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The World at Ideological Crossroads: Is Capitalism on Death Bed Or Relocating from the West to the East?

--Cutting-Edge Analytics--

By: Franklin Otorofani
 Published December 14th, 2011

"The true dreamers are those who think things can go on indefinitely the way they are. We are not dreamers. We are awakening from a dream which is turning into a nightmare. We are not destroying anything. We are only witnessings how the system is destroying itself. To be engaged in fighting for freedom, you have first to free yourself from the chains of the ruling ideology. When you critize capitalism, don't allow yourself to be blackmailed that your are against democracy."----The Occupied Wall Street Journal

The word "capitalism" once the pride of the west has suddenly assumed a dirty and sinister, if not altogether fraudulent connotation, at least in the United States in these lean times of severe economic distress--to the extent that some Republican Party brainiacs, alarmed at the bashing of Wall street by the media, organized labor, and enraged political activists, have suggested its strategic replacement with a more appealing nomenclature such as "free enterprise", for example. Sure, that sounds less ugly, less menacing, and less exploitative, too; for the word "free" smoothens off its rough edges that so often grates on the overly sensitive skins of the poor laboring under its yoke.

But no apologies. Though monstrously imperfect, I have no qualms in stating that I have a soft spot for the capitalist economic system, if for nothing else but for: (1) its prodigious capacity for wealth creation; (2) the massive wealth it has in fact created in the world particularly in developed economies in the last few millenia, and it is now doing in the developing economies that have chosen its path, as can readily be seen in the economic miracles of the "Asian Tigers"; (3) its promise for least developed African nations that look forward to becoming the new frontiers of economic growth and development. Yes, capitalism might not be perfect, and no one said it was, but it delivers! Period. And that is important. For all its bashing no one disputes that fact. That is not to say, however, that we should close our eyes and ears to its shortcomings and go on with business as usual, but to recognize its huge contribution to global prosperity in general even as mass poverty remains an issue.

With such a stellar resume to flaunt around and indeed poke in the face of communism, its arch competitor, it must take Karl Marx himself not to fall in love with such consummate wealth generator and amplifier as capitalism has proven time and again in country after country that has embraced it as its preferred path of economic growth and development. In this connection, we need to remind ourselves that none of the nations that have converted to free market and the capitalist mode has any regrets for doing so whether in South America, Africa, and the Caribbeans China, India, Malaysia, Singapore, Ireland, Poland, Ukraine, Georgia, Indonesia, South Korea, Brazil, or even the small Namibia in our very own backyard right there in Africa--all bearing eloquent testimonies to the power of the capitalist mode of production.

The genius of capitalism resides in its boundless capacity to create what Marxists prefer to call "surplus value", which, in plain language simply means surplus wealth. And capitalism does in fact create surplus wealth, and massively at that, too, well beyond the market needs of its producer countries extending into foreign markets thereby making for robust, vibrant, and dynamic world trade with its regulatory agency, the World Trade Organization (WTO). This is the thing with it. Capitalism does not go small. It goes big and succeeds or fails big as the case may be. It is perhaps fair to state therefore that there has been no other economic system in the history of the world that has created nearly as much wealth for nations that embraced it as the capitalist system. There is so much wealth floating around in the free world that it is a shame that there is still mass poverty in many parts of the world even in the developed nations themselves.

On a personal level, this writer was, at first, shocked to see mass poverty even in the United States amid its huumongous surplus wealth that hundreds of thousands of citizens are not only homeless and live literarily in and off the streets and subways, but must rely on food kitchens, churches, and charitable organizations to put food in their starving stomachs or provide roof over their heads especially in the bitter winter colds. I couldn't understand and still don't understand the glaring contradictions and huge gulf in income levels between those at the top 1% and the rest of the 99% as they have now come to be characterized these days and those who do not count at all in the official estimates. It's the ugly side of capitalism that people can be found in their thousands in the streets begging for alms. Who is accounting for those medicant hordes in the streets? Sad to say, no one in particular. They are both nameless and faceless and mere statistical abstraction at best.

By some queer, capitalistic logic such social condition seems to be viewed as "normal" in capitalist systems that would readily point to the existence of public assistance or welfare programs for the poor as wholesome and redemptive features of the system, but which can only go so far in meeting the existential needs of impoverished citizenry. Let's not delude ourselves: No one should envy even for a second those on public assistance in developed countries, including of course, the United States. Life on welfare is life wasted, and a huge burden on society, too. This may not be political correct in our age of political correctness but it is the reality and I have no problem saying it like it is.

