US superpower status is shaken

[waraich]

US superpower status is shaken

By Paul Reynolds
World affairs correspondent, BBC News website



Will Uncle Sam still bestride the world in future?
The financial crisis is likely to diminish the status of the United States as the world's only superpower.

On the practical level, the US is already stretched militarily, in Afghanistan and Iraq, and is now stretched financially.

On the philosophical level, it will be harder for it to argue in favour of its free market ideas, if its own markets have collapsed.

Pivotal moment?

Some see this as a pivotal moment.

The political philosopher John Gray, who recently retired as a professor at the London School of Economics, wrote in the London paper The Observer: "Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably.

"The era of American global leadership, reaching back to the Second World War, is over... The American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated."

"In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.

"How symbolic that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees."

No apocalypse now

Not all would agree that an American apocalypse has arrived. After all, the system has been tested before.
John Bolton gives rumours of US hegemony's demise short shrift

In 1987 the Dow Jones share index fell by more than 20% in one day. In 2000, the dot-com bubble burst. Yet both times, the US picked itself up, as it did post Vietnam.

Prof Gray's comments certainly did not impress one of the more hawkish figures who served in the Bush administration, the former UN ambassador John Bolton.

When I put them to him, he replied only: "If Professor Gray believes this, can he assure us that he is selling his US assets short?

"If so, where is he placing his money instead? And if he has no US assets, why should we be paying any attention to him?"

Nevertheless, it does seem that the concept of the single superpower left bestriding the world after the collapse of communism (and the supposed end of history) is no longer valid.

Multi-polar world

Even leading neo-conservative thinkers accept that a more multi-polar world is emerging, though one in which they want the American position to be the leading one.

Robert Kagan, co-founder in 1997 of the "Project for the New American Century" that called for "American global leadership", wrote in Foreign Affairs magazine this autumn: "Those who today proclaim that the United States is in decline often imagine a past in which the world danced to an Olympian America's tune. That is an illusion.



The US is seen as declining relatively and there has been an enormous acceleration in this perfect storm of perception in the waning days of the Bush administration



Dr Robin Niblett
Chatham House



"The world today looks more like that of the 19th Century than like that of the late 20th.

"Those who imagine this is good news should recall that the 19th Century order did not end as well as the Cold War did."

"To avoid such a fate, the United States and other democratic nations will need to take a more enlightened and generous view of their interests than they did even during the Cold War. The United States, as the strongest democracy, should not oppose but welcome a world of pooled and diminished national sovereignty.

"At the same time, the democracies of Asia and Europe need to rediscover that progress toward this more perfect liberal order depends not only on law and popular will but also on powerful nations that can support and defend it."

New scepticism

The director of a leading British think-tank Chatham House, Dr Robin Niblett, who has worked on both sides of the Atlantic, remarked that, at a recent conference he attended in Berlin, an American who called for continued US leadership was met with a new scepticism.


Despite its feats in space, China is said to face a future food crisis

"The US is seen as declining relatively and there has been an enormous acceleration in this perfect storm of perception in the waning days of the Bush administration. The rise of new powers, the increase in oil wealth among some countries and the spread of economic power around the world adds to this," he said.

"But we must separate the immediate moment from the structural. There is no doubt that President Bush has created some of his own problems. The overstretch of military power and the economic crisis can be laid at the door of the administration.

"Its tax cuts were not matched by the hammer of spending cuts. The combined effect of events like the failures in Iraq, the difficulties in Afghanistan, the thumbing of its nose by Russia in Georgia and elsewhere, all these lead to a sense of an end of an era.

The longer term

Dr Niblett argues that we should wait a bit before coming to a judgment and that structurally the United States is still strong. :D


America has been stretched by wars in Iraq and Afghanistan

"America is still immensely attractive to skilled immigrants and is still capable of producing a Microsoft or a Google," he went on.

"Even its debt can be overcome. It has enormous resilience economically at a local and entrepreneurial level.

"And one must ask, decline relative to who? China is in a desperate race for growth to feed its population and avert unrest in 15 to 20 years. Russia is not exactly a paper tiger but it is stretching its own limits with a new strategy built on a flimsy base. India has huge internal contradictions. Europe has usually proved unable to jump out of the doldrums as dynamically as the US.

"But the US must regain its financial footing and the extent to which it does so will also determine its military capacity. If it has less money, it will have fewer forces."

With the US presidential election looming, it will be worth returning to this subject in a year's time to see how the world, and the American place in it, looks then.

Paul.Reynolds-INTERNET@bbc.co.uk

http://news.bbc.co.uk/2/hi/business/7645743.stm


Iraq and Afghanistan wars and with more then one trillion debt plus present world economic down turn , its too late for US economy to recover ,however if China continue its 8.5GDP growth rate in next two years can emerge as super power.:D

[Merlöwe]

Iraq and Afghanistan wars and with more then one trillion debt plus present world economic down turn , its too late for US economy to recover, however if China continue its 8.5GDP growth rate in next two years can emerge as super power.:D

Not at all, China will need decades to begin to match the United States, the Chinese themselves don't think they''ll overcome the Americans in this century.

I'm not sure if you understand this, but if the US economy doesn't recover neither will China. China's record economic growth is fueled mainly by exports to other countries, with the US being its major consumer. The US is virtually the backbone of the world economy, if the US collapses so does nearly every other industrialized nation in the world, meaning that China's export market is gone. With its fuel for economic growth gone, China is a goner and the Communist party will face mass dissent and possibly revolution.

[Feanor]

The United States is not so much the back bone as it is the global financial center. If it loses that position, and no suitable alternative emerges, then yes the world will be screwed.

EDIT: The discussions seems to be aimed and politics and economics. Not at the military. I'm moving this to the Off-Topic forum. Play nice everyone. This discussion is interesting and I wouldn't want it to get closed. :)

[Schumacher]

Not at all, China will need decades to begin to match the United States, the Chinese themselves don't think they''ll overcome the Americans in this century.

I'm not sure if you understand this, but if the US economy doesn't recover neither will China. China's record economic growth is fueled mainly by exports to other countries, with the US being its major consumer. .....

Even before the current crisis, we have studies that show China would overtake the US in total size by certain measures in abt 10 yrs. With the crisis & US going negative & if China can maintain abt 8%, which they seem confident of, add in how various currencies behave, it might well be sooner than 10 yrs.
But of course on a per capita basis, China will still be behind but I tend to see that as only giving it more potential for further growth.

Various arguments have either said China is very dependent or not very on exports to US. I put my money on the latter. Anyway, I suspect this debate will largely be decided around the next 12 months as exports to US is already slumping, we'll just have to see whether China's overall growth stays high regardless or slump with it.

[Manfred2]

Ah, but if China begins to really suffer and loose ground, won't they embark on a war of expansion, now that they are well-equipped to do so?

Bringing us back to the military side of things, why would they not do so, if the economic incentive for peace is gone?

[ReAl PrOeLiTeZ]

US superpower status is shaken

By Paul Reynolds
World affairs correspondent, BBC News website



Will Uncle Sam still bestride the world in future?
The financial crisis is likely to diminish the status of the United States as the world's only superpower.

On the practical level, the US is already stretched militarily, in Afghanistan and Iraq, and is now stretched financially.

On the philosophical level, it will be harder for it to argue in favour of its free market ideas, if its own markets have collapsed.

Pivotal moment?

Some see this as a pivotal moment.

The political philosopher John Gray, who recently retired as a professor at the London School of Economics, wrote in the London paper The Observer: "Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably.

"The era of American global leadership, reaching back to the Second World War, is over... The American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated."

"In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.

"How symbolic that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees."

No apocalypse now

Not all would agree that an American apocalypse has arrived. After all, the system has been tested before.
John Bolton gives rumours of US hegemony's demise short shrift

In 1987 the Dow Jones share index fell by more than 20% in one day. In 2000, the dot-com bubble burst. Yet both times, the US picked itself up, as it did post Vietnam.

Prof Gray's comments certainly did not impress one of the more hawkish figures who served in the Bush administration, the former UN ambassador John Bolton.

When I put them to him, he replied only: "If Professor Gray believes this, can he assure us that he is selling his US assets short?

"If so, where is he placing his money instead? And if he has no US assets, why should we be paying any attention to him?"

Nevertheless, it does seem that the concept of the single superpower left bestriding the world after the collapse of communism (and the supposed end of history) is no longer valid.

Multi-polar world

Even leading neo-conservative thinkers accept that a more multi-polar world is emerging, though one in which they want the American position to be the leading one.

Robert Kagan, co-founder in 1997 of the "Project for the New American Century" that called for "American global leadership", wrote in Foreign Affairs magazine this autumn: "Those who today proclaim that the United States is in decline often imagine a past in which the world danced to an Olympian America's tune. That is an illusion.



The US is seen as declining relatively and there has been an enormous acceleration in this perfect storm of perception in the waning days of the Bush administration



Dr Robin Niblett
Chatham House



"The world today looks more like that of the 19th Century than like that of the late 20th.

"Those who imagine this is good news should recall that the 19th Century order did not end as well as the Cold War did."

"To avoid such a fate, the United States and other democratic nations will need to take a more enlightened and generous view of their interests than they did even during the Cold War. The United States, as the strongest democracy, should not oppose but welcome a world of pooled and diminished national sovereignty.

