Monday, October 18, 2010

The Incorrigibles

By Chan Akya, Asia Times Online:

Back in 1969, when the Internet was but an idea on someone's blackboard, the world's largest and most astounding cruise ship, the Queen Elizabeth 2, or QE2, was launched to great fanfare. Over the lifetime of the great ship, she (it is traditional to refer to ships in the female gender, a practice that is frowned on by feminists today) participated in the Falklands War, was considered the greatest cruise ship of all time (below, left), and finally was meant to be purchased by the United Arab Emirates-based Nakheel for use as a permanent hotel.

Instead, the ship now lies docked at the Port Rashid (below, right) with an uncertain future. What is clear is that being purchased by an over-leveraged and technically bankrupt company has spelt the end of the QE2, fated to be remembered in its current state at a rust bucket rather than for all her past glory.

On then to the new version of QE2, namely the second round of quantitative easing that is now being proposed (well, to be quite clear, it seems a dead certainty) to pull the United States, European and Japanese economies out of their apparently permanent downward spiral. Stop me if you have read this before - and perhaps on these same pages, but there is a dreadful sense of deja-vu about what is going on in the "real" world of economics these days.

Gold is getting past US$1,380, the Australian dollar is getting to be close to the US dollar in value as the commodity boom becomes entrenched. The rallying call behind all this isn't so much optimism as it is the sheer "academic" logic behind Ben Bernanke. The US Federal Reserve chairman famously studied the Japanese bubble and its aftermath since the late 1980s, and is "determined" not to repeat the mistakes made by the Bank of Japan. These "mistakes" were of course the central bank's attempts to thwart asset inflation whilst flying straight into a demographic on

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