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The Financial Times led off its series on ‘Capitalism in Crisis’ with a wandering piece that attempted to outline the problem. Unfortunately, the FT writers don’t seem to understand what capitalism is, let alone what is wrong with it. They say they are “rethinking capitalism.” But it doesn’t appear that they ever thought about it the first time.
“At the heart of the problem is widening income inequality,” they write.
Anatomically, income equality is right on the surface…not at the heart. It is more like warts or boils…on the skin of the system for all to see. Right out in the open. The question is what causes these blemishes… More in just a minute…
First, let’s look briefly at what is going on in the markets. A quick preview — nothing much. The Dow rose 69 points yesterday. Gold shot up $23.
Meanwhile, The Wall Street Journal tells us that consumers have begun to borrow again:
Consumer borrowing leapt as holiday spending kicked in late last year, according to a new Federal Reserve report that hinted the era of household debt reduction that has held the economy back for years might be entering a new, milder phase.
The Fed said Monday that household borrowing on credit cards, car loans, student loans and other kinds of installment debt rose at a 9.9% seasonally adjusted annual rate in November, the fastest monthly increase since November 2001. That was when the economy was bouncing back from the Sept. 11 terror attacks and Detroit car companies were rolling out zero-percent…
Whoa… Does this mean the Great Correction is over? Have households decided to go back to their old free-borrowing, free-spending ways? Is it 2005 all over again? Let’s hold that question…
Read more: The Real Crisis in Capitalism