"At the same time, the democracies of Asia and Europe need to rediscover that progress toward this more perfect liberal order depends not only on law and popular will but also on powerful nations that can support and defend it."

New scepticism

The director of a leading British think-tank Chatham House, Dr Robin Niblett, who has worked on both sides of the Atlantic, remarked that, at a recent conference he attended in Berlin, an American who called for continued US leadership was met with a new scepticism.


Despite its feats in space, China is said to face a future food crisis

"The US is seen as declining relatively and there has been an enormous acceleration in this perfect storm of perception in the waning days of the Bush administration. The rise of new powers, the increase in oil wealth among some countries and the spread of economic power around the world adds to this," he said.

"But we must separate the immediate moment from the structural. There is no doubt that President Bush has created some of his own problems. The overstretch of military power and the economic crisis can be laid at the door of the administration.

"Its tax cuts were not matched by the hammer of spending cuts. The combined effect of events like the failures in Iraq, the difficulties in Afghanistan, the thumbing of its nose by Russia in Georgia and elsewhere, all these lead to a sense of an end of an era.

The longer term

Dr Niblett argues that we should wait a bit before coming to a judgment and that structurally the United States is still strong. :D


America has been stretched by wars in Iraq and Afghanistan

"America is still immensely attractive to skilled immigrants and is still capable of producing a Microsoft or a Google," he went on.

"Even its debt can be overcome. It has enormous resilience economically at a local and entrepreneurial level.

"And one must ask, decline relative to who? China is in a desperate race for growth to feed its population and avert unrest in 15 to 20 years. Russia is not exactly a paper tiger but it is stretching its own limits with a new strategy built on a flimsy base. India has huge internal contradictions. Europe has usually proved unable to jump out of the doldrums as dynamically as the US.

"But the US must regain its financial footing and the extent to which it does so will also determine its military capacity. If it has less money, it will have fewer forces."

With the US presidential election looming, it will be worth returning to this subject in a year's time to see how the world, and the American place in it, looks then.

Paul.Reynolds-INTERNET@bbc.co.uk

http://news.bbc.co.uk/2/hi/business/7645743.stm


Iraq and Afghanistan wars and with more then one trillion debt plus present world economic down turn , its too late for US economy to recover ,however if China continue its 8.5GDP growth rate in next two years can emerge as super power.:D
its economy is already a superpower, its not could be a superpower it is already. China account balance is $372 billion, while USA is -$731 billion, 5 times greater in debt then the next country which is Spain. So if any so USA will go to war cause of loss of ground, not China, they have can just buy ground instead of fighting for it.

[Merlöwe]

Even before the current crisis, we have studies that show China would overtake the US in total size by certain measures in abt 10 yrs. With the crisis & US going negative & if China can maintain abt 8%, which they seem confident of, add in how various currencies behave, it might well be sooner than 10 yrs.
But of course on a per capita basis, China will still be behind but I tend to see that as only giving it more potential for further growth.

Various arguments have either said China is very dependent or not very on exports to US. I put my money on the latter. Anyway, I suspect this debate will largely be decided around the next 12 months as exports to US is already slumping, we'll just have to see whether China's overall growth stays high regardless or slump with it.

It can't overtake the US economy in 10 years, not unless it expands by around 25-50% percent a year while the US dramatically drops. They may be able to have 6% growth but the Chinese gov't needs high growth to keep their peasants from revolting.

Its not just dependant on exports to the US, but to other countries as well, most of which are also suffering from the financial crisis. Plus, something like 20 million of their migrant workers have been laid off as so many factories have closed their doors.

Ah, but if China begins to really suffer and loose ground, won't they embark on a war of expansion, now that they are well-equipped to do so?

Bringing us back to the military side of things, why would they not do so, if the economic incentive for peace is gone?

Where would they expand? An expansionist campaign into South Asia is invariably going to end with China's cities experiencing nuclear holocaust.

its economy is already a superpower, its not could be a superpower it is already. China account balance is $372 billion, while USA is -$731 billion, 5 times greater in debt then the next country which is Spain. So if any so USA will go to war cause of loss of ground, not China, they have can just buy ground instead of fighting for it.

Lets not get too liberal with the term superpower. Currently, only the US meets the qualifications for a superpower. The definition is a country that has the capacity to project dominating power and influence anywhere in the world, and sometimes, in more than one region of the globe at a time, and so may plausibly attain the status of global hegemon.

China meets none of those characteristics. It can't project its influence anywhere in the world, and in multiple regions. Its power is not dominating considering that its military are currently outdated. And it certainly is not the global hegemon.

[black shark]

The US will react and come out of this crisis for sure. Western powers have worked for many years to get to where they are today, notwithstanding the crisis. Lessons will be learned and a balance found once more.
All that is happening with this crisis is a redistribution of wealth from investor to consumer (via the governments), mostly within national boundries.

As for China being a superpower, you can call them a superpower if that means having an army with soldiers armed with bolt action rifles and a large population well below the poverty line.

[nevidimka]

While the US looks to be in the same situation where Soviet Union foud itself 17 years ago, I feel the US has 1 thing that the SU lacked which made it collapse. The US is integrated into the world financial market, while the Soviet Union was cut off from the world market. The market will prop up US and allow it to survive and not collapse and break up IMO.

[Merlöwe]

While the US looks to be in the same situation where Soviet Union foud itself 17 years ago, I feel the US has 1 thing that the SU lacked which made it collapse. The US is integrated into the world financial market, while the Soviet Union was cut off from the world market. The market will prop up US and allow it to survive and not collapse and break up IMO.

What would it break up into? The majority of Americans are fully assimilated, unlike the USSR which had ethnic republics.

[Schumacher]

It can't overtake the US economy in 10 years, not unless it expands by around 25-50% percent a year while the US dramatically drops. .....

It can, if one uses measurements like PPP.

http://www.defencetalk.com/forums/showthread.php?p=126389&highlight=China+economy#post126389

[SoCalSooner]

It is not like the US is the only country effect by the melt down.

Superpower - since this is a Military forum and the post is mostly financial/economics, I fail to see to connection.

Military superpower - yes

Financially superpower - yes

Economical superpower - ?

[Feanor]

Well lets not confuse the real economy and the numbers. Those are two very different things.

EDIT: By the way, this is the off-topic forum so it's ok to talk about almost anything here. ;)

[AdvanXer]

It is not like the US is the only country effect by the melt down.

Superpower - since this is a Military forum and the post is mostly financial/economics, I fail to see to connection.

Military superpower - yes

Financially superpower - yes

Economical superpower - ?

Military superpower - No

Financially superpower - ? (maybe)

Economical superpower - ? (most likely)

fixed.

You need all three plus more to be a superpower in the general sense.

China can project much soft power but not a lot of HARD power, at least not overseas anyways. If they can't do that, they are not a Superpower. For instance could China have pulled off the invasion of Iraq? Forget about the occupation, but just the invasion part. I think not!

[ReAl PrOeLiTeZ]

It can't overtake the US economy in 10 years, not unless it expands by around 25-50% percent a year while the US dramatically drops. They may be able to have 6% growth but the Chinese gov't needs high growth to keep their peasants from revolting.

Its not just dependant on exports to the US, but to other countries as well, most of which are also suffering from the financial crisis. Plus, something like 20 million of their migrant workers have been laid off as so many factories have closed their doors.



Where would they expand? An expansionist campaign into South Asia is invariably going to end with China's cities experiencing nuclear holocaust.



Lets not get too liberal with the term superpower. Currently, only the US meets the qualifications for a superpower. The definition is a country that has the capacity to project dominating power and influence anywhere in the world, and sometimes, in more than one region of the globe at a time, and so may plausibly attain the status of global hegemon.

China meets none of those characteristics. It can't project its influence anywhere in the world, and in multiple regions. Its power is not dominating considering that its military are currently outdated. And it certainly is not the global hegemon.
well your wrong my friend. The term superpower isnt only used for military, but for economy too. thats what i was implying. not everything is about war you know.

[ReAl PrOeLiTeZ]

The US will react and come out of this crisis for sure. Western powers have worked for many years to get to where they are today, notwithstanding the crisis. Lessons will be learned and a balance found once more.
All that is happening with this crisis is a redistribution of wealth from investor to consumer (via the governments), mostly within national boundries.

As for China being a superpower, you can call them a superpower if that means having an army with soldiers armed with bolt action rifles and a large population well below the poverty line.
you so uneducated in Chinese military and economy. China using bolt action rifles yeah true about 40 years ago. Dont forget US still uses bolt action rifles today. Mechanics of a weapon doesnt characterise one being a superpower or not.

how is large population of china in poverty aye? lets compare this to USA they are around 12-13% poverty level, while China is 10%. Hmm lets see by ratio USA has more people in poverty then China. China only has larger numbers cause its population is larger.

China military lets see front line, marines, special forces, airbourne all use Type-95.
China reserves all use Type 81. Both rifles are automatic rifles.

so dont write nonsense comments if non are true. lack of knowledge is evident in the last paragraph written.

[Transient]

A superpower should be judged based on a few metrics. Economic power, diplomatic power, military power and cultural influence. There is some overlap, but not much. The US has a good deal of margin over its closest rival in every one of these areas. China can at best be described as a regional power.

