Spengler explains why America with all its problems is still a safe haven for the world's capital. He blames it on hockey moms.
Why do Asian investors depend on American capital markets? Given the near breakdown of key sectors of the American market, one might expect Asians to bring their money home. Quite the opposite has happened: Asian currencies have fallen sharply against the American dollar.Spengler says Asian markets can't absorb Asian savings. Which is rather odd. Given the low state of economic development and high returns on capital it would seem Asia would be an ideal place for Asian money. Yet it is not.
What does America have that Asia doesn't have? The answer is, Sarah Palin - not Sarah Palin the vice presidential candidate, but Sarah Palin the "hockey mom" turned small-town mayor and reforming Alaska governor. All the PhDs and MBAs in the world can't make a capital market work, but ordinary people like Sarah Palin can. Laws depend on the will of the people to enforce them. It is the initiative of ordinary people that makes America's political system the world's most reliable.It is the basic honesty of ordinary people that make America work. When dishonesty rears its ugly head ordinary people go to work to clean out the pigsty. They wipe the lipstick off the pig and take it to the abattoir to eliminate the problem.
America is the heir to a long tradition of Anglo-Saxon law that began with jury trial and the Magna Carta and continued through the English Revolution of the 17th century and the American Revolution of the 18th. Ordinary people like Palin are the bearers of this tradition.
The fact that ordinary people safeguard their rights and have the means to challenge established interests does not exclude the possibility of fraud on a grand scale.Rights. That is the key. In most of the world the people are servants of the government. In America they have this peculiar notion that government is the servant of the people. And where did that peculiar idea originate? In Anglo Saxon Culture. From the Magna Carta to the Constitution of the US of A. In Anglo Saxon Culture there is not just a belief in honest government but also a demand for it.
Asian investors were cheated by a conspiracy of the financial industry and the ratings agencies, which sold them ostensibly low-risk securities that turned out to be toxic. The just-approved US$700 billion support package for American banks sets America back to a regime of oligarchy, according to New York Times columnist David Brooks. Despite this fraud and its attendant humiliation, and despite the deterioration of governance in American markets, Asian investors are putting more rather than less money into America, judging from the decline of Asian currencies against the dollar in the course of the crisis.
One doesn't see demonstrations by wronged peasants in the small towns of America. There never were peasants - American farmers always were entrepreneurs - and the locals avenge injury by taking over their local governments, which have sufficient authority to make a difference. At the capillary level, school boards, the Parent Teachers' Association, self-administered religious organizations and volunteer organizations incubate a political class entirely different from anything to be found in Asia. There are tens of thousands of Sarah Palins lurking in the minor leagues of American politics, and they are the guarantors of market probity.
It is true that Asian economies depend on American consumers and an American recession is bad for Asian currencies. But why don't Asians consume what they produce at home? The trouble is that rich Asians don't lend to poor Asians in their own countries. Capital markets don't work in the developing world because it is too easy to steal money. Subprime mortgages in the US have suffered from poor documentation. What kind of documentation does one encounter in countries where everyone from the clerk at the records office to the secretary who hands you a form requires a small bribe? America is litigious to a fault, but its courts are fair and hard to corrupt.You know maybe that old f**ker Mao was on to something when he said political power comes from the barrel of a gun. His problem was that he did not trust his own people with guns or political power. Uprisings of the people against their presumed masters can be so inconvenient. And that in a nutshell is the weakness of the rest of the world and the strength of America. Americans are jealous of their rights and will defend them with the barrels of their guns if push comes to shove.
Asians are reluctant to lend money to each other under the circumstances; they would rather lend money in places where a hockey mom can get involved in local politics and, on encountering graft and corruption, run a successful campaign to turn the scoundrels out. You do not need PhDs and MBAs for that. You need ordinary people who care sufficiently about the places in which they live to take control of their own towns and states when required. And, yes, it doesn't hurt if they own guns. Popular gun ownership places a limit on the abuse of state power.
The Battle of Athens, Tennessee should be a lesson to all American politicians. Let us hope the politicians learn their lesson before they wind up on the wrong side of the guns.
Cross Posted at Classical Values