Even so, no other system has lifted more of the throng of humanity from the nadir of poverty, material deprivations, and subsistence existence more than capitalism. The sociological term "middle class", a unique creation of the capitalist system captures it all in a nutshell. Only capitalism could have created such middle class that is large enough to form a distinct demographic group in society. Previous systems simply created two opposite classes of the haves and the have-nots, with virtually nothing in between. Its robust middle class of white and blue collar workers can afford the good life just like the rich unlike the peasantry in feudal times, for instance. Also, through the financial markets the little guy could invest his widow’s mite in the capitalist gravy train and make a buck or two for himself if the gods of capitalism happen to smile on him even for a brief moment, thus affording him the opportunity for social mobility which was so rigid and etched in stone in previous epochs as to create distinct social castes with no avenues of breaking out. Whatever its shortcomings, therefore, capitalism must be credited for making social mobility possible.

It is a matter for regret, therefore, that capitalism has fallen short and has not been able to do as good a job in distributing its surplus wealth in the back end as it has in creating it in the front end. And the bad news is that it appears incapable of doing so. Its mechanism of distributing wealth as indicated in the capital market is rather too elitist and therefore caters only to the sophisticated investors which constitute only a small fraction of the populace. As a result, 90% of its huge wealth resides only in the top 1% of the population and that has become the battle cry of protesters in the United States chanting the 1% and 99% slogan in the growing "Occupy" movement. According to data from the US Census Bureau released on September, 13,2011, 46.2 million Americans were living in poverty in Y2010. By now it must have reached or close to 50 millions in 2011, in the midst of plenty.

Distributing this surplus wealth has, therefore, become its Achilles Heel, and may very well become its waterloo as well. The auguries are indeed troubling if not altogether frightening, and that is a scarry thing even to contemplate the possible demise of the world's pre-eminent economic system as the global economic system takes exacts its tool on the masses. But if capitalism is fated to go the way of communism it is beyond the power of man to save it however much he tries to as the Europeans are doing presently with little or no success so far even as they keep pushing for new solutions.

There are, no doubt, those incurable optimists out there, who might dismiss the present economic convulsion as one of the usual ill winds that periodically assail the capitalist system that will soon go away. And they have every reason and incentive to think that way because it is the only game in town in which they are heavily invested. I once belonged to that group and even went about pontificating to those who cared to listen to me that the US economy under Barack Obama and, indeed any other president, for that matter, had nowhere else to go but up as previous historical experiences with severe economic downturns had instructed me. But we are now moving, or rather limping into the fourth year of the recession/depression--the longest running in history, yet the economic storm has shown no signs of abating. Rather it has gained new strenghts in Europe, threatening to tear asunder the carefully crafted 27-member European Union superstate.

Added to that reality is the creeping recognition that the crisis is much far deeper than previously imagined. Therefore, the response mechanism hurriedly put together in the wake of the crisis by panicky politicians to address it has proven to be woefully inadequate if not wholly inappropriate, necessitating a completely fresh approach. Like a doomed patient the global economy has stopped responding to treatment and even the sizzling Chinese economy, which is the envy of the west has shown signs of slowing down--no thanks to the Eurozone economic troubles. There is, therefore, little cause for optimism in the face of these realities on the ground however optimistic we might want to be.

As I write this piece Europe is battling to come up with a new kind of union that will prohibit deficit budgetting by member states with appropriate enforcement mechanism. In practical terms that means the member states will have to give up a chunk of their sovereignty, an idea that does not appear to go down well with British Prime Minister, David Cameron. And although the rest 26 members voted for a new union, pulling such resolution through their national parliaments or referenda is a different animal altogether and may well drive the union into new political turmoil in addition to the economic crisis.

The atmosphere is so poisoned right now that it will be a miracle for countries like Greece to pull such a resolution through their parliaments. And that is because nationalism is not dead with the union and can be counted to rear its ugly head as the British have done. Agreeing to new form of union in Brussels by EU leaders that cedes sovereignty to Brussels is the easy part. Having the peoples' endorsements in their respective countries is practically next to impossible in the current atmosphere. It wasn't easy the last time at the best of times when there was no economic turmoil in Europe and everybody was happy. Many countries stalled in the referenda. Now, it is a different climate altogether that is decidedly anti-government as we have seen in Greece and Italy, for example.

All of this goes to the question of capitalist system. It is at the root of the crisis. It has to be addressed holistically, not tinkering at the edges. Right now, the capitalist west is in denial that the capitalist system is overdue for a major overhaul. And I am afraid all the measures taken so far are just mere firebrigade measures designed to put out the fire rather than addressing the cause of the fire. Yet the fire rages on with little containment if it all.