[black shark]

you so uneducated in Chinese military and economy. China using bolt action rifles yeah true about 40 years ago. Dont forget US still uses bolt action rifles today. Mechanics of a weapon doesnt characterise one being a superpower or not.

how is large population of china in poverty aye? lets compare this to USA they are around 12-13% poverty level, while China is 10%. Hmm lets see by ratio USA has more people in poverty then China. China only has larger numbers cause its population is larger.

China military lets see front line, marines, special forces, airbourne all use Type-95.
China reserves all use Type 81. Both rifles are automatic rifles.

so dont write nonsense comments if non are true. lack of knowledge is evident in the last paragraph written.

Yes, apologies the Type 56 Carbine has been retired. My information is out of date.
I think my point still stands. China has a massive military no doubt but very far behind the US in terms of military power and capabilities. China is still playing catch up with current weapons never mind what the US has in the pipeline.

[Falstaff]

While the US looks to be in the same situation where Soviet Union foud itself 17 years ago, I feel the US has 1 thing that the SU lacked which made it collapse. The US is integrated into the world financial market, while the Soviet Union was cut off from the world market. The market will prop up US and allow it to survive and not collapse and break up IMO.

What the... makes you think that the US of today are in the same situation as the SU 17 years ago? Does the US have a history of decades of communism? Has the SU been the center of the world's economy for decades? Has the SU been the center of inventive and economical spirit for decades? Has the SU had a free and prospering population? Has the SU had absolute cultural dominance apart from the countries that were occupied? Is there anything like a soviet way of life that billions of people go for?

Man, I'm an old European and we're feeling comfortable claiming cultural superiority over the US, but this doesn't change the fact that the US are and will be the world's dominating superpower despite all your Russia and China fanboy blah.
Never underestimate America's ability to reinvent themselves, emerging stronger than they were before.
I'm sorry, but fact is, all other countries are only trying to catch up with the Western Hemisphere. And although there might be a donturn now, it will take a while.


how is large population of china in poverty aye? lets compare this to USA they are around 12-13% poverty level, while China is 10%. Hmm lets see by ratio USA has more people in poverty then China. China only has larger numbers cause its population is larger.

Hey propaganda-boy, do you have the slightest idea what poverty means by western compared to chinese standards? I guess not. "so dont write nonsense comments if non are true. lack of knowledge is evident in the last paragraph written. "

[Tavarisch]

Yes, apologies the Type 56 Carbine has been retired. My information is out of date.
I think my point still stands. China has a massive military no doubt but very far behind the US in terms of military power and capabilities. China is still playing catch up with current weapons never mind what the US has in the pipeline.

Yeah, given today's circumstances. If China overtakes you guys economically and gain enough money to buy new toys, you guys are gonna be in trouble.

[swerve]

how is large population of china in poverty aye? lets compare this to USA they are around 12-13% poverty level, while China is 10%. Hmm lets see by ratio USA has more people in poverty then China. China only has larger numbers cause its population is larger..
Different nations use different definitions of poverty. Some national poverty lines are set as a percentage of average income, not an absolute limit. The US definition is absolute, but much higher than the Chinese definition, or the World Bank definition. In 2007-8, a single person with an income of less than $10400 was defined as poor in the USA. This was significantly more than the average income per head in China, even adjusted for purchasing power parities. In other words, according to the US definition of poverty, most Chinese are poor.

Look at this (http://siteresources.worldbank.org/DATASTATISTICS/Resources/WDI08supplement1216.pdf). (2.57 megabyte PDF).

[swerve]

Not at all, China will need decades to begin to match the United States, the Chinese themselves don't think they''ll overcome the Americans in this century.
That's per head. In absolute GDP terms, China expects to overtake the USA fairly soon at purchasing power parities. The World Bank estimates (with Chinese official co-operation) that Chinas GDP is about 55% of the US level now (51% in 2007), & is widely criticised for underestimating it. No credible economist thinks it's an overestimate, & other estimates are up to 75%. It's closer than the USSR ever got.

GDP at exchange rates will converge more rapidly, but starts further away, & will take longer to close the gap. It should still overtake the USA long before the end of this century.

[black shark]

Yeah, given today's circumstances. If China overtakes you guys economically and gain enough money to buy new toys, you guys are gonna be in trouble.

FYI Tavarisch...I'm not from the US.

[Tavarisch]

FYI Tavarisch...I'm not from the US.

Sorry. I just assumed you were.

[nevidimka]

What the... makes you think that the US of today are in the same situation as the SU 17 years ago? Does the US have a history of decades of communism? Has the SU been the center of the world's economy for decades? Has the SU been the center of inventive and economical spirit for decades? Has the SU had a free and prospering population? Has the SU had absolute cultural dominance apart from the countries that were occupied? Is there anything like a soviet way of life that billions of people go for?

Man, I'm an old European and we're feeling comfortable claiming cultural superiority over the US, but this doesn't change the fact that the US are and will be the world's dominating superpower despite all your Russia and China fanboy blah.
Never underestimate America's ability to reinvent themselves, emerging stronger than they were before.
I'm sorry, but fact is, all other countries are only trying to catch up with the Western Hemisphere. And although there might be a donturn now, it will take a while.



Hey propaganda-boy, do you have the slightest idea what poverty means by western compared to chinese standards? I guess not. "so dont write nonsense comments if non are true. lack of knowledge is evident in the last paragraph written. "


Perhaps you should tone down your argument. I wonder why this is allowed by the moderator. My opinion is not a soviet fanboyish thingy whatever way you may want to put it. I just remember reading a site that said, both US and Soviet Union championed 2 different ways of managing the economy. 1 being a state controlled economy by the Soviets and the free market economy by the US. The Soviet Version collapsed 17 years ago, and every1 in the west were celebrating the victory of free market. But 17 years down the lane the western style itself collapsed. The soviets collapsed earlier coz its economy was much smaller to the US. The strain of war on the financial system of both superpower pushed their economies to the edge. That is what I remember from the top of my head on what the website was saying.

That is why I said the US is in a similar situation to the SU back then.

[Waylander]

But it is just wrong.

The US is in no way in as a bad situation as the SU was when it imploded.
Sure the whole world faces an economical crisis and naturally the US is hit badly because it still is the backbone of the world economy.
But nevertheless it is not a failure of the system by itself. Some things went wrong which doesn't mean the whole system is broken.
What do you think? The US and with it the rest of the west is breaking apart and suffers poverty unknown for centuries while the rest of the world prospers because the US system is dead?
Everybody is going to suffer, especially these countries which rely on exports to exactly the broken systems you are talking about.

It is not like the SU where a whole system broke apart economical as well as political. Texas and some other states are not going to declare independence from a one party regime while the economy goes to shambles because most of the companies are whoefully inefficient and don't have the technology to survive on the world market.

[Manfred2]

Let them think what they will. Everyone from King George to Osama bin Hidden has underestimated the US. Why should the current gang be any different... or smarter?

[riksavage]

I think we all need a reality check! Look at the defence spending figures for 2007 (below). Even if the likes of China hide much of their expenditure, they are still WAY BEHIND the US. If you add China, Russia and India's spending together it doesn't even come close!

It's not just the huge disparity in spending today, but the existing military infrastructure which the US currently has in place - industrial manufacturing, R&D, land/sea/air bases and other incalculable assets such as strategic intelligence gathering capabilities, which make them generations ahead of the rest of the world.

Top World-wide Military Spenders: 2007
Spending
Country $bn

USA - 546.8
UK - 59.7
China - 58.3
France - 53.6
Japan - 43.6
Germany - 36.9
Russia - 35.4
Saudi Arabia - 33.8
Italy - 33.1
India - 24.2
South Korea - 22.6
Brazil - 15.3
Canada - 15.2
Australia - 15.1
Spain - 14.6
World Total 1008.2

SOURCE Stockholm International Peace Research Institute

[Ananda]

[QUOTE=ReAl PrOeLiTeZ;168918]how is large population of china in poverty aye? lets compare this to USA they are around 12-13% poverty level, while China is 10%. Hmm lets see by ratio USA has more people in poverty then China. China only has larger numbers cause its population is larger.

Defense is not my field, but economics & finances certaintly are. China poverty standard still uses the similar poverty line for developing countries. The poverty line's income below USD 2.0 per day.

Compare dollar to dollar, lower income bracket in US (begin at below USD 1,200 per month by lattest US standard) are Middle Class group in developing countries including CHINA.

US might be in trouble, but hey so do all the world including china at this moment. Growth by more than 8% ?? even the very optimist in China Leadership can't realistically hope for that.

[Feanor]

First thing is first, the USA is not a real free market economy. Keep in mind that the financial market controls both the labor and goods market. And the financial market is controlled by the Fed. So while you don't have economic planners who decide exactly how much and what to make, by controlling the interest rates the US economy is still centrally planned from the Federal Reserve, to a large extent.

A real free market simply doesn't work.

[kato]

In 2007-8, a single person with an income of less than $10400 was defined as poor in the USA.
If we start talking about relative poverty, the US fixed rate definition is in some way placed artificially at an amount that equalizes the resulting poverty rate with European countries btw.

And it's a non-standard definition. For example, in the EU, someone is defined as "threatened by poverty" if they earn less than 60% of the median income; "poor" if they earn less than 40%. The WHO, OECD and other organisations use a similar definition.

The current US fixed rate definition is at about 30-35% of the median income, but gets somewhat screwy with families (no per-person rate).

In Germany, for example, 13.5% fall within the first slot, 4.4% in the second slot above. If the same calculation was applied to the USA (with US income), around 11.7% would fall in the second slot alone there.

