUSA-Europe-Japan, the USA is dominant rather than equal. As Japan ishaving major economic difficulties due to its heavy investments inSouthEast Asia and Korea, Japan is not likely to ever compete withthe 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 themistake of his successor Jiang Zemin in returning to doctrinaireMarxism and repressive actions reminiscentof the Cultural Revolution, China.

If alternative safe havens appear, possibly in Europeand China, another pillar of support for therecord high levels of the Dow Jones Industrial Average willdisappear.


Perhaps the most potentially destabilizing ( for the economicorder in the present developed world ) possibility is that anindustrially developed, but fossil-fuel-poor, nation will makeavailable small modular cheap safefission reactors thus renderingthe present fossil-fuel energy system obsolete.

For the long run, thatwould be a good thing, because only nuclear energy can support alarge Earth population with a present-day-energy standard ofliving.

According to a22 August 2001 article by Peter Hadfield and Michael Fitzpatrickin 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 a21 October 2003 article by Joel Gay in the Anchorage DailyNews:

"... 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 dependenton fossil fuel, and particularly on oil.

How Long will AbundantCheap Oil Last ?

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

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

Production in the World Outside Persian Gulf substantially followsthe Hubbard curve pattern of increase to peak, then decline. TheCaspian Sea of the Former Soviet Union is probably the only area thatcould possibly break out of its Hubbard curve and increase productiondramatically, but political rivalries and instability may interferewith the necessary construction of production and transportationfacilities. Even if the Caspian Sea were developed rapidly, it mayadd no more oil production to the graphs shown above than the totalproduction of the North Sea in the UK and Norway. According toa5 December 2002 article by Dale Allen Pfeiffer on a FromThe 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 anarticle 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 perbarrel in the Persian Gulf to about $5 to $10 per barrel in the NorthSea in the UK and Norway. Since the price is set on the margin, andsince oil companies make profits, the 1997 oil price was in the $15to 20 per barrel range.

Either dramatic decrease in oil production, or dramatic increasein oil price, could be so disruptive to the Industrial Sector that itcould destabilize the dominant position of the USA in the WorldOrder.

Could substantial oil production at reasonable prices come fromunconventional sources?

Higher recovery technology would extend the graphs, but probablynot much. Such oil might be so expensive relative to $20 per barrelthat the dominant position of the USA in the World Order would bethreatened.

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

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

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

With the World Outside the Persian Gulf on a declining Hubbardcurve, and with high-tech recovery, Orinoco sludge, tar sands andshale, and natural gas very expensive relative to $20 per barrel, theonly way to sustain 1997 production levels at reasonable prices isto, 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 untilabout 1973.

Political restrictions, not normal economic and geological forces,took the Persian Gulf off its Hubbard curve with a flat productionfor the rest of the 1970s and a dip in production in the early1980s.

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

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

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

If Saudi Arabia, Kuwait, and the United Arab Emirates keep theirproduction at 1997 levels of about 7 billion barrels per year through2010,

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

then Iraq and Iran would be the most likely nations to pick up the5 billion barrel per year shortfall from 1997 levels.

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

Can Iraq and Iran provide theneeded oil ?

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

Iraq's proven reserves, more than 112billion barrels of proven oil reserves, second only to Saudi Arabia's250 billion barrels, and those of Iran, which are somewhat smaller,will have to come into play,

and that neither Iraq nor Iran has thefinances to substantially expand production capacity without foreigncapital.

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

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

and since the USA will need oil from Iraqand Iran to stabilize the dominance of the USA in the World Orderthrough 2010,

the USA must either change the governments of Iraqand/or Iran

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

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

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

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



If Conflict arises

among nations in the Global World Order, whether it is among theUSA, Iraq, China, France, Germany, Russia, or others, the way theConflict is managed may determine whether the Global World Orderproduces a harmonious unity of Humanity or whether it producesterribly destructive wars.

Conflicts might involve:

Europe mightbegin to compete with the USA as a safe haven beginning in 1999.According anarticle by Helene Cooper and Sara Calian in The Wall Street Journalon 26 August 1998, "... Merrill Lynch and Co. ... [is]... preparing for the euro. Merrill believes that the the commoncurrency, to be introduced [January 1, 1999,] will spark aEuropean investment boom. ... The total stock-market capitalizationin "Euroland," as the 11 countries participating in the new currencyare known, is equal to just 60% of the region's gross domesticproduct, compared with 140% to 150% in the U.S. ...".

If the UK remains aligned with the USA, and if a unitedContinental Europe based on a Troika of France, Germany, andRussia emerges, it could be a third major power, along with theUSA and China. As Thomas Kamm of the Wall StreetJournal reported on 9 April 1998, if you only take into account the1997 data for Austria, Belgium, Finland, France, Germany, Ireland,Italy, Luxembourg, Netherlands, Portugal and Spain (the countrieslikely to be charter members of the European EMU (Economic andMonetary 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 unitedContinental Europe, you see that the USA would be a good bit smallerin everything except possibly military strength.