LET'S face it: Capitalism might be a great system alright, but it is not and has never pretended to be a stable economic system. On the contrary, instability seems to be at its very core, dogging its path every step of the way. The more we drill down into its core the more chaotic and unstable it becomes. In competition with communism, however, this congenital defect paled into insignificance and was largely overlooked by many given the well documented horrors of communism itself. Like an eccentric old man, however, capitalism has acquired the notoriety of blowing hot and cold with bouts of booms and busts much like an epileptic patient, and this should be of great concern to the world at large that has pinned its hopes and aspirations on it. And this calls to mind the Great Depression of the last century that hit the world in 1929, and subsequent capitalist convulsions that continue to dog the path of global economic growth and development. Booms and busts have become the lot of the capitalist system. Between the Great Depression and and now there have been countless harvests of shortlived booms and busts and a rash of recessions, depressions, and rather violent capitalist gyrations that have become somewhat of bi-annual rituals in almost all major economies across continents.

At this point the reader might ask, why is capitalism so prone to crisis? The simple answer is, greed. The capitalist beast is fed by human greed and it rewards the greediest of the greedy, and bountifully, too. But don't forget that greed is a vice, not virtue. Therefore, a beast that is fed by a vice rather than a virtue can only produce a bigger and more sinister beast for which we have all been witnesses. It is this greed that Americans are protesting in the streets across the cities by way of the Occupy Wall Street (OWS) movement that has lit up major US cities, spontaneously. Yet the bitter truth is that capitalism cannot survive even for a day without greed. Greed is its lifeblood.

The OWS puts it better when it states that:

"WE THE PEOPLE of the global Occupy movement emboy and enact a deep democratic awakening with genuine joy and fierce determination. Our movement---fearless and leaderless--is a soulful expression of a moral outrage at the ugly corporate greed that pushes our society and world to the brink of catastrophe..."

Pluck greed from the heart of capitalism and it will be ready for the undertakers, destined for the morgue, and thereafter to the cementary for its final resting place. It is this greed that has inflicted great harm on the fortunes of ordinary hardworking citizens caught in between its ferocious jaws. In one fell swoop millions in the United States and elswhere lost their homes, investments, pensions, and retirement benefits to the banking collapse caused by greedy mortgage bankers while they walked away with billions of dollars in their pockets unscathed--not even a mere official reprimand by the authorities in the US. In case after case, country after country, massive corruption, fraudulent expropriation of the poor, hardworking masses, and official complicity trail the path of capitalism. The millions of Americans whose retirment benefits have been wipped off the huge casino that is Wall Street and the home owners that have been rendered homeless literarily overnight know firsthand the horrors of capitalism and government's utter incapacity to effectively regulate it.

It only goes to show that capitalism is essentially a rudderless ship with no one really in charge of piloting it. After all, isn't that supposed to be the meaning of "free market" where the players do whatever they like to maximize profits at the expense of all with no headmaster in charge of reining in the unruly kids? Politicians are beholden to them. They grovel before them during and after elections. In the United States, for instance, the entire legislative process has virtually been hijacked by corporate America, which dictates which legislative proposals should pass and which should go out the window. With their deep pockets and hordes of institutional lobbyists at their service, the ordinary citizen no longer has a say in how he is to be governed.

And to make matters worse the US Supreme Court has just recently in a landmark decision vested the right to freedom of speech on US corporations just like US citizens, meaning in practical terms, awarding them the power to campaign for particular parties or political candidates thereby giving corporations the enormous power to hijack the issues and dominate the political field and effectively shut out the voices of the ordinary citizens. How ordinary citizens could compete for political choices with huge corporations dominating the airwaves beats me hollow. The scales are weighted in favor of big business. A situation where CEOs of corporate America are awarding themselves huge bonuses running into hundreds of millions of dollars and flying around in corporate jets on vacations to exotic lands sometimes with government bailout funds at tax payers' expense in the face of mass poverty, is fundamentally unsustainable. And it does not take a genius to figure out that the masses will revolt at one time or another when push comes to shove. Nations are born, owned, and defended by their citizens, not corporations. I don't know of any US corporation that has laid down its life to defend America. It's its citizens that put their lives and limbs on the line to defend the nation and they deserve better than being handed the short end of the stick. It is, therefore, unconsionable and morally reprehensible to contine business as usual.

What are we talking about here in real terms? Let's put some numbers to it. Check this out: US corporations are not even paying their fair share of taxes. Quoting "Citizens for Tax Justice," the Occupied Wall Street Journal reports that "While most Americans reliquish 40 percent of their income to taxes, the most powerful corporations in the world pay next to nothing once credits and deductions are factored in".