National poverty lines are irrelevant.

[waraich]

its economy is already a superpower, its not could be a superpower it is already. China account balance is $372 billion, while USA is -$731 billion, 5 times greater in debt then the next country which is Spain. So if any so USA will go to war cause of loss of ground, not China, they have can just buy ground instead of fighting for it.

My friend for super power economy is also major factor but still US is far ahead of China in high tech (Nano technology) may be 20 Years or more .Nano technology will actually decide the ranking of super powers

http://nextbigfuture.com/2005/11/discussion-of-ranking-countries-in.html
http://www.azonano.com/details.asp?ArticleID=1134

But if present economic crunch in USA continued for next two years which is very much expected because still not touched the peaks and Chinies latest stretegy to investment in technology sector (Railway,control systems,telecom,software) to mantain their growth rate above 8% then there is possibility that China will emerge as greatest super power very soon.

[ReAl PrOeLiTeZ]

[quote].

Defense is not my field, but economics & finances certaintly are. China poverty standard still uses the similar poverty line for developing countries. The poverty line's income below USD 2.0 per day.

Compare dollar to dollar, lower income bracket in US (begin at below USD 1,200 per month by lattest US standard) are Middle Class group in developing countries including CHINA.

US might be in trouble, but hey so do all the world including china at this moment. Growth by more than 8% ?? even the very optimist in China Leadership can't realistically hope for that.
you must understand you cant use western term of poverty and implement it into chinese terms, the same goes the other way around. poverty level on how i took it is china's way for china and western way for america. remember US$1 can get you nothing in western countries while in china it can. so say 5000 yuan= US$1000 (not correct but example), in china its like US$5000 not literally. but everything in china is so cheap that they earn say $100 yuan their its like someone earning US$100 in USA and spending on it.

To Waraich.
technology superpower is one thing but i was refering to economy. so dont mix up your thinking with mine. i said superpower economy, not superpower technology.

[ReAl PrOeLiTeZ]

I think we all need a reality check! Look at the defence spending figures for 2007 (below). Even if the likes of China hide much of their expenditure, they are still WAY BEHIND the US. If you add China, Russia and India's spending together it doesn't even come close!

It's not just the huge disparity in spending today, but the existing military infrastructure which the US currently has in place - industrial manufacturing, R&D, land/sea/air bases and other incalculable assets such as strategic intelligence gathering capabilities, which make them generations ahead of the rest of the world.

Top World-wide Military Spenders: 2007
Spending
Country

USA - 546.8
UK - 59.7
China - 58.3
France - 53.6
Japan - 43.6
Germany - 36.9
Russia - 35.4
Saudi Arabia - 33.8
Italy - 33.1
India - 24.2
South Korea - 22.6
Brazil - 15.3
Canada - 15.2
Australia - 15.1
Spain - 14.6
World Total 1008.2

SOURCE Stockholm International Peace Research Institute
defence budget yeah they might be big, but look at their nations accounts. every year they raise their budget but more is deducted from their account. so what if you have a big military "borrowed money" budget, in the end your account is such in debt. having a big defence dont mean nothing in terming yourself a superpower. china has a big population jeez it must be a superpower then since its got more people. dont worry great britain and australia are also near the bottom of national account funds in debt too, so not singling out usa.

so what big military budget dont mean squat, their just playing arogant and not admiting that their budget is going to start going down a bit soon. though in military china is still no superpower like the usa i admit that. but economy it is. technology, china is half way their in technology, but usa i dont think they are superpowers either. id say europe are superpowers of technology. space id say usa.

everybody stop saying stuff that i didnt write. i never refered to military and technology of china being superpowers. i said economy. individual spendings is another factor. but china assests in economy is superpower status. thats it for now.

To Falstaff. your extremely rude, in your reply post to me, and im gonna ignore this time, but next time try using words that arent biased or uncivilised. eg: propaganda boy. im australian afterall. but the truth is the truth. even if dont support china.

[autumn child]

Let me share alittle insight in the current situation of world powers.

The US is feeling the pain from the financial crisis, but i predict that the US will recover and still continue to be very important player in the global economy and security in the next few decades. The US has a resilient economic and political system that can accomodate change and reforms. One of the reason that Japan is unable to recover is its inability to reform itself quick enough to meet new challenges.

The EU is not a super power since it is not fully integrated and has many weaknesses in the system, i.e. each EU state does not give up military sovereignty, only some economic sovereignty. But what i am worried about is the Total Factors of Productivity (TFP) in the EU which is very low, only 0.2. TFP is important for sustainable economic growth as it allows a country to develop with less reliance on limited resources. The low TFP also means that European workers are too comfortable with their live and unwilling to work extra hours to increase productivity. In contrast US TFP is quite high (1.6) compared to the EU. This mean that the US has much greater room to grow economically than the EU under limited natural and human resources.

Another factor that the US has is the entrepreneurial resource. US citizens continually innovate and is entrepreneurial at the same time, thus we see emergence of companies such as google, amazon and starbucks. The top 100 brands in the world are mostly american company. European fails to take advantage of IT development in the early 2000 and as a result is quite underdeveloped compared to the US in this sector. We all also know that starbucks coffee does not make the best coffee and even got its original inspiration from european coffee shop. The american entrepreneurial spirit can make starbucks into a corporate giant while the european coffee still stays in europe. Japan is another example of a country lacking in entrepreneurial spirits after it reach its peak in the 80s. Some economist argues that Japan lost two decades is partly the result of lack of entrepreneurs to stimulate the economy.

In the case of China, most people have extreme views, its either china is all good and powerful or china is poor and miserable. The truth ofcourse lies in between. China's GDP per capita is about 3500USD and using PPP it is slightly more than 10000 USD per capita still only abput one fifth of US GDP/capita. So china is a relatively poor country compared to US but a relatively wealthy among developing nations. I have confidence that chinese economy grow at 8% this year but it is mainly due to "data messaging" by the bereau of statistics. The real growth is between 6 to 7% as estimated by world bank, still a good and healthy growth rate. There will also be no mass rioting and social instability if china grows below 8%. Entrepreunur spirit is strong and alive while TFP is also high, therefore china, like the US have huge growth potential, thus the interaction between china and US is increasingly important and will dominate future world affairs in the future.

I do not like to use the term superpowers because the world is increasingly integrated and unlike during the cold war where SU economic is isolated and US does not rely on SU economy. Reliance create power. At the moment many countries economic well-being relies on the US, therefore the US has alot of economic power over other nation, but the US also heavily and increasingly relies on chinese money for their increasingly large debt to maintain growth. does this mean that china is also a superpower since the US also relies on china? Many economist agrees that the current system of asian savings paying for US consumption is broken and unsustainable, but will continue further as china plans to buy more US treasuries and OBama encourage consumption for economic recovery. This is the Brettonwood two system, where the US dollars value is tied to asian savings and increasingly China's savings (currently worth 1.95 trillion USD). Hence the G-2 concept of China and US relationship, where the world's affair will rely on the two nation's interaction. Both China and US increasingly rely on each other, which means they have power over one another. The next few decades or even centuries will probably see no real superpower in existance. This is the new world order.

Fortunately (or unfortunately depending on your perspective) military power is becoming less reliable to measure a country's power. In increasingly integrated world, any military action will have serious economic consequence. Nuclear arsenals and the brettonwood two systems ensure that major military conflict between major state impossible. military might of major power can only coerced isolated small/weakened states (Iraq, afghanistan) but not other major states with nuclear arsenals or even small states with major power backing as we have seen in Georgia.

[swerve]

If we start talking about relative poverty, the US fixed rate definition is in some way placed artificially at an amount that equalizes the resulting poverty rate with European countries btw.

And it's a non-standard definition. For example, in the EU, someone is defined as "threatened by poverty" if they earn less than 60% of the median income; "poor" if they earn less than 40%. The WHO, OECD and other organisations use a similar definition.

The current US fixed rate definition is at about 30-35% of the median income, but gets somewhat screwy with families (no per-person rate).

In Germany, for example, 13.5% fall within the first slot, 4.4% in the second slot above. If the same calculation was applied to the USA (with US income), around 11.7% would fall in the second slot alone there.

National poverty lines are irrelevant.
The federal US poverty definition is an absolute, not relative, line, calculated by pricing a basket of goods & services, has a small element of allowance for regional price differences (but not enough), & takes into account that per-person costs reduce as family numbers go up. There's a table of values, depending on family size. Imperfect, but one of the (technically - not its level) best poverty definitions out there. But most of the worlds population probably don't think that level of income represents poverty.

The relative definitions, of the "n% of median income" variety are essentially meaningless.

The World Bank PPP absolute poverty line is more meaningful, but still flawed, as it fails to account for different price structures, being based on whole-economy PPPs. It would understate absolute poverty in a country where basic necessities are relatively expensive, for example.

[Ananda]

[QUOTE=ReAl PrOeLiTeZ;169075][QUOTE=Ananda;169037]
you must understand you cant use western term of poverty and implement it into chinese terms, the same goes the other way around. poverty level on how i took it is china's way for china and western way for america. remember US$1 can get you nothing in western countries while in china it can. so say 5000 yuan= US$1000 (not correct but example), in china its like US$5000 not literally. but everything in china is so cheap that they earn say $100 yuan their its like someone earning US$100 in USA and spending on it.

