Brahmason's Blog

The financial ( not economic ) measures being applied by US and Japan are not and cannot be , a solution to world current economic problems .

The only problem of world economy is the drastic rupture between offer and demand , caused by bubbles and liquidity cemeteries , that in turn have accelerated an enormous concentration of wealth and resources in very few hands at the expenses of the destruction of the so called middle class whose number and income is responsible for the consumption needed to keep balance between offer and demand , of which big investments such as car production , food production and commodities depend…

To help visualize the dramatic situation of world economy there is nothing so clarifying as to compare the rent per capita ( GDP per person ) with the GINI in some countries .

In short it can be said that the lower the rent per capita the better distribution of richness is needed . Better distribution of richness means e lower GINI indicator .

Roughly it can be stablished that for economies with rent per capita above 50.000 $ the GINI indicator does not need to be better ( lower ) than 0.35 to guarantee lower incomes solid enough to contribute sufficiently to balanced consumption .

In economies with rent per capita between 25.000 and 30.000 $ the GINI necessarily has to be below 0.25 if the economy has to safely keep the necessary balance without resorting to growing endemic borrowing that will never be fully returned to creditors and which level of default will depend on the level and speed of indebtment as a ratio of income…

The real situation is that EEUU with a presumed current rent per capita around 47.000 $ with a lowering trend , has a GINI indicator of 0.49 and Spain with a rent per capita strongly dropping and presumably today around 25.000 $ , has a GINI indicator of 0.35 …

Norway for instance has a very good GINI indicator ( 0.22 ) with a rent per capita clearly above 50.000 $ but the problem here is that blind growing and wealth politics are again so exhuberantly irresponsible that the amount and speed of thirsty borrowing has surpassed the equilibrium limits of youth solvency coinciding with the government inability to create the necessary increase of investments and jobs to match continuity with the previous trend…

There are not miracle solutions now of course because for obvious mathematic considerations , the recovery under the circumstances need more time than it needed to deteriorate..
The big worry however is that government policies being applied are promoting a worsening of the situation instead of the necessary healing .
Flooding the economy with liquidity while a big percentage of potential consumers are highly indebted and / or with poor incomes can only increase the concentration of wealth and help further cemeteries of liquidity..
A drastic change of tax systems is needed to promote added value investments while preventing money concentration in speculation ventures ..

Brahmason

Brahmason@gmail.com