It and further reports that "twelve of the Fortune 500 companies--including Wells Fargo, Exxon Mobil, General Electric and Verizon---paid an effective tax rate of negative 1.4 percent on $175 billion in profits during the years 200-2010."

From all indications President Obama just like his predecessors is in bed with Wall street in spite of his public rhetoric. There has been nothing radical in his appointments to economic positions. The same old guards are in charge of his economic policies including Jon Corzine who ran Goldman Sachs and Global Financial into the ditch and escaped with bankrutcy filing. The "change" president has changed nothing. While raving against corporate greed as the cause of the nation's economic woes the Obama administration has not lifted a finger against those reponsible for the mortgage crisis and therefore the global recession. Not a single individual has been prosecuted under his watch. On the contrary, he not only bailed them out Obama has been raising campaign funds from the same Wallstreet denizens in private while he rails against them in public. The hypocrisy is indeed mindboggling. If this could happen under a Democratic government just imagine what it would be under the Republicans that have made the protection of the rich their number one goal and first order of business in government. It is clear, therefore, that politicians and the government itself are locked in symbiotic relationship with the corporate America, rubbing each other's back behind the backs of the general citiznry groaning under the suffocating weight of economic doldrums.

In fact, the the entire governmental apparatus is now serviceable to capitalism, making complete nonsense of the very notion of democracy. Just think about the unwieldy numbers of regulatory agencies that supposedly police the system oftentimes caught in bed with the high priests of the capitalist system. These so-called regulatory agencies that gulp billions of dollars in tax payers monies can hardly lift a finger against sundry malfeasances perpetrated by capitalists. Take, for instance, the FDA, which has consistently and severally been accused of maintaining cozy relationships with the very pharmaceutical companies it is supposed to police with some of them allegedly funding its oversight actitivies. The same is equally true of the Environmental Protection Agency (EPA) and so also is the Federal Trade Commission (FTC) and many others that turn a blind eye on flagrant abuses leading to, at best, anemic regulatory oversight.

There is no greater testimonial to this than the near collapse of the US financial system which is directly attributable to un-policed and un-regulated capitalist exccesses. The FTC conveniently looked the other way when mortgage bankers and financial gamblers were causing havoc in US mortgage market under clever but dubious and fraudulent financial engineering schemes. We witnessed that also in the spectacular failure of the regulatory agencies in the Bernie Maddoff's $10bn rip-off of hard working Americans that was perpetrated under the very nose of US regulatory agencies. That is not to say, however, that these agencies are sleeping all of the time. Surely, every now and then they make a show of enforcements. But these are no more than token gestures to keep them relevant in the eyes of the unsuspecting publics and buy them some public goodwill. After all, they need public goodwill to stay in business with tax payers money with one leg over here with the people and the other over there with the capitalists, living double lives.

Basically therefore, capitalism has been allowed to regulate itself with industry groups making rules for themselves or otherwise heavily lobbying lawmakers to bend the rules their way with lots of loopholes to exploit. Thus a law supposed enacted to keep greedy capitalists in check is purposely ridden with loopholes. In point of fact, Republicans in the US would rather the government shoved aside and out of the way of capitalism any form of regulations in the name of free market even getting away with murder, literarily. More than anything else, it is this regulatory laxity that is at the heart of capitalist woes. While over regulation might be detrimental to innovation and competition, under-regulation could be catastrophic.

And so hardly a decade passes without the capitalist system undergoing series of economic convulsions taking place in some parts of the globe that would soon spread to other regions under its sway like a contagion. Japan, hitherto the world's second largest economy until recently dethroned by China, has been in recession or depression, if you like, for three solid decades with no end in sight. And since 2008 when the capitalist system went into one of its episodic epileptic seizures it has precipitated a massive global economic convulsion and it is now on the verge of taking down the entire continent of Europe, indeed the entire global economy with it. No thanks to globalization. Globalization has shrunken the capitalist empire to the extent that if a capitalist nation catches an ordinary cold in one part of the world it would sooner create a contagion of global proportions to bring down the global economy.

AND this brings us to the topic of this essay: Is capitalism falling apart and drawing its last breaths or simply moving from the west that had been its old, medieval home to the east, its glittering 21st century new home? And if so, can the world continue to put its hope on the capitalist system? What are the auguries? Can the broken capitalist system be fixed or has it broken down irretrievably? What happens to its old home in the west? How is the west reacting to this emerging scenario and what hope for developing nations at the fringes of capitalist system? These are the main issues that I will be addressing in this essay.