That's PPP (Purchasing Power Parity) issue. It's true that USD 1 in China will have different power buy with USD 2 in US. However if China poverty line still in line with what poverty line in developing countries (below USD 2 per day), than it's mean only USD 60 per month.

With US lower bracket begin at USD 1,200, even with current PPP between China and US (base on WB figure), the USD 1,200 in US still have similar purchasing power effect of USD 500 in china. This figure still far above China poverty line, and thus still considered included in 'middle income bracket' (equivalent with annual income of USD 6000 in China).

PPP do matter, but the comparison even with PPP still show lower income bracket line in US still considered to have same ammount of purchasing power of Middle Class China.

Poverty line of advanced developing countries like US still have different meaning even with poverty standard of new emerging economics power like China.

[waraich]

Let me share alittle insight in the current situation of world powers.

The US is feeling the pain from the financial crisis, but i predict that the US will recover and still continue to be very important player in the global economy and security in the next few decades. The US has a resilient economic and political system that can accomodate change and reforms. One of the reason that Japan is unable to recover is its inability to reform itself quick enough to meet new challenges.

The EU is not a super power since it is not fully integrated and has many weaknesses in the system, i.e. each EU state does not give up military sovereignty, only some economic sovereignty. But what i am worried about is the Total Factors of Productivity (TFP) in the EU which is very low, only 0.2. TFP is important for sustainable economic growth as it allows a country to develop with less reliance on limited resources. The low TFP also means that European workers are too comfortable with their live and unwilling to work extra hours to increase productivity. In contrast US TFP is quite high (1.6) compared to the EU. This mean that the US has much greater room to grow economically than the EU under limited natural and human resources.

Another factor that the US has is the entrepreneurial resource. US citizens continually innovate and is entrepreneurial at the same time, thus we see emergence of companies such as google, amazon and starbucks. The top 100 brands in the world are mostly american company. European fails to take advantage of IT development in the early 2000 and as a result is quite underdeveloped compared to the US in this sector. We all also know that starbucks coffee does not make the best coffee and even got its original inspiration from european coffee shop. The american entrepreneurial spirit can make starbucks into a corporate giant while the european coffee still stays in europe. Japan is another example of a country lacking in entrepreneurial spirits after it reach its peak in the 80s. Some economist argues that Japan lost two decades is partly the result of lack of entrepreneurs to stimulate the economy.

In the case of China, most people have extreme views, its either china is all good and powerful or china is poor and miserable. The truth ofcourse lies in between. China's GDP per capita is about 3500USD and using PPP it is slightly more than 10000 USD per capita still only abput one fifth of US GDP/capita. So china is a relatively poor country compared to US but a relatively wealthy among developing nations. I have confidence that chinese economy grow at 8% this year but it is mainly due to "data messaging" by the bereau of statistics. The real growth is between 6 to 7% as estimated by world bank, still a good and healthy growth rate. There will also be no mass rioting and social instability if china grows below 8%. Entrepreunur spirit is strong and alive while TFP is also high, therefore china, like the US have huge growth potential, thus the interaction between china and US is increasingly important and will dominate future world affairs in the future.

I do not like to use the term superpowers because the world is increasingly integrated and unlike during the cold war where SU economic is isolated and US does not rely on SU economy. Reliance create power. At the moment many countries economic well-being relies on the US, therefore the US has alot of economic power over other nation, but the US also heavily and increasingly relies on chinese money for their increasingly large debt to maintain growth. does this mean that china is also a superpower since the US also relies on china? Many economist agrees that the current system of asian savings paying for US consumption is broken and unsustainable, but will continue further as china plans to buy more US treasuries and OBama encourage consumption for economic recovery. This is the Brettonwood two system, where the US dollars value is tied to asian savings and increasingly China's savings (currently worth 1.95 trillion USD). Hence the G-2 concept of China and US relationship, where the world's affair will rely on the two nation's interaction. Both China and US increasingly rely on each other, which means they have power over one another. The next few decades or even centuries will probably see no real superpower in existance. This is the new world order.

Fortunately (or unfortunately depending on your perspective) military power is becoming less reliable to measure a country's power. In increasingly integrated world, any military action will have serious economic consequence. Nuclear arsenals and the brettonwood two systems ensure that major military conflict between major state impossible. military might of major power can only coerced isolated small/weakened states (Iraq, afghanistan) but not other major states with nuclear arsenals or even small states with major power backing as we have seen in Georgia.

You have painted a rosy picture of US economy, there are few grey area which are not enlightened eg. The total US economy is arround 14 trillion dollars but actuall value may become 50% if oil buying and selling started in other currencies.That is reason US is bulling oil producing countries to sell oil in dollar which actually keeping the market value of dollar at higher demand or values.Iraq and Afghanistan war were engineered to get control of oil resources and routes to ensure the supriority of US and maitain the investor confidence.
But this big oil game to support US is now no more workable but damaging the US economy ,present economic down turn is reation of these wars and wrong US approach, but now its too late , US economy has to touch first the lowest level and as result disintegration is unavoidable as happened with SU.

World economic gurus are also pridicting the same.:)

[autumn child]

do not underestimate US economic and political resilience. I agree that the US is going to take alot of pain to reform and recover from the downturn. The fundamental economic strength of the US is still there. Its major drawback is the budget deficits and increasing debt. Oil trade is not the going to devalue the USD by 50%, Asian countries selling US treasuries anf printing USD will devalue the USD significantly. It is also in the interest of Japan and China, the two biggest buyer of US treasuries to maintain the USD so that they can maintain export competativeness of their products. Asian countries also have no other choice to invest if they want to maintain the value of their reserve. The relationship between China(and other asian countries) and US far outweigh oil trade in importance.

And US is not going to break up like the SU even if the economy hit the bottom. The society cohesiveness (political ideology, language, cultures, etc) in the US is far greater than the SU.

[waraich]

do not underestimate US economic and political resilience. I agree that the US is going to take alot of pain to reform and recover from the downturn. The fundamental economic strength of the US is still there. Its major drawback is the budget deficits and increasing debt. Oil trade is not the going to devalue the USD by 50%, Asian countries selling US treasuries anf printing USD will devalue the USD significantly. It is also in the interest of Japan and China, the two biggest buyer of US treasuries to maintain the USD so that they can maintain export competativeness of their products. Asian countries also have no other choice to invest if they want to maintain the value of their reserve. The relationship between China(and other asian countries) and US far outweigh oil trade in importance.

And US is not going to break up like the SU even if the economy hit the bottom. The society cohesiveness (political ideology, language, cultures, etc) in the US is far greater than the SU.


You said "Reliance Create Power" ,this is the bigest challenge ,US lost reliance of family of nations .

In business world for sucess either you should be bull or bear , in present world economic senario investors are in bearish mode.which is main reason of collapse all major sectors(service, banking,industial) of capitalist economy of US.

[Feanor]

And US is not going to break up like the SU even if the economy hit the bottom. The society cohesiveness (political ideology, language, cultures, etc) in the US is far greater than the SU.

Well... if you want to talk absolute bottom, wait until there is no food to put on the table. How cohesive will the South, the coasts, and the ethnic minorities be then? ;)

[waraich]

The fundamental economic strength of the US is still there

I have doubts in your conclusion . US economy is very close to total collapse


The Federal Reserve is Bankrupt
How Did It Happen and What are the Ugly Consequences?


by Matthias Chang

http://www.globalresearch.ca/index.php?context=va&aid=12648

[Waylander]

@Feanor
If the point is reached that there is nothing to eat in the US than the rest of the world is already in shambles...;)

@Waraich
I know of the comments you have produced on this site so far that you have an axe to grind with the west and especially with the US.
Your comments are full of hope that the US and with it the rest of the corrupt west is going to degenerate into a bunch of failed states.

But what is the alternative to the relatively free economy of the US and the west?

The oppressive regime in China which lives from exporting stuff to the west you despise so much or the healthy economic powerhouses of the middle east or pakistan?

Hoping that the US economy breaks down is as suicidal as one can become because with it the rest of the world is going down the tube, too.

[riksavage]

The US economy, and to a lesser degree Europe and Japan, regardless of debt levels are fortunate that they remain the R&D / high-end manufacturing centers of the world. Germany today still remains the largest exporter (exceeding China - check the last page of the Economist). This builds in a resilience which other countries relying on commodity based exports don't have. The ME maybe cash rich, but what are they going to do when the oil runs out?

We are witnessing tough times, but the fact is the developing world STILL relies on exports to US and European markets (the former in particular). This is a strong testament to their continued spending power. Yes these countries are in dept, but I ain't seen many going cap in hand to the World Bank or on the receiving end of international aid to prop up their failing economies. We've been here before in the 1930's, and no doubt due to the cyclic nature of things, we will end up here again in 20 years time.

[ReAl PrOeLiTeZ]

but in the end americans economy is pretty smart, they connect everybody financial sector in way that. if we go down your going down with us. their market system and economy is so tied up in most countires economy, in that any losses in america have a chain reaction effect that trails down to the end points.

[Feanor]

@Feanor
If the point is reached that there is nothing to eat in the US than the rest of the world is already in shambles...;)

The US has recently become a net importer of food, and that trend is set to only strengthen... so it's not unrealistic that in the even of a US economic meltdown the US would be unable to import food, and unable to grow it. What you say is true, but only in the short term. Even in the medium term there are potential scenarios where the rest of the world is off pretty bad, but the US is off worse.

