A layman's view on the US financial crisis

by Mahinda JAYASINGHE

America was a large land mass full of natural resources with a very hard working population at the beginning of the twentieth century.

A majority of the population were farmers and in most families all members contributed their labour in family farms. The culture of this population had many positive attributes such as hard work, thrift and saving the surplus whenever possible.

The honest hard work of large farming communities slowly developed simple techniques that increased their productivity leaving production surpluses that were retained as savings.

Many family farms that produced little more than the family requirements started to produce more using the developing techniques while reducing labour utility.

The children who were spared from contributing labour in family farms received education in a wide spectrum of fields including pure sciences, engineering, economics, social sciences and medicine.

The young and educated joined the emerging American industries and made America almost number one in all fronts by the middle of the twentieth century. A country with a majority of the population living by farming became an industrialised nation reducing its farming community to below 5% of the population.

Agricultural production

The agricultural production output of the 5% could feed the balance 95% and also export a substantial volume of food produce. The large population that did not contribute their labour in farms started to contribute as builders, factory workers, managers, scientists, engineers, entertainers, writers, poets and the list is endless.

The Americans produced large aircraft carriers, fighter planes, submarines and nuclear bombs in very large quantities to fight the armies of Hitler.

This upward move of the American society leading the world economically, socially and technologically was sustained, controlled and maintained by the old American culture which valued honesty, hard work and thrift.

America became a promised land after successful defeat of Nazi and Japanese invasions by the allied forces. It became a land of opportunities for those who worked hard.

The freedom, equal opportunity, educated human resource, natural resources and technology made a very stable country despite the cold war.

The economic and social stability of post world war II America automatically strengthened its currency slowly outsmarting the British sterling pound. Finally, the US dollar was accepted as the world trading currency outmanoevuering the sterling pound in international trading.

The Japanese also continued its industrial phase behind the Americans and slowly secured its global economic position as the second largest in the world. Japanese people worked much harder than Americans without gifted natural resources and dominated many industries such as consumer electronics, vehicles, industrial machinery, ship building, locomotives and construction.

But its extremely conservative culture remained strong despite the earned riches.

The Japanese culture influenced mainly by Buddhism dates back to a couple of millennia. The strength of its culture against the change is extremely high due to the continued existence as an independent nation governed by a monarchy.

Powerful traits

Many powerful traits embedded in the Japanese culture includes family centered communities, loyalty, hard work, modesty, politeness, respect for women, children and elders, thrift and practice of many forms of arts.

Even though all these traits contribute to the social stability, modesty and thrift of Japanese culture is outstanding visible and contributes directly to economic development. Japanese housing is very special and may be the modest among the rich. In many houses, sitting room during the daytime converts to a bed room in the night.

Inmates sit on the floor and food is served on to a short table. Never serve more than the requirement that go waste.

The ratio of per capita earnings against the consumption is the highest in the world. The conventional lifestyles governed by Japanese culture produce like bees, but consume like ants and save trillions in USD as surpluses in international trading. Most of these surpluses were invested in America considering its emerging opportunities, social and economic stability.

Another economic phenomenon is taking place in the Middle East. America is carrying out strategic manoeuveres in the Middle East to get the maximum utility of the massive petroleum reserves in the area and also to amass the riches generated in the area by petroleum sales to the rest of the world.

"In nearly three decades since the oil embargo of 1973, the United States had bought hundreds of billions of dollars of oil at reasonable prices.

During the same period, they had purchased hundreds of billions of dollars of weapons from the United States.

Middle Eastern monarchs, who became billionaires many times over, invested trillions of USD in US equity markets becoming major players.

They banked with Citigroup and invested with Goldman Sachs and Merrill Lynch - House of Bush, House of Saud by Craig Unger."

The passion of the oil rich in the Middle East is to lavishly spend their petro dollars in purchasing sprawling properties, buying designer clothes, pursuing education, buying American limos and investing in large American banking conglomerates.

The american glamour tied with Icons Disney, Hard Rock cafe, Snapple, Porsche and lavish and glamorous lifestyles attracts trillions of Middle Eastern petro dollars to the American soil.

Over the years, the Americans received many trillions of dollars from Japan mainly as investments deposited in American banks. In addition trillions of Middle Eastern petro dollars also flowed as investments and as spending to purchase American glamour which made Americans very rich.

This continued inflow of riches from outside unconsciously attacked the social value system that sustained the pre world war American society.

To be continued