It is somewhat of an understatement to say that the world is presently at ideological crossroads barely 20 years after the collapse of communism in the former Soviet block. And there is a real danger that the system itself might unravel particularly in the West which happens to be its first home from where it has spread to the rest of the world. The United Nations Conference on Trade and Development (UNCTAD) puts it better in its report titled: Trade and Development Report, 2011.

Below is a summary of the report particularly as it relates to the developed countries:

"The pace of global recovery has been slowing down in 2011. Global GDP is expected to grow by 3.1 per cent, following an increase of 3.9 per cent in 2010. In many developed countries, the slowdown may even be accentuated in the course of the year as a result of government policies aimed at reducing public budget deficits or current-account deficits."

For the United States and Japan the reports states:

"In the United States, recovery has been stalling, with the pace of growth well below what is needed to make a significant dent in unemployment. Even the second round of quantitative easing has failed to translate into increased credit for domestic economic activities, as domestic demand has remained subdued due to stagnating wages and employment. With little scope to lower interest rates further –as they are already at historically low levels – and fiscal stimulus waning, a quick return to a satisfactory growth trajectory is highly unlikely. In Japan, recovery has been delayed by the impact of unprecedented supply-chain and energy disruptions due to the massive earthquake and tsunami in March.

And for Europe here is the ultimate damper:

"In the European Union, growth is set to remain below 2 per cent in 2011, although with significant variations among member countries. In Germany a revival of exports (particularly to Asia) and investment, together with rising public expenditures, resulted in a strong increase in economic activity in 2010 and early 2011, but, as in other developed economies, mass income remains very weak, as does domestic demand.

"With the unresolved euro crisis, the reappearance of severe debt market stress in the second quarter of 2011 and the prospect of austerity measures spreading across Europe, there is a high risk that the eurozone will continue to act as a significant drag on global recovery. Austerity measures, as the main means of tackling the euro crisis without regard for regional domestic demand growth, may backfire badly. Crisis hit countries in the euro area are labouring under extremely adverse conditions."

Bleak as this above report might be it has been overtaken by even worse case scenarios hinted in the report. Presently there is virtually no economic growth in the 27-nation Euro-zone and none is foreseeable in the immediate future given present dire conditions. And don't take my words for it. Quoting the London based economic research firm, "Capital Economics" market analyst Anthony Mirhaydari stated in his recent article that "the eurozone economy is on track to contract by 1% next year and by 2.5% in 2013, with risks to the downside for both forecasts." As indicated above that forecast is coming from the research firm, Capital Economics based on present realities.

Though still paltry, US 2.1% GDP growth rate as of October 2011 would appear robust compared to that of the Euro-zone which is trending in negative territory. And that was enough to embolden US president Barrack Obama to go to France for the G8 meeting to lecture Europe about putting its financial house in order as if the US financial house itself is out of the woods under his watch. The reason Obama was lecturing Europeans while still entangled in Washington DC with Republican diehards is because he was looking for some headwind out of Europe to help the US economic recovery efforts and therefore his re-election bid. Even so, all eyes are on the Euro-zone at the moment and for good reasons, too. Greece, Italy, Spain, Portugal, and Ireland are sinking under the enormous weight of their national debts that are well above their respective GDPs, which they cannot repay to European banks even with the 50% debts write offs--the so-called "haircuts" negotiated by Brussels to save their necks from the hammer that cuts off a whopping 100bn Euros from its debts to bond-holders, in the case of Greece.

To put some figures on the face of the debts, presently Italy gross debt is 1.9 trillion Euros, which is 120% of its GDP. In other words, the Italian debts are 20% more than the entire Italian economy in value, and it is said to be the biggest bond issuer in Europe with its debts about six times that of Greece though a much larger economy and nation, too, relatively speaking, than Greece. Italy is practically living on borrowing. On the other hand, Greece’s public debts currently stand at 354bn Euros at the end of 2011 according to Eurostats and projected to reach 371.9 euros in 2012. On May 2, 2010, the eurozone countries and the IMF combined to extend 110bn Euros (150bn dollars) bail out to Greece, and has since been living off that money which is now running out. If anything, it is only a down payment.

The European Central Bank is not in any position to bail them out partly because it’s not sufficiently capitalized itself to come to their rescue in addition to objections from the big powers. But wait! The recent report points to European nations talking about giving the IMF $200bn to help bail out the bankrupt european nations. On the face of it, that would seem to be a way out because major European banks that have been exposed to these huge but failing sovereign debts are on the verge of collapse just like US erstwhile banking giants, AIG and Leyman Brothers. As a matter of fact one US investment firm MF Global headed by former New Jersey governor and former head of failed Goldman Sachs, John Corzine has already gone under and has filed for bankruptcy due to its huge exposure to Europe’s sovereign debts. The firm is already under investigation by US authorities for alleged disappearance of investor funds under its watch.