[waraich]

@Waraich
I know of the comments you have produced on this site so far that you have an axe to grind with the west and especially with the US.
Your comments are full of hope that the US and with it the rest of the corrupt west is going to degenerate into a bunch of failed states.

But what is the alternative to the relatively free economy of the US and the west?

The oppressive regime in China which lives from exporting stuff to the west you despise so much or the healthy economic powerhouses of the middle east or pakistan?

Hoping that the US economy breaks down is as suicidal as one can become because with it the rest of the world is going down the tube, too.
There is alternative .Please read below article


This crisis has proven very clearly that the apparent strength of the financial markets was illusionary. The happy-go-lucky mood evaporated instantly, with the write-down of losses accompanied by the sackings of executives. It is a principal of Capitalism that there is never too much of anything: never too much growth, never too much speculation, never too high a salary, never too many flights, never too many cars, never too much trade and never too much Oil. What Capitalism has created is speculation, recklessness, greed, arrogance and over-indulgence. This is why every boom is followed by a bust and will continue to do so.

The Khilafah Plc

The Islamic system has a completely different philosophy for the economy and as a result it treds a path completely different to Capitalism:

The Islamic economic system is about people and their needs, not economic growth. Muhammad (saw) said: "The son of Adam has no better right than that he would have a house wherein he may live and a piece of cloth whereby he may hide his nakedness and a piece of bread and some water" (Tirmidhi). This forms the basis of the Economic system of Islam, all policies and rules are geared towards achieving such ends. Islam focuses on the needs of the people which this hadith outlined rather then merely increasing GDP.

To achieve such ends the state has been ordained by Islam to play a direct role in the economy and not leave things completely to the free market. Ibn ‘Abbas Narrated as reported by Abu Dawud that Muhammad (saw) said: "Muslims are partners in three things: in water, pastures and fire." Based upon this hadith the state takes direct ownership of the fire based resources such as oil, gas, refineries, electricity plans as well as the water resources. In this way society will not be open to abuse by private companies who make a killing from such key essential utilities. The state will also control key institutions in society so it will be in a position to act well before it’s too late.

The Islamic economy does not have a dual economy – a large financial sector where essentially bets takes place on what will happen in the real economy. The financial sector consists of financial instruments such as stocks and shares, derivatives and securitised products which apart from involving interest (Riba) involve transactions over items which do not require partners to have ownership of them.

The Islamic economy is based upon the real economy and as a result all its rules are based upon ensuring wealth circulation continually occurs. The prohibition of interest means investing wealth can only take place by placing ones wealth in the real economy as there is no other place to invest, if one keeps their money in a bank account (where there will be no interest) it will be liable for taxation at the end of the tax year. Taxation in Islam is wealth based rather then income, hence under Islam there would be no income tax, VAT, road tax etc. This means individuals will have much more disposable income which can practically only be invested in the real economy, this will create a multiplier effect as money will circulate from person to person. It is interest, the financial markets and direct taxation that hinder wealth circulation.

The Islamic system clearly laid down the rules for ownership and how to dispose of assets; these have been outlined in general principals which can be extended through analogy to new realities. This will bring the much needed stability to the economy absent in the West who continually change the goal posts with free markets and the free economy. After every crisis or crash the debate always centres on how much the government should be involved in the economy and how much should be left to the free market. Currently it is state intervention which is keeping the Capitalist economy afloat, through bailouts and the involvement of Sovereign wealth funds, banks have been saved from collapsing. It was these same banks who for decades have argued for deregulation.

Conclusions

The Global credit crunch has once again highlighted the fragility of Capitalism, as the fallout from the credit crunch and the wider economic crisis continues, demands for alternatives are certain to grow and it is here the Islamic economic model represents a compelling case for an alternative economic system. The Islamic system is more then the prohibition of interest and Islamic finance and unlike Capitalism places the needs of the people not economic growth as the central issue that require answers and policies.

http://adnan-globalissues.blogspot.com/2008/09/disaster-capitalism.html

[Waylander]

I knew it.
The so-called "islamic system" is so superior to the western way.
That is the reason why the islamic world and the economic powerhouses of which it consists dominated the world for centuries and are responsible for most of the advancements, new technologies and wealth of this time.

Ok, let's have a look at what most islamic countries did with their oil revenues. The ruling class lives in golden palaces while islamic brothers from pakistan work for them without getting paid alot.
And apart from the UAE not many countries used the billions and billions of oil dollars to invest in a lasting infrastructure and industrial base which allows the to prosper when the oil doesn't flow at some point in the future.

And the financial market is what gives companies the money to invest in new technlogies and to expand.
Who do you think is going to give the companies the needed credits?
From the individuals which no longer put their poney onto the bank?
I want to see how a company like VW is going to finance a new modern factory with the help of thousands of individuals who are now free to invest their money...
The financial market is what keeps the economy alive and growing.
Mistakes have been made and some things went clearly wrong but in the end there can be no growth without a healthy financial market.

You think something like the renessaince or the industrial revolution would have been possible within an islamic system which doesn't assists in economic growth?
Questionable.

Arguing that the current western system needs replacement and then showing the islamic system as an alternative is brave when one considers history and how many advancements have come out of the islamic world since some time...

[Tavarisch]

There is alternative .Please read below article


This crisis has proven very clearly that the apparent strength of the financial markets was illusionary. The happy-go-lucky mood evaporated instantly, with the write-down of losses accompanied by the sackings of executives. It is a principal of Capitalism that there is never too much of anything: never too much growth, never too much speculation, never too high a salary, never too many flights, never too many cars, never too much trade and never too much Oil. What Capitalism has created is speculation, recklessness, greed, arrogance and over-indulgence. This is why every boom is followed by a bust and will continue to do so.

The Khilafah Plc

The Islamic system has a completely different philosophy for the economy and as a result it treds a path completely different to Capitalism:

The Islamic economic system is about people and their needs, not economic growth. Muhammad (saw) said: "The son of Adam has no better right than that he would have a house wherein he may live and a piece of cloth whereby he may hide his nakedness and a piece of bread and some water" (Tirmidhi). This forms the basis of the Economic system of Islam, all policies and rules are geared towards achieving such ends. Islam focuses on the needs of the people which this hadith outlined rather then merely increasing GDP.

To achieve such ends the state has been ordained by Islam to play a direct role in the economy and not leave things completely to the free market. Ibn ‘Abbas Narrated as reported by Abu Dawud that Muhammad (saw) said: "Muslims are partners in three things: in water, pastures and fire." Based upon this hadith the state takes direct ownership of the fire based resources such as oil, gas, refineries, electricity plans as well as the water resources. In this way society will not be open to abuse by private companies who make a killing from such key essential utilities. The state will also control key institutions in society so it will be in a position to act well before it’s too late.

The Islamic economy does not have a dual economy – a large financial sector where essentially bets takes place on what will happen in the real economy. The financial sector consists of financial instruments such as stocks and shares, derivatives and securitised products which apart from involving interest (Riba) involve transactions over items which do not require partners to have ownership of them.

The Islamic economy is based upon the real economy and as a result all its rules are based upon ensuring wealth circulation continually occurs. The prohibition of interest means investing wealth can only take place by placing ones wealth in the real economy as there is no other place to invest, if one keeps their money in a bank account (where there will be no interest) it will be liable for taxation at the end of the tax year. Taxation in Islam is wealth based rather then income, hence under Islam there would be no income tax, VAT, road tax etc. This means individuals will have much more disposable income which can practically only be invested in the real economy, this will create a multiplier effect as money will circulate from person to person. It is interest, the financial markets and direct taxation that hinder wealth circulation.

The Islamic system clearly laid down the rules for ownership and how to dispose of assets; these have been outlined in general principals which can be extended through analogy to new realities. This will bring the much needed stability to the economy absent in the West who continually change the goal posts with free markets and the free economy. After every crisis or crash the debate always centres on how much the government should be involved in the economy and how much should be left to the free market. Currently it is state intervention which is keeping the Capitalist economy afloat, through bailouts and the involvement of Sovereign wealth funds, banks have been saved from collapsing. It was these same banks who for decades have argued for deregulation.

Conclusions

The Global credit crunch has once again highlighted the fragility of Capitalism, as the fallout from the credit crunch and the wider economic crisis continues, demands for alternatives are certain to grow and it is here the Islamic economic model represents a compelling case for an alternative economic system. The Islamic system is more then the prohibition of interest and Islamic finance and unlike Capitalism places the needs of the people not economic growth as the central issue that require answers and policies.

http://adnan-globalissues.blogspot.com/2008/09/disaster-capitalism.html


What you fail to understand is that, despite Islam being a thing of beauty and perfect in every way, not everyone is Muslim and not every non-Muslim agrees to this philosophy mainly because, they're not Muslim. They are not about to take the word of the Quran, Hadith and Sunnah if they do not believe in it.

ESPECIALLY since some of them think that Islamic values are another way of preventing greed from taking over the entire economy. Greed fuels the capitalist economy. That's why the Iraq War happened in the first place. I still don't see any "WMDs".

Everyday, a lot of capitalists make shit up and sell them to consumers who probably didn't need them in the first place. Of course, there are exceptions. For example: Computers and Internet service.

[Tavarisch]

I knew it.
The so-called "islamic system" is so superior to the western way.
That is the reason why the islamic world and the economic powerhouses of which it consists dominated the world for centuries and are responsible for most of the advancements, new technologies and wealth of this time.

