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Could It Be That The World Economy Is A Virtual One?

November 28, 2009

Dubai Anton Goryunov writes: Let’s be cynical about the world economy for a moment: does it actually exist or is it just a figment of our imagination, a dream, a virtual reality, like the kingdom of Dubai?

It was only recently that Dubai’s all powerful ruler, Sheikh Mohammed bin Rashid al-Maktoum, was saying that there was no chance of a serious crisis happening in his lovely kingdom. Yes, there were some problems, he was insisting, but nothing to be worried about. Especially as the oil rich Abu Dhabi was supposedly standing shoulder to shoulder with its neighbour. But guess what happened a couple of weeks after that? Dubai went down under the weight of its huge debts and the markets all over the world took a huge hit. The economic success story that we have been hearing so much about for several years  evaporated like a dream.

And here is another example of virtual economics: that great man, Dominique Strauss-Kahn, the Managing Director of the International Monetary Fund, paid a visit to London to address the Confederation of British Industry and let it be known, in a casual sort of way, that the banks around the world were still keeping at least $1.5 trillion of their losses in secret. Mr Strauss-Kahn was basically telling everyone that they were living on borrowed time and that the so-called recovery was a virtual recovery. But no one paid any attention to that. And now we hear experts warning us of a double-dip recession caused by a second wave of bank failures.

Strange, very strange. Just like it is strange to hear all those wonderful stories about Russia, China, India and Brazil emerging as the new economic giants.

Take China: the accepted wisdom is that it is the fastest growing economy. Just look at the way China is buying up assets all over the world, some excited economists are saying. There they go, snapping up energy resources and giving out loans and credits to anyone who’d care to take them. These guys are loaded. And I would say to this: it means absolutely nothing, dear experts. China is a communist dictatorship run by a corrupt clique that would never reveal the true state of things. So all the wonderful statistics that China is feeding to the world are not worth the paper they are printed on. And as for the Chinese investments abroad, this is probably a way of siphoning money and accepting huge backhanders from corrupt regimes and rulers. Because suspiciously the Chinese seem to be extremely active in the most corrupt of nations like Sudan, Zimbabwe, Congo, Venezuela, Iran, Cuba, North Korea and others. Very, very suspicious, this orientation of Chinese comrades. Great for the virtual economy but does not really work in the real world.

Then there is Russia. Some hotheads are actually claiming that Russia has come out of the recession already and is on the way to recovery. How is that, I would like to know. What recovery? It never even had a period of normal growth. Its whole ‘success story’ is based on two things: oil and gas. There is nothing else to the Russian economic miracle. It’s all a big bluff. The country’s banks currently owe close to $800 billion to Western banks and the government that is underwriting these debts barely has a third of it in its kitty. Russia is technically bankrupt. But that is in the real world. In the virtual world, where everyone seems to be living, it is still a global player.

I won’t waste too much time on India, the ‘largest democracy in the world’, as some people call it. I for one could never understand the whole obsession with India’s economic boom. Have you ever been there? Have you seen the dire poverty of millions of people? And calling India a democracy is a bit like calling Zimbabwe a champion of human rights. Get a grip people. Go see Slumdog Millionaire, if you want to get the feel for the economic boom in India. Start living in the real world, folks.

And let’s just leave Brazil out of it. Let Brazilians think that they are having an economic boom. Why spoil their fun while it lasts.

I can go on giving you more examples, but I hope you got my drift: the world economy is really a dream. With an occasional nightmare creeping in here and there.

– End –

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