As if ordinary US investors have not had enough Corzine's IMF Global could not account for $1.2bn allegedly missing from its records. And the former CEO testified in Congress that he has no idea where the money has gone. This is how pathetic capitalism has become. To add to the woes of the Eurozone, Standards and Poor's has threatened to downgrade the credit ratings of eurozone nations as it infact did to the US sometime in August.

Only recapitalization would save European banks from going under like those in the US in the wake of the mortgage crisis of 2008. EU has in fact directed the banks to recapitalize. It echoes what former Nigerian Central Bank Governor, Professor Charles Solubo did well before the financial crisis hit in 2008 to help shore up Nigerian banks. That proactive but ignorantly criticized policy must be credited for Nigeria’s ability to weather the storm otherwise she would be singing the blues by now in the place of the modest annual GDP growth rate being recorded. It cannot be gainsaid that the collapse of a nation’s banking system is the end of the road, literarily. It is noteworthy that Solubo’s successor has ramped up that policy and taken it to a whole new level though initially criticized due to its mishandling and lingering doubts about his real intentions. US had followed suit by bailing out failing banks that were exposed to subprime mortgage crisis. But Europe didn’t do that at the beginning and even mocking US for adopting the "Solubo Solution" which has been credited for preventing the US banking industry from total collapse even if there are still lingering problems of anemic GDP growth, unemployment and debts overhang. Now, however, in the face of its banks exposure to failing sovereign debts by Greece and Italy and the rest of the bunch it is now forced to adopt the Solubo Solution that it had resisted in the past.

Permit me to wax a little rhetorical here: Who says there are no brains in Africa? Who says good ideas cannot come from Africa? Professor Charles Solubo deserves a Nobel Prize in Economics since there is none for Banking and Finance. It is not enough to name him International Banker of the Year. He deserves the Nobel. Period. Were he a European economic professor in position of authority he might have helped Europe stave off the financial disaster that hit it.

Meanwhile as European leaders are running around with fire on their heads, discreet overtures are being made to the People's Republic of China to dip its hands into its enormous reserves to help rescue debt ridden European countries. The enormity of the economic crisis is underscored by the abrupt resignation of both prime ministers in Greece and Italy over the last few weeks to pave way for new governments to administer the bitter economic pills dictated basically by France and Germany. Prime Ministers George Papandreou and Silvio Berlusconi respectively of Greece and Italy have been swept out of power by the economic hurricane that has hit their nations and there are many more shoes to drop— from Spain to Portugal and Ireland, threatening to bring down the whole economic edifice in the Euro-zone with devastating consequences for the global economy.

The resignation of both leaders is only a political move designed to provide the right political environment before the hangman moves in to administer the poisonous and deadly pill on both economies. And that, in practical terms, signals more economic, political, and social turmoil in these nations in the days and months ahead. Make no mistakes about this: The kind of harsh austerity measures being imposed on these European nations have never been popular anywhere and will never be popular in Europe either because they are consistently seen as punishment for the poor masses as they lead to unemployment, wage freezes, benefits reduction or elimination, higher taxes and deep cuts in social services that benefit the poor and weak the most, just to mention but a few. Early signs of these protests are already taking place in Europe and they can only get worse not better. Massive protests will rule the streets in the eurozone for as far as the eyes can see. And it has already begun with even more dire political consequences. That much is certain.

The reality is that Europe’s nanny states are on the verge of collapse and those social entitlements are now being compelled to give way in the face of harsh economic realities with grave socio-political consequences ahead all across the Euro-zone. It is serious enough for both German and French leaders to propose an amendment to the EU treaty to punish states that do not follow prudent financial husbandry. That proposition however, is a sure recipe for the disintegration of the eurozone altogether and many are already calling for that. Left to their own devices these beleaguered states could simply have devalued their currencies but they no longer have any national currencies save for Britain. They all have only one currency--the Euro, which cannot be devalued by any one nation. And that's why they are left with little or no options but borrow, and borrow some more until they all drop dead.

Across the Atlantic the US economy, itself, though a shade better than that of the euro-zone at the moment is still largely in the doldrums barely raising its head above the waters even with the medication that it had received. Before the last quarter numbers came out to signal a marginal growth of 2.1% in GDP the fear of another recession in the US economy was thick in the air in spite of everything that had been thrown at it. The US economy is acting like a patient that has failed to recover or slow in recovering from a major accident.