Ok, let's have a look at what most islamic countries did with their oil revenues. The ruling class lives in golden palaces while islamic brothers from pakistan work for them without getting paid alot.
And apart from the UAE not many countries used the billions and billions of oil dollars to invest in a lasting infrastructure and industrial base which allows the to prosper when the oil doesn't flow at some point in the future.

And the financial market is what gives companies the money to invest in new technlogies and to expand.
Who do you think is going to give the companies the needed credits?
From the individuals which no longer put their poney onto the bank?
I want to see how a company like VW is going to finance a new modern factory with the help of thousands of individuals who are now free to invest their money...
The financial market is what keeps the economy alive and growing.
Mistakes have been made and some things went clearly wrong but in the end there can be no growth without a healthy financial market.

You think something like the renessaince or the industrial revolution would have been possible within an islamic system which doesn't assists in economic growth?
Questionable.

Arguing that the current western system needs replacement and then showing the islamic system as an alternative is brave when one considers history and how many advancements have come out of the islamic world since some time...


You see, Islam is in one way, similar to communism. (I know it's not, but in this case it is.) IT HAS TO BE APPLIED CORRECTLY AND GLOBALLY. Those poor excuse of Sultans in the Arab countries resting on their gigantic throne rooms enslaving their own people DO NOT REPRESENT what Islam is or what the economic system in Islam is. Hell, as a Muslim I do not endorse these lavish Sultans. Instead of funding aid for the Palestians who die in the thousands everyday, they buy more and more BMWs and other luxuries for Allah only knows what.

This system is bound to one's interpretation of the Hadith, Sunnah and Quran. Not all are correct.

In the case of those other countries, it's simple. They are not doing it correctly.

[Waylander]

If you want to apply this all over the world than, as you rightly said, the fact that many people are not muslims stands in it's way.


I for example don't want to be ruled by islamic laws just as I don't want any christian, jewish, whatever church to rule my life.

Motivation not greed is what fuels economic growth.
There is no motivation in a system which doesn't reward success, hard work and new ideas.
If everything is sucked up by the whole society and divided in equal shares than there is no motivation.

Why should I even try to work harder or to bring up new ideas if this is not rewarded?
Such a system can only succede when everybody is full of altruism.
And we all know that mankind is not close to being like that.

As for many islamic states in the ME not being what they should be.
How can a system work when even in all these countries it doesn't work?
The whole middle east is full of islamic countries and there is not a single one, be it blessed with oil or not, where it works.
Or in other islamic countries like in Africa or Pakistan. Not one of these countries is an example of how well the "islamic-system" works.
So why should it work in a world where most people are not even muslims and have no desire to become muslims when there is no example of where it works even on a small scale.

[waraich]

=Waylander;169185]I knew it.
The so-called "islamic system" is so superior to the western way.
That is the reason why the islamic world and the economic powerhouses of which it consists dominated the world for centuries and are responsible for most of the advancements, new technologies and wealth of this time.

Ok, let's have a look at what most islamic countries did with their oil revenues. The ruling class lives in golden palaces while islamic brothers from pakistan work for them without getting paid alot.
And apart from the UAE not many countries used the billions and billions of oil dollars to invest in a lasting infrastructure and industrial base which allows the to prosper when the oil doesn't flow at some point in the future.

And the financial market is what gives companies the money to invest in new technlogies and to expand.
Who do you think is going to give the companies the needed credits?
From the individuals which no longer put their poney onto the bank?
I want to see how a company like VW is going to finance a new modern factory with the help of thousands of individuals who are now free to invest their money...
The financial market is what keeps the economy alive and growing.
Mistakes have been made and some things went clearly wrong but in the end there can be no growth without a healthy financial market.

You think something like the renessaince or the industrial revolution would have been possible within an islamic system which doesn't assists in economic growth?
Questionable.

Arguing that the current western system needs replacement and then showing the islamic system as an alternative is brave when one considers history and how many advancements have come out of the islamic world since some time...

No doubt ,Gulf oil rich states are misusing their wealth and have no system of accountability,that is reason kingship is HARAM(prohibited) in Islam .

Your knowledge about earlier inventions of islamic world and muslim contribution for humanity is too limited.

Please read below post to enlighten your thoughts , muslim scientist did great job in field of science and technology and for service of humanity.

Setting the Record Straight: The Miracle of Islamic Science
December 10, 2007 ·

http://sakooterspeaks.wordpress.com/2007/12/10/setting-the-record-straight-the-miracle-of-islamic-science/

[waraich]

What you fail to understand is that, despite Islam being a thing of beauty and perfect in every way, not everyone is Muslim and not every non-Muslim agrees to this philosophy mainly because, they're not Muslim. They are not about to take the word of the Quran, Hadith and Sunnah if they do not believe in it.

ESPECIALLY since some of them think that Islamic values are another way of preventing greed from taking over the entire economy. Greed fuels the capitalist economy. That's why the Iraq War happened in the first place. I still don't see any "WMDs".

Everyday, a lot of capitalists make shit up and sell them to consumers who probably didn't need them in the first place. Of course, there are exceptions. For example: Computers and Internet service.

Western preception about islam is not correct ,islam is way of life and emphsis on implementation of five pillars of islam through practice in society and where ever there is dispute islam provide total freedom to resolve that issue in the light of Quran in the benefit of humanity.

Non muslim have total freedom and protection in muslim society much better then capitalism and socialism but because at the moment there is no state fully comply shariah and islamic financial system it would be difficult to develop confidence of western world.

[Waylander]

I never said that the islamic world never invented anything in the past.
I totally agree that for example during the time of the crusades the Islamic world was more advanced than europe.

But what did they do with it in the following centuries?
They fell back more and more.
Saying that because the islamic world was well ahead of other powers of it's time nearly a 1000 years ago doesn't change the fact that at some point in the past the islamic world began to fall behind.
Using the medieval time as an example of how well an islamic system would work is a little bit far fetched don't you think?

The west emerged as the leading power because it stopped being stuck past. A system which mostly relies on religion cannot prosper in the same way like a free society.
That is not said that religion cannot be an integral part of a soviety but it being the fixing point of a society just doesn't work.
The west really began to prosper when it decided to work it's way out of the shadows of the church.

[Tavarisch]

Guys, let's stop this before it turns into a war. It's clear here that neither one of us wants to give up this argument and before this turns into an entire my-musket-is-better-than-yours thing.

Going back on track to what the topic truly is, personally the US is going to lose it's title as a super-power if it doesn't get it's arse up and running economically.

[waraich]

I never said that the islamic world never invented anything in the past.
I totally agree that for example during the time of the crusades the Islamic world was more advanced than europe.

But what did they do with it in the following centuries?
They fell back more and more.
Saying that because the islamic world was well ahead of other powers of it's time nearly a 1000 years ago doesn't change the fact that at some point in the past the islamic world began to fall behind.
Using the medieval time as an example of how well an islamic system would work is a little bit far fetched don't you think?

The west emerged as the leading power because it stopped being stuck past. A system which mostly relies on religion cannot prosper in the same way like a free society.
That is not said that religion cannot be an integral part of a soviety but it being the fixing point of a society just doesn't work.
The west really began to prosper when it decided to work it's way out of the shadows of the church.


This is main difference in other religion and islam that it helps and provide safe and secure path for advancement and development and encourage reasearch and technology and protect and provide gurantee for safety of life and property. first word of Quran is "Read" .

It is just fear and mispreception in western world about islam that how islamic laws can be implemented in modren world.

We muslim consider ourself guilty for this sin that we are not practicing islam in our life as indidual and society and by this act creating hindrence for others non muslims to get benefit of blessing of God which lies in it.

[autumn child]

Reliance creates power still holds true. Many nations still relies on US economy to grow. The fiancial crisis in the US has effected the world economy. There is no better proove that the world still relies on the US and this means that US is still powerful.

I agree that the current capitalist system focus too much on growth and consumption. Personally i don't agree that we all should consume as much as possible to prop up the economy. The cause of the crisis stems from the flawed system of asian countries producing too much cheap goods and exporting low inflation to US. The US in return has excess money or loose money that went to Asian countries again as foreign investment to produce more cheap goods while some goes to the real estate as subprime mortgage. The rest is history. Therefore there is no real one person to blame, but alot of the blame goes to the fed for creating too loose of a monetary policy for such a long time.

We should not categorize the current system as western system anymore. It is slowly changing and evolving with the participation of non western countries. It is the emerging global trade systems that is still in its infancy and requires alot of growing up to do. I disagree with the mixing of religion and economics as religions role is to provide salvation spuiritually and economics is to distribute resurce efficiently. I believe that the world needs to learn moderation. loose regulation will create buble as we have seen in the US and too much regulation leads to inefficient economy as we see in classical communism. The world need to create a regulatory bodies that prevent the world economy from collapsing. This balancing act is of course easier said than done. As for the immidiate remedy, asian especially chinese need to spend more and US needs to save more to abolish the current imbalances. Chinese have about 3.5 trillion in personal savings and 2 trillion in foreign reserve. Spending a fraction of this money can be beneficial to the world economy, while the US need to cut down on spending and regain its basic footing (and of course reality check on consumption fantasy).

[ReAl PrOeLiTeZ]

umm people really really off topic, i thought mine was off topic but islamic now??

