Understanding small business economics starts with looking at the big picture.

The New World Economy: Effects On Your Business And What To Expect For The Future

small business economics 2011

It's time to turn around global economy effects and abandon our current system. It is claimed that the Western System cannot exist without debt. I argue the opposite.

“You may be deceived if you trust too much, but you will live in torment if you don't trust enough.” –Frank Crane-

small business economics 2011

Just last Monday the freefall, in which the global markets are in, seemed to have come to a halt following the reports from Germany about the possibility of a controlled liquidation of the Greece economy.

During that day the stock markets recovered somewhat following the news that Italy would probably be saved by China. This news was received very well by traders, because the financial sector is just too accustomed to personal gain.

Who's Your Daddy?

The reality was quite different though. It wasn’t China that offered Italy a helping hand. No, it was just the opposite. It was the Italian government who asked China for help, simply because the Chinese are always prepared to buy pieces of Europe for next to nothing.

small business economics 2011

The fact that China is no sugar daddy with philanthropic tendencies but merely acts out of personal gain, remains largely un-discussed in practice. How can one speak of a united Europe when China is allowed to take big bites out of the European pie?

State of denial

The real question is whether Italy will benefit with a few billion of emergency aid from China? The Americans call it "kicking the can down the road" to indicate that a country can buy itself some time, but ultimately cannot escape the harsh reality of a bankruptcy. That is, if the country has really gone bankrupt and that is the case with Italy. (And Greece and Portugal and Spain and Ireland and…) But how can it be that we witness the actual bankruptcy of a member state, (even the entire continent of Europe) and continue to deny this? As for the Greece economy this is certainly the case. Why can’t the European Union just admit that the case is broken and that it is better to make a fresh re-start? What are we so damn afraid off?

small business economics 2011

What the future may bring

The first reason is also the most important. We have no idea what the future holds . That’s why we grasp so tightly to what we know. (Even if what we grasp onto is broken). Rather than come clean with a European-bankruptcy and start over, we tend cling on to a sick system that clearly belongs to the past. It really seems the economy effects of an old system are crumbling.

small business economics 2011

Optimism as an excuse

The second reason concerns the deep-rooted optimism of politicians and administrators, that eventually all things will be okay if there is sufficient time. At first, according to the politicians Greece was not go bankrupt. Now that is a different matter. Spain and Ireland appear to have found the way to recovery through a combination of political will and extreme budget cuts. But the question remains how "polished" the situation really is. Does Europe keep deceiving itself?

small business economics 2011

Faith or fact?

The third reason has to do with trust. We keep on believing in the Western economic, political and financial system even though we see it crumble under our very eyes. Meanwhile, even mainstream economists don’t know what to say anymore. Also they do not know how to proceed. The system is broken because it is no longer stable, reliable and predictable.

System Failure

There is nearly anyone who isn’t surprised about the current crisis. No plan has worked. No pocket money has alleviated the emergency. No explanation hit a bull’s eye. The many balloons that are blown into the air never got foothold. We seem to be at the end of the road (and our wits). Are we thus at the end of the western trip? Will we experience a system crash?

small business economics 2011

I certainly hope so... Allow me explain. It is clear to me that we cannot keep on doing things how we used to do. We simply cannot continue to patch the hot air balloon on one side and see two new holes appear on the other side.

By the way… what is keeping the balloon up in the first place? Exactly: Hot Air! Since the 1970’s governments are allowed to print money without a counterbalance in gold… That leaves the value of your currency representing just uhmm… Paper.

The only thing that keeps this system up is your trust in the banking system… When looking back just two years or so, do you think the banks are worthy of your trust? Oh, let me remind you in case you said yes, they have been hard selling loans and mortgages to folks who really couldn’t afford this, they knew this but kept on selling faulty financial products anyway in order to meet targets and of course paying big bonuses to managers.

Then, when on the brink of bankruptcy and their evil ways were exposed, got a huge bailout from the government with tax payers’ money and then… Yes, kept on paying out huge bonuses again!

What would a new system look like?

I am just brainstorming here, but how about a currency system built on actual gold or other precious metal? How about forgive all debt to citizens and countries worldwide, and move our global society from debt to prosperity. Wealth must first be earned before it can be enjoyed. That’s what my grandmother used to tell me. I think she gave some sound advice to all of us (including governments!)

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