With over 15 trillion dollars in debts, 16 million Americans jobless, amounting to 9% unemployment rate now officially revised downward to 8.6% for the month of November, the unemployment rate has barely budged which some have unofficially put at well above 15% given that those on public assistance and unemployment insurance are not included in the official count, it is clear that the 2008 financial crisis spawned by the subprime mortgage bedlam has taken a life of its own in the US and seems to be intent on running its course like a stubborn flu. It has defied all economic solutions thrown at it by the Obama administration. If throwing money at economic problems could provide the solution the nearly two trillion dollars Obama has thrown at the economic crisis in the US would have made a huge difference. But the reality is it has not.

Now he is looking for yet another half a trillion dollars in his so-called American Job Act (AJA) bill which has been rejected by the Congress. What two trillion dollars could not solve Obama thinks half a trillion dollar would, close to an election year. Everywhere you turn capitalism is on trial. And the Occupy Wall Street movement has helped to bring this to the forefront apart from the economic crisis in Europe. The very foundation of capitalism is quaking. And the political environment is not in a better shape either. The Congressional super-committee charged with the responsibility of coming with deficit reduction proposal for the whole congress has turned out a collosal failure throwing its hands up in the air. And even if it had succeeded it would only have spelled even harder days ahead for Americans as its failure. But its failure to reach a decision will trigger automatic deep budget cuts for government agencies across the board including the Department of Defense and venerable Medicare and Social Security programs.

And even as the Obama administration's Labor Department announced, advisedly with restrained glee the creation of 120,000 net jobs and a drop in unemployment rate to 8.6% for the month of November, that is just a drop in the ocean of unemployment. Besides, the unemployment rate was arrived at by effectively discounting some 315, 000 unemployed Americans who have given up and stopped looking for jobs out of sheer frustration. Among Obama's own African American communities official unemployment rate is 16% almost double the national average. So while the trajectory of economic indicators in the US are pointed upward and headed north rather than south for now, it is fair to say that the US economy is still a long, long way from getting out of the woods. The job report is due to new store hires in the traditional shopping season majority of whom will be laid off afterward. Therefore the November job report is not a reliable indicator of the health of the US economy at this very moment in time until the shopping season is over.

In fact, by some estimates it will take not less than 3-5 years for the US to get to pre-recession status and that will take no less than 250,000 to 450,000 monthly job creation rate to bring back the 9 million jobs lost during the recession and even as more are being added yearly on the uemployment list as college students graduate. And even as the private sector are adding low paying jobs, 120,000 in the last month which are easily attributable to the shopping season kickstarted by the Thanksgiving as earlier indicated the government itself is still hemorrhaing jobs, 20,000 in November alone. States and municipalities are shedding rather than growing jobs. Perhaps no government agency presents this gloomy scenario better than the US Postal Services (USPS) that is planning to shed some 120,000 jobs, close down several retail outlets, and reduce daily mail delivery schedules to save costs.

Now all of this is happening in only in the Northern Hemisphere while the orient seems to be in a different planet altogether. Apart from Japan whose economy has been depressed as indicated earlier virtually all Asian countries are doing well amid the global economic turmoil. Indeed the word "global" is inappropriate in this context because it is actually a regional or hemispheric economic turmoil. Each time you buy any electronic gadget whether it be a television set, computer, smart phone, tablet, you name it and turn it over and check out the country of manufacture, you bet in 8 out of 10 cases it will be China and the rest 2 cases might just be Taiwan, Singapore, or Malaysia. Yes there is Aple, HP, Dell, RIM, which makes Blackberry products and the rest of bunch based in the US and Canada, but all they do now is design products which are actually manufactured in China, Taiwan, or Singapore and then shipped back to the US and Canada as the case may be as Chinese imports. Nothing is being made in the United States anymore. Not a pin! And you, the reader can verify that right now as you read this piece. Yes, Steve Jobs could design an IPAD but it would not be manufactured in the US but in China. Amazon could design Kindle Fire but it would not be manufactured in the US but in China. The same is true of Dell, HP, IBM, RIM and the rest of them.

US stores are bristling with Chinese imports and electronic gadgets. And this is a fact that US politicians are daily bemoaning in previous and this election cycles, including President Obama who is now describing US companies as being "lazy" and "soft" in the global economic competition. For the most part the American economy has been reduced to a "service economy" engaged in financial services and the likes rather than a producer economy. Asia, particularly Japan, China, Taiwan and India are now the word's workshop relegating the US and Eurozone to the background particularly in consumer goods. Sadly enough there are no Made-in-America goods anymore. US department stores are now filled with Made-in-China and Made-in-Taiwan goods. American hitherto bustling factory towns have become veritable ghost cities inhabited by rodents and have deservedly earned the tag "rust belt". Detroit, for example, once the global epicenter of automobile production has been reduced to a ghost town with hundreds of thousands fleeing to other cities and states. According to the US News and World Report the city has lost 25% of it population according to the last census figures amounting to some 237,000 overall.