As to military strength, according to a 16 December 2000 articleby Anton La Guardia in TheLondon Telegraph, "... French officials claimed that thedevelopment of an autonomous European defence policy was unstoppable.One French official said: "The train is already moving. Nato is noton board. It is not the engine. It is not in the tender or even inthe passenger compartment. It is still on the platform." ...America fears that ... Francecould push the EU into developing separate operational planningfacilities and ultimately "decouple" Europe from America.... Richard Perle, one of ... Bush's hardlinecampaign 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 TheLondon ElectronicTelegraph reported that "Security experts inGermany have uncovered new evidence of a big American industrialespionage operation in Europe using satellite listening posts inBritain and Germany. German business is thought to suffer annuallosses of at least £7 billion through stolen inventions anddevelopment projects. With Europe already locked in a trade war withits American ally over bananas, Germany's high-tech industry wantsits government to back a counter-offensive. The main centres used forsatellite tapping of millions of confidential company telephonecalls, fax and e-mail messages are believed to be terrestriallistening posts run by the American National Security Agency (NSA) atMenwith Hill, near Harrogate, North Yorkshire, and Bad Aibling,Bavaria, with the backing of the American government. ... Victimshave included such German firms as the wind generator manufacturerEnercon. Last year it developed what it thought was a secretinvention enabling it to generate electricity from wind power at afar cheaper rate than before. However, when the company tried tomarket its invention in the United States, it was confronted by itsAmerican rival, Kenetech, which announced that it had alreadypatented a near-identical development. Kenetech then brought a courtorder against Enercon banning the sale of its equipment in the US. Ina rare public disclosure, a NSA employee, who refused to be named,agreed to appear in silhouette on German television last August toreveal how he had stolen Enercon's secrets. He said he used satelliteinformation to tap the telephone and computer link lines that ranbetween Enercon's research laboratory near the North Sea and itsproduction unit some 12 miles away. Detailed plans of the company'sallegedly secret invention were then passed on to Kenetech. ...Experts have little doubt that the NSA is at the forefront of theEuropean industrial espionage war, not least because Washingtonhas instructed its security services to collect information for thebenefit of American industry. Early in his presidency, Bill Clintondecreed that industrial espionage should be one of the main tasks ofthe CIA. "What is good for Boeing is good for America," he wasquoted as saying. The NSA operates a global data surveillance networkinvolving 52 super computers. Specialists in European industrialespionage, such as the journalist Udo Ulfkotte who is to publish abook on the subject, entitled Market for Thieves, later this year,say there is strong evidence that Britain's Menwith Hill is at theforefront of the offensive. "My research suggests that 70 per cent ofthe spying is done in Yorkshire," Mr Ulfkotte said. From both theYorkshire and Bavarian sites, data is transferred to the NSA'sheadquarters at Fort Meade, Maryland where 10,000 military personneland 30,000 civilian employees trawl the information with the help ofthe British Memex computer identification system. German industrycomplains that it is in a particularly vulnerable position becausethe Bonn government forbids its security services from conductingsimilar industrial espionage. "German politicians still support therather naive idea that political allies should not spy on eachother's businesses. The Americans and the British do not have suchillusions," Mr Ulfkotte said. But for Germany's Association forIndustrial Security, which backs the idea of a counter-industrialespionage drive, the situation has become intolerable. "We will haveto get used to the fact that industry is a part of our nationalsecurity," said the association's president Wolfgang Hoffman.".


India and Pakistantested nuclear weapons in 1998.

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


USA Policy of Irrationality

a 1995 study "Essentials of Post-Cold War Deterrence" by the USADefense Department's Strategic Command stated, that, according to aCNNreport, stated that "... Because of the value that comes from theambiguity of what the U.S. may do to an adversary if the acts we seekto deter are carried out, it hurts to portray ourselves as too fullyrational and cool-headed ..." and that "The fact that some elements(of the U.S. government) may appear to be potentially 'out ofcontrol' can be beneficial to creating and reinforcing fears anddoubts within the minds of an adversary's decision makers ..." andthat "That the U.S. may become irrational and vindictive if its vitalinterests are attacked should be a part of the national persona weproject to all adversaries."

According to CNN,the Policy of Irrationality dates back at least to the 1960s, whenHarvard professor Thomas Schelling, working on game theory andnuclear bargaining, wrote: "It is not a universal advantage insituations of conflict to be inalienably and manifestly rational indecision and motivation ...".

As CNNsays, Schelling's deas were adopted by Henry Kissinger and PresidentNixon in using coercive air strikes on North Vietnam as a way offorcing Hanoi to the bargaining table in the latter stages of theVietnam War.

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

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

Kosovo, Russia, andChina

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 Policyof Irrationality whereby the USA is using Brinksmanship andBluffing to try to intimidate China and the Rest of theWorld,
Does the USA really intend to actually use its militaryforce, including B2 bombers, to destroy China's Nuclear Missilecapability in a preemptive strike, and then use USA militarysuperiority to guarantee availability of cheap goods and labor fromthe Rest of the World for the benefit of USA MultinationalCorporations ?

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



Will China's low wages attract so manymanufacturing plants to move to China from the USA and Japan thatconflict may arise as the USA and Japan lose not only jobs but theability 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 toadvance.

What obstacles might prevent development and utilization of NewTechnology?

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 Civilizationof the Global World Order to advance, then what might the be thefuture of Humanity?

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

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



It is possible that one source of New Technology might becontact with


Click Here forReferences.

Click Here for History prior to1998.

excerpts from Rudyard Kipling - The Gods of the CopybookHeadings:

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 trueThat 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 hascollapsed and China's economy has becomeCapitalist. Does that mean that Marxism died with the Millenium2000?

Perhaps the most important phenomenon of 1980-2000 is the movementof Modern Industry from high-wage areas of the USA, Europe, and Japanto low-wage areas which I will call China (its largest and dominantcomponent).

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

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


during 2000-2020 Chinese workers will realize how realize how farthey are below the life-style at the top and begin to form Earth'smost powerful unions, which cannot be broken because there is noother "China" to which to export Modern Industry jobs.

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

Will the Chinese unions of 2020 be Taoistor Confucian in spirit?


The process is substantially accurately described by interpretingsome excerpts from theManifesto 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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