Global Crisis: An Austrian Futurist Got It Right

[Bob T]

* GLOBAL CRISIS: AN AUSTRIAN FUTURIST GOT IT RIGHT

Wednesday, October 8, 2008

Dear Thirsters:

The plunderers whom the Bush Administration refused to regulate have been robbing the public for years. Now, finally, at long last, millions of Americans see this clearly. They are outraged. And they readier for change than they have been in a long time. A crisis offers opportunity, which a good leader should seize. I hope and believe that Mr. Obama will be such a leader.

The essay below is just in from Thirster in Vienna ERNST EUGEN VESELSKY, economist, futurist, former member of the Austrian Cabinet, and Founding President of the Austrian Association for Future Policies. In 2006, Erni foresaw today’s crisis presciently. He got it right – but too few people listened. Maybe now, they will.

Erni’s essay mentions a book that he edited / wrote in 2006, entitled “The Future of Austria: Opportunities and Dangers in the Age of Nanotechnology.” Full disclosure: I served as methodological advisor in producing this book. The complete English text of this book is available to you by going to

http://www.stanford.edu/~rbtextor/ and clicking “publications” -- or by just googling “textor stanford.”

BY ERNEST EUGEN VESELSKY:

Dear Bob,

Thank you for informing us about the brand new forthcoming of the US-election campaign. Meanwhile Austria on Sept 28th had its own parliamentary elections. These early reelections were forced by the co-governing People's Party whose electoral forecasts showed a [gain] of about 10 %. In reality they lost another 8% and find themselves now in an even worsened 2nd place. Today Austrian's president Fischer designated Faymann, the new leader of the Social Democrats, to form a new government up to Christmas Eve. The negotiations will start with Proell, the newly installed leader of the Peoples' Party, but the expectations are poor because the election brought a swing to the right and enables a new right-wing grouping under the leadership of the losers (People's Party). Despite all critics which have come up on the international scene, interests of power policy will unfortunately induce Proell to risk a renewal of the right wing experiment of the years 2000 to 2006.

Leaving aside national policies of yours and ours: what is going on in international capital markets completely follows the lines of our joint forecasts of our book (Wien 2004: Die Zukunft Österreichs: Chancen und Risiken im nanotechnischen Zeitalter), re the breakdown of financial markets -- especially on pages 108 - 109)!

EXCERPT FROM VESELSKY BOOK:

FINANCIAL MARKETS

The number one problem area of globalized capitalism lies within the financial markets, and in financial capitalism. According to the British “New Economics,” there is a strong connection between commodity markets on the one hand and financial markets on the other -- a view that has long been contested, above all by the Viennese and Chicago Schools of national economics, which conceded the financial markets a life of their own. The “Chicago Boys” seem to have been right, as evidenced by the boom of shares and financial markets at the end of the 20th century. The share prices were generally much higher than those that were diagnosed as the intrinsic value of an enterprise. Despite the disillusionment that has since set in, such speculation is still going on. In an era of globalization, gigantic profits are made possible by downward wage pressure. These profits are only partly invested, but are assessed on the financial markets instead. Even large, world-renowned industrial groups accrue a large part of their earnings from such financial assets.

The financial markets have gained further by the privatization of national social security systems and public enterprises -- a move recommended and encouraged by international organizations. On this basis, a permanent increase in the supply of, and demand for, investments has raised their prices substantially.

But this “plentifulness” that the enterprises currently enjoy may come to an end, if commodities stay too far behind the stock exchange prices, or if there is a general crisis of confidence. In some financial markets, dangerous imbalances (blisters) could emerge and finally explode. On our way into the future we are not facing the question of “if” -- but only the questions of “when” and “where.” Decreasing yields on shares, and the emergence of investor insurance and hedge funds, could be indications that relatively big blisters might burst open rather sooner than later.