The relocation of US manfucturing companies such as Maytag for example, that went to Mexico, for example and hundreds that have moved their operational headquarters abroad can only mean effective tranfer of wealth, technical knowhow and manufucturing power abroad. China, India, Taiwan and South Korea have been major beneficiaries. For example, according to the Labor department of the 120,000 net jobs created in November, over 50,000 came from low-wage store hirings to help sell cheap Chinese and Taiwanese goods, especially electronics to Americans looking for bargain deals. 22,000 jobs came from leisure and hospitality sector and only 5,000 jobs came from manufacturing. Now, 5,000 manufacturing jobs for an economy the size of United States' is nothing short of industrial recession in the US, which is in fact the case as indicated above. And it underlines the deep hole the US economy has fallen into. Conversely, the creation of 50,000 low-wage sales job is symptomatic of a largely service economy powered by consumerism as apposed to manfucturing of real consumer goods.

But here is the real tragedy: As Americans invade Walmart and the huge shopping malls this shopping season clutching the latest electronic gadgets from China, South Korea, and Taiwan, to mention but a few, bought with welfare handouts by their government borrowed from the China, it is clear that the United States has been sucked into the Asian economic loop from which it is difficult to break out. This theme has animated the campaign of at least one Republican presidential aspirant, Mitt Romney, who is railing against China. But is it the fault of the Chinese that America is no longer producing goods for its local consumers but must rely on huge Chinese imports like a third word nation? Or is it the fault of the Chinese that the US outsourced its manufacturing to developing countries at the expense of its economy and its own workers? Hardly so. With due respect to Romney, his anger is misdirected.

It remains to be seen how the US and indeed Europe will dig itself out. Americans are running out of hope. For the first time I am seeing the usually upbeat Americans expressing a sense of hopelessness. Their trust in the ability of their government to do something has fast receded promising a real bloodbath in the next election where they will take their frustrations on their leaders just as they did in the last midterm elections. Spirited attempts by the Obama adminstration to steer the US economy in the direction of renewable energy in the forms of solar and wind energy has backfired with the still smoldering Solyndra loan scandal under probe by the US Congress.

This bears some elaboration by those who have not heard of it. In a move that underlines government's ineptitude and cluelessness in business undertakings the Obama administration rushed out $530m loan to a solar panel manfucturing start up going by the name Solyndra to compete with the Chinese. And no sooner the company got the loan than it went belly up and promptly filed for bankruptcy and laid off its 1,100 workers because it couldn't compete with the Chinese. And the Obama administration's due diligence was at best, suspect. In fact, it was pointedly accused of crony capitalism since one of Solydra's directors was alleged to be one of Obama's campaign contributors. Let's not rush to conclusions here but if we put two and two together it has the odor of official corruption. That is how Washington works anyway, and President Obama's administration is certainly no exception. And with that American tax payers' money went down the toilet.

This is the direct opposite of what is happening in Asia where most of the global economic expansion is taking place compared with the recessionary Europe and North America. The ground has shifted under the feet of capitalist west, hastened, no doubt, by globalization, greed and corruption. And that precisely is why the recession is not going away because all US jobs have been outsourced abroad to Asian countries and they are not coming back anytime soon. That's what is meant when some analysts talk about structural changes in the US economy. And poisoned political atmosphere in Washington is helping to drive the final nail in the coffin of capitalism. As in Europe if capitalism is denied political crutch to stand a free fall is inevitable and this being mirrored by the wild gyrations in the financial markets on daily basis.

President Obama has been drumming it into the ears of his fellow Americans that the jobs the US has lost to foreign competitors in the old economy are not coming back in the new economy. And that the US should regain its competitive advantage through investment in the new economy signposted by information technologies and renewable energy sources but no one is listening to him. People want jobs not the promise of new economy. And what is more, the failure of the Solyndra start up has undermined his gospel in that direction. No doubt Obama is utterly frustrated and he shows it at each and every turn. Nothing seems to be working amidst Washington's political gridlock, not even economic catastrophe could move the political needle in Washington even as Europe is in turmoil. Which provokes the question: What is going on in the west? Why are all these happening at the same time? It seems there are certain hidden forces propelling the west into economic irrelevance. Yes, the capitalist train is headed east. No doubt about it.

Franklin Otorofani is an attorney and political analyst


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