Its trade surplus continues to deteriorate, while its foreign military spending adds to the overall balance-of-payments deficit. This means that the United States is pumping more and more dollars into the rest of the world without any means of repaying them – or any intention to do so. That is why foreign countries are beginning to treat these dollars as “hot potatoes,” trying to get rid of them as fast as they can.

But how can they all do this? China is using its new dollar inflows to try and buy up foreign raw materials assets, land and other assets needed for its long-term growth. And some Middle Eastern countries are buying long-term supply agreements for food and raw materials produced abroad. But fewer countries are eager to accept these dollars. And the U.S. Government is blocking foreign investment in the most desirable and remunerative domestic U.S. sectors as its politicians become more nationalistic. This threatens to limit foreign investment in the United States to the junk-mortgage market, to real estate that is falling in price, and loans to bail out U.S. banks and financial institutions as they fight off insolvency and their stock-market prices plunge...

This means that Middle Eastern oil exporters – and indeed, European industrial exporters – are in effect giving their oil and other products away to U.S. consumers in exchange for paper IOUs that are in danger of becoming unspendable and hence worthless. [More] . . read more

Almost everyone in the country is now buying and selling in foreign currency, rendering the Zimbabwe dollar almost worthless on the domestic market.

Even bank queues that characterized the daily lives of people last year are disappearing, as more people turn to using either the South African rand or U.S. dollars.

The MDC MP for Mbare Piniel Denga told us villagers in Murehwa were selling maize cobs, tomatoes and their livestock in U.S. dollars. The MP was in the area on Sunday were he bought a small dish of five mangoes for US$1. He said three tomatoes cost US$1, and five fresh maize cobs also cost US$1.

'During the festive season I was in Chivhu where people were buying beer and other drinks in foreign currency. I must admit that the use of our local currency is fast dwindling and you hardly see anyone using it anymore. For instance if you use a kombi from Glen View to the city it now costs US$1 as well, so everything has been dollarised,' Denga said.

The Mbare legislator said Zimbabweans had been forced to abandon the local currency for the simple reason that the maximum money you are allowed to withdraw can only buy one small onion.

'Go to any bank now and you hardly see anyone inside. You see few people here and there but otherwise the days of the Zimbabwe dollar are nearing their end. This is not a secret, even the government knows that people have empowered themselves and abandoned their useless dollar. We are headed for interesting times,' the MP quipped.

It costs US$20,000 to buy a foreign currency licence, which legally allows businesses to trade in forex. But with the virtually total collapse of the economy most small business can barely generate enough income to pay their staff at the end of each month. The Reserve Bank's policies, courtesy of Gideon Gono, have created a nightmare for most of these small companies and for the majority of the population who have little access to forex.

With everything now being imported companies have to pay for their inputs in forex, but if they can't afford a forex licence they legally can't sell in foreign currency. So Gono's forex police do the rounds of the shops, impounding 'illegal' foreign currency from these shops. In other words state sponsored theft.

The dollarisation has extended to school tuition with private schools setting fees in US dollars, putting education out of reach of most.

Chisipite High School in Harare is charging US$1,200 per term, and was asking pupils to bring fuel coupons worth US$300 with them on their first day of the term as a deposit.

Roxer Academy primary in Harare is charging US$800 a term, while in Bulawayo the Masiyephambili Primary School is requiring a fee of US$650.

This almost guarantees that when schools open next week they will be virtually empty. Families will be unable to send their kids to school and teachers will have no money for transport. . . read more

There are other factors affecting the price of oil. The prospect of an Israeli/U.S. attack on Iran has increased current demand in order to build stocks against disruption. No one knows the consequence of such an ill-conceived act of aggression, and the uncertainty pushes up the price of oil as the entire Middle East could be engulfed in conflagration...

The crisis that looms for the U.S. is the loss of world currency role. Once the dollar loses that role, the U.S. government will not be able to finance its operations by borrowing abroad, and foreigners will cease to finance the massive U.S. trade deficit. This crisis will eliminate the U.S. as a world power. [More]

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. . . read more

We are experiencing the devastating consequences of a chain of major economic policy errors, which, to use a current cliché, created the perfect storm. These government blunders temporarily paralyzed the global credit system and are now sending the U.S. and Europe into recession, while sharply cutting back Asia's growth rates.