[waraich]

Reliance creates power still holds true. Many nations still relies on US economy to grow. The fiancial crisis in the US has effected the world economy. There is no better proove that the world still relies on the US and this means that US is still powerful.

I agree that the current capitalist system focus too much on growth and consumption. Personally i don't agree that we all should consume as much as possible to prop up the economy. The cause of the crisis stems from the flawed system of asian countries producing too much cheap goods and exporting low inflation to US. The US in return has excess money or loose money that went to Asian countries again as foreign investment to produce more cheap goods while some goes to the real estate as subprime mortgage. The rest is history. Therefore there is no real one person to blame, but alot of the blame goes to the fed for creating too loose of a monetary policy for such a long time.

We should not categorize the current system as western system anymore. It is slowly changing and evolving with the participation of non western countries. It is the emerging global trade systems that is still in its infancy and requires alot of growing up to do. I disagree with the mixing of religion and economics as religions role is to provide salvation spuiritually and economics is to distribute resurce efficiently. I believe that the world needs to learn moderation. loose regulation will create buble as we have seen in the US and too much regulation leads to inefficient economy as we see in classical communism. The world need to create a regulatory bodies that prevent the world economy from collapsing. This balancing act is of course easier said than done. As for the immidiate remedy, asian especially chinese need to spend more and US needs to save more to abolish the current imbalances. Chinese have about 3.5 trillion in personal savings and 2 trillion in foreign reserve. Spending a fraction of this money can be beneficial to the world economy, while the US need to cut down on spending and regain its basic footing (and of course reality check on consumption fantasy).

You are again suggesting the same prescription which is root cause of desease,there nothing wrong with the players and match refree's , we need to change the rule of game ,by increasing the number of players and putting more match refrees will not stop the foul play :D

[Tavarisch]

You are again suggesting the same prescription which is root cause of desease,there nothing wrong with the players and match refree's , we need to change the rule of game ,by increasing the number of players and putting more match refrees will not stop the foul play :D

And you need to understand that NOT ALL PLAYERS want to play by the new rules because in the new ruling itself (Islam), those players are ALLOWED to choose so.

[autumn child]

How am I prescribing the root cause of the problem? I am prescribing a remedy to the trade imbalance of Asia and US by rebalancing and moderating. Ofcourse the player have problems. Growing at more than 10% annually by relying on foreign investment is not healthy for china and growing 3-5% annually by over consuming is not healthy for the US. This is one of the root cause of the crisis. What they need is natural growth rather than inflated and unsustainable growth.

Furthermore, you cannot impose Islamic economic philosophy which is radically different than the current system. The system needs evolution not revolution. beside the islamic system is not mature enough to be adopted on a global scale. The world have not seen any major Islamic economy yet. What you are proposing is infact reducing the players, not increasing them. We have to be realistic to the situation, currently US still have the biggest economy along with EU and China (catching up fast). They are the main player in the coming decades. Countries have to prove that they are significant enough to have a voice in the global arena, crude but pragmatic. Of course, there will be more players in the future such as India, and maybe russia and brazil, further adding complexity and multipolarity in the system. I will be interesting what the power landscape balance look like in the future.

But onething I know that theses major players will increasingly integrate their economy to the world and hence making the word superpower irrelevant.

[Manfred2]

The US has recently become a net importer of food, and that trend is set to only strengthen...


Are you talking dollar amounts, as in gourmet' items, or tonnage?

[kato]

USDA Import/Export statistics:

http://ffas.usda.gov/scriptsw/bico/bico_frm.asp

Definitely not by worth.

[Feanor]

Are you talking dollar amounts, as in gourmet' items, or tonnage?

You know, I recall seeing the article a little while ago. I did some googling and did not find anything very recent (though I'll admit it was a brief search). However it seems that it is by value. And that the US is losing ground in meat and grain products.

[waraich]

How am I prescribing the root cause of the problem? I am prescribing a remedy to the trade imbalance of Asia and US by rebalancing and moderating. Ofcourse the player have problems. Growing at more than 10% annually by relying on foreign investment is not healthy for china and growing 3-5% annually by over consuming is not healthy for the US. This is one of the root cause of the crisis. What they need is natural growth rather than inflated and unsustainable growth.

Furthermore, you cannot impose Islamic economic philosophy which is radically different than the current system. The system needs evolution not revolution. beside the islamic system is not mature enough to be adopted on a global scale. The world have not seen any major Islamic economy yet. What you are proposing is infact reducing the players, not increasing them. We have to be realistic to the situation, currently US still have the biggest economy along with EU and China (catching up fast). They are the main player in the coming decades. Countries have to prove that they are significant enough to have a voice in the global arena, crude but pragmatic. Of course, there will be more players in the future such as India, and maybe russia and brazil, further adding complexity and multipolarity in the system. I will be interesting what the power landscape balance look like in the future.

But onething I know that theses major players will increasingly integrate their economy to the world and hence making the word superpower irrelevant.

Impressed,great idealogy,but now players are reluctant to play in present field because every one afraid of great losses and economic gurus are talking about change in game rules,they prescribing new foundations to avoid same crunch in near future.Now suger coated piles will not work ,we have to take few concret steps.
We observed few economies islolated less effected for example still Saudia has 600BUSD excess money to spend for development projects have islamic finance system.:)

[Waylander]

And you think SA is in this favourable position because of their excellent economic system and not because they sit on alot of oil which is dsitributed by a cartell?
Not that their way of using this huge wealth isn't debatable...

Just a quick look at how other systems enhanced the wealth of countries in the past.

There are not many examples were a communist or some sort of islamic system improved the wealth of a country as much as it did with a more open market system.

On the other hand we have examples like Singapore, Hong Kong, South Korea, Taiwan,and the whole western hemisphere were countries which adopted the relatively open markets of the west (surely with regional and cultural differences) prospered in way never seen before.
The same goes for some of the former WarPac countries like Poland and the Czech Republic which also increased their standard of lving by a wide margin.
And note that countries like China and Vietnam only began to jump onto the growth train when they adopted a capitalistic behaviour which often enough excells that of the west.

[waraich]

And you think SA is in this favourable position because of their excellent economic system and not because they sit on alot of oil which is dsitributed by a cartell?
Not that their way of using this huge wealth isn't debatable...

Just a quick look at how other systems enhanced the wealth of countries in the past.

There are not many examples were a communist or some sort of islamic system improved the wealth of a country as much as it did with a more open market system.

On the other hand we have examples like Singapore, Hong Kong, South Korea, Taiwan,and the whole western hemisphere were countries which adopted the relatively open markets of the west (surely with regional and cultural differences) prospered in way never seen before.
The same goes for some of the former WarPac countries like Poland and the Czech Republic which also increased their standard of lving by a wide margin.
And note that countries like China and Vietnam only began to jump onto the growth train when they adopted a capitalistic behaviour which often enough excells that of the west.

This not first time the foundations of capitalist economy failed to sustain the loads also fail to provide the needs of poor nations,we observed poverty ,wars and bloodshed increased in last 50 years .

congestion in flow of wealth ,increase in poverty at global level and high curruption risks are major flaws in free economy and capitalism ,we have to redefine the rules of game for better and secure future .

Restructuring in present world economic system is need of future global economy.

[autumn child]

The curent economic system is not perfect, but so far it is the best humanity has put into use globally. Poor nations and poverty may not be a direct product of the curent systems. These poor country could become wealthier if they adopt the rule of law and have political stability. Corruption have nothing to do with economic system, but rather have more to do with the rule of law. Economy is also not the major source of war. Greed and Ideology (mainly politic and religion) are the major source of war. It can happen with any economic system that you can think of including open economy, planned economy or Islamic economy.

If you want to change the rule of the game start by reducing oil based economy and rely on renewable energy sources and reduce unecessary consumption. It will shift alot of nation's fundamental economy...and reduce global warming :) This is a whole new theory of growth without relying on stored energy source such as fossil fuel.

[black shark]

The curent economic system is not perfect, but so far it is the best humanity has put into use globally. Poor nations and poverty may not be a direct product of the curent systems. These poor country could become wealthier if they adopt the rule of law and have political stability. Corruption have nothing to do with economic system, but rather have more to do with the rule of law. Economy is also not the major source of war. Greed and Ideology (mainly politic and religion) are the major source of war. It can happen with any economic system that you can think of including open economy, planned economy or Islamic economy.

If you want to change the rule of the game start by reducing oil based economy and rely on renewable energy sources and reduce unecessary consumption. It will shift alot of nation's fundamental economy...and reduce global warming :) This is a whole new theory of growth without relying on stored energy source such as fossil fuel.

Well said.
Another criticism I often hear leveled at western economies is that the gap between rich and poor is getting wider and wider. I think this is misleading. A more accurate statement would be the following:

"The rich are getting richer faster than the poor are getting richer"

Insecurity also causes war.

[Feanor]

Communism as an economic model never existed. All that existed were socialist and pseudo-socialist countries.

[autumn child]

Yes it does, even if it is not efficient. Its called centrally planned economy. As long as there is a system that redistribute resources there is an economy.

[Waylander]

Communism as an economic model never existed. All that existed were socialist and pseudo-socialist countries.

And that's because pure communism doesn't work on state level.
The same way a fully free capitalistic market doesn't work and doesn't exists.

Both extreme sides are just not feasible and always need to be adjusted at the direction of the middle.
Be it for example a social market economