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Doom and Gloom Sells   (December 22, 2005)


Those of you still wondering why the Kroika Cookie and Biscuit Company (KCBC) has chosen to sponsor this modest blog, here's the reason: doom and gloom sells.

Even occasional readers of this site know that the global economic future is one shrouded in the deepest doom and gloom, for the current era of "prosperity" (as headlines cheerfully chirped today, "U.S. economy expands at best rate in two years--4.1%") is entirely bogus, depending as it does on three unsustainable, increasingly wobbly legs: unprecendented U.S. consumer borrowing and spending, and unprecedented buying of U.S. dollar-based debt by foreign central banks and other institutions. This foreign buying spree has effectively propped up the dollar and flooded the world with cheap liquidity (otherwise known as cheap-to-borrow money). The graph shows how rising spending is not coming from wages anymore--it's coming from borrowing.

Being majority-owned by the People's Liberation Army, KCBC would not be sorry to see the U.S. economy go into a tailspin, as that would leave a happy vaccuum which China could then gracefully fill as the globe's next superpower. Alas, the PLA might have missed the linkage between the U.S. and Chinese economies, to wit, China is dependent on the U.S. consumer to buy about a third of their entire export output. So when the U.S. finally falls off the debt-deficit-overload cliff, the ropes firmly attached to the Chinese, Japanese and European economies ensure they will join the U.S. in the agonizing landing on the perilous rocks below.

The PLA might also want to have a look at this article from a recent Atlantic Monthly magazine, The World Is Spiky. The charts in the story graphically demonstrate how population, energy use and patents (a rough proxy for innovation) are highly concentrated. While the population spikes in Asia, Europe and the coasts of the U.S. are to be expected, the PLA might want to look closely at the spikes in patents, which are concentrated in Tokyo, Seoul, and in the U.S. and Europe. Economic superpower status, it seems, is not just a function of population and physical size, but of innovation, which is a trickier thing to nurture and sustain than either production or consumption. (see Can you create creativity? in "Ideas" section of the sidebar on the left).

For more Doom and Gloom, check the many topics listed under "Financial Meltdown Watch" in the sidebar.

As for innovation, I must say that Kroika is leading the way in cookie technologies. Did you notice the light crusting of crunchy sugar topping on the Kroika cookie displayed here? It collects just along the edges and against the embossed lettering. Yum! That requires a special high-tech technique which is winding its way through the patent application process, first in The Netherlands (thank you, Royal Dutch Comestibles Trading Company--Go Dutch!) and the E.U., and then in the U.S. That explains the barbed wire surrounding the Kroika factory and research labs, and the secretiveness of Kroika operations around the world. But you, lucky reader, have a window into this heavily guarded inner sanctum--yes, this very blog.


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copyright © 2005 Charles Hugh Smith. All rights reserved in all media.

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