Left to its own devices, the credit crisis, which began in August 2007, would have crushed economies as severely as did the Great Depression.

Belatedly, but thankfully, governments recognized that the only way to get credit flowing again was for them to make quick and direct massive infusions of new equity into beleaguered banks, as well as commit to other emergency measures hitherto unimaginable.

If sensible rescue efforts continue--and they will--the immediate crisis will quickly pass. Shell-shocked businesses and consumers won't recover rapidly from the trauma of recent months, especially as we now cope with recession. But the downturn shouldn't be prolonged: The economy here and those overseas should start to pick up no later than next spring.

That soon? Despite the crisis, the global economy still retains enormous strengths. Between the early 1980s and 2007 we lived in an economic Golden Age. Never before have so many people advanced so far economically in so short a period of time as they have during the last 25 years. Until the credit crisis, 70 million people a year were joining the middle class. The U.S. kicked off this long boom with the economic reforms of Ronald Reagan, particularly his enormous income tax cuts. We burst from the economic stagnation of the 1970s into a dynamic, innovative, high-tech-oriented economy. Even in recent years the much-maligned U.S. did well. Between year-end 2002 and year-end 2007 U.S. growth exceeded the entire size of China's economy. Obviously China's growth rates were higher, but China was coming off a much smaller base.

The world is flush with cash. It's frozen because of fear, but the cash is there. Productivity gains are burgeoning.

So, will this global boom resume next year, slowly at first and then with increasing momentum? It should. Whether that happens, however, depends on the next, highly dangerous phase: the political aftermath.

Will we and other countries pursue policies that hinder growth and retard or abort a full-blown recovery, e.g., regulations that stifle innovation and taxes that harm the creation and deployment of capital? Washington politicians are asking: If the federal government can bail out banks, why not other battered businesses? Congress recently voted for $25 billion in loan guarantees aimed at helping Detroit automakers. (This money is to be used not only to aid Detroit but also to prevent another flare-up of the credit crisis. If the Big Three defaulted on their debts, holders of credit default swaps--which in recent years have grown like toxic weeds--would demand payment from those who wrote the insurance on the automakers' bonds. This would create another wave of losses for financial institutions.)

Some liberal political activists are advocating using Washington's new powers to pursue other agendas, such as forcing tighter emissions curbs or mandating costly health insurance coverage. New attempts to restrict corporate pay, at least in some sectors, is a given--overlooking the unintended side effects of Bill Clinton's attempt to limit CEO pay packages back in 1993. (The deductibility of CEOs' salaries was capped, which led companies to use stock options as never before.) Protectionists are renewing calls for trade restrictions in the name of consumer safety and promoting "better" labor and environmental standards. Politically resurgent labor unions and other activists will push for rules on who sits on corporate boards to "better represent consumers and investors." They want an implicit veto power over the policies of publicly held companies. They're also ready to remove barriers, such as the secret ballot, in order to coerce workers into joining unions.

The financial sector will certainly face new rules and regulations. Will these be sensible, such as rationalizing our myriad, overlapping financial regulatory structures and pushing for the creation of exchanges and clearinghouses for exotic instruments, such as credit default swaps, so we have transparency and standardization? Or will they be punitive and costly like the Sarbanes-Oxley Act? Washington's new powers over banks may make our capital markets more hostile to entrepreneurs--savings bonds won't give you high returns, but they will protect you from political fallout. Or, as happened with Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), will they make banks do things for political not economic reasons?

The oil companies' staggering profits are a windfall of the purest sort (Websters' definition: "an unexpected, unearned, or sudden gain or advantage"). This is not a moral judgment about the oil companies, it is just a description of what's happening. A windfall profits tax could generate substantial government revenues. Allocated to investment in renewable energy, it could significantly increase funds directed to renewables, and be a small but important down payment on the massive investment needed in mass transit, energy efficiency and renewable energy...

Re-regulating energy markets, imposing margin requirements and lessening investors' ability to trade with borrowed money, and cracking down on market manipulation will all slow the Wall Street frenzy and limit price spikes. For the long term, however, oil demand will continue to shoot up and supply cannot keep up. Ultimately, new sources of oil may become available, including from deep water sites and tar sands and shale, but these will be more expensive to obtain. The world is likely witnessing a long-term, steady (if bumpy) and permanent rise in oil prices. This price increase will impose major economic hardships, unless there is a massive effort to shift to oil-displacing technologies and renewable energy. [More] . . read more

This is the challenge which we face right now. To see the world around us with new eyes and to create a story which changes the anonymity we are so used to with a new personality, perhaps one that draws on our indigenous history and the diversity of our people. . . read more

The cash being used to generate such profligacy is a function of the long boom which has ramped mergers & acquisitions, and delivers spending money for the art-loving business and professional types who reap excessive bonuses from private equity deals and the like. You can be certain of one thing above all else. The studios of practising artists will not be benefiting from this trade and their inhabitants will continue to be among the poorest groups in our society.

Practising painters, more than any other arts community, need to be encouraged by an expansion of their market opportunities. When will our Government in Australia introduce a resale royalty so that artists and their estates get a percentage when their works sell at auction?  . . read more

First, corporations do not like to fight each other because they may need each other on other matters. Second, they also have exposable skeletons in their own closets. Third, they do not have to initiate a business war of retaliation. Fourth, they do not want to give their traditional labor, environmental and consumer adversaries cause to strengthen their own power by, in effect, siding with these groups’ traditional causes.

If investors had any power over the companies they own — as individuals, or through mutual funds and pension trusts — an inquiring process could open up on this fascinating question. But as Robert Monks, a leading shareholder activist and writer, has said many times, those same CEOs have their own economic interests — think CEO compensation — in keeping investors powerless. [More] . . read more

Unlike Batman’s order-obsessed rigidity, Joker explodes with chaos. He is the perfect Anti-Batman. Where Batman is the pillar of Law and Order, Joker is the arbiter of Anarchy. The key scene (and my personal favorite) which reveals the Joker as the anarchist is when he stands in front of a giant mountain of cash (the combined assets of all the crime leaders which represents the centralized economic power of a corrupt system), and he burns it...

Maybe Nolan is asking us to choose from different sides of nothingness. If so, I know what side I’m choosing. I’ll take the Joker’s anarchistic chaos over Batman’s archaic commitment to corrupt systems of law and order any day. Not only that, Joker’s exploding hospitals and burning towers of cash (executed with economic explosive devices) are infinitely more entertaining than Batman’s Multi-million Dollar Extreme Warfare Batmobile. And speaking of the Joker burning things, when he gave his speech about not needing money and held a match to the giant mountain of cash, I didn’t hesitate for a second. “BURN IT!” I screamed inside my head. And I let out a little gasp of victory when the whole stack of bills burst into flame. But I also know that I was surrounded by people who gasped in horror at the sight of burning money, and those people were, unequivocally, the majority. [More] . . read more

Commercialism is overrunning the Olympics. It is undermining the professed ideals of the Olympic Games, and subverting the Olympics' veneration of sport with omnipresent commercial messaging and branding. The Olympics have auctioned off virtually every aspect of the Games to the highest bidder. In addition to multimillion-dollar sponsorship deals between the International Olympic Committee and international companies, smaller firms are paying for designations from “official home and industrial flooring supplier” to the “frozen dumplings exclusive supplier” of the Beijing 2008 Olympic Games...

To its credit, the Olympics do prohibit advertising in sports stadia or other venues. The Olympics also prohibit advertisements on uniforms (other than uniform maker logos)... Besides celebrating sport, there is an official ideology of the Olympics, called "Olympism." It aims to promote a pure blend of sport, culture and education. Sports, of course, remain at the center of the Olympics, but commercialism has overwhelmed whatever other values the Olympics hope to embody. The overwhelming cultural influence at the Olympics is now commercial culture; and the overwhelming informational message is: buy, buy, buy. [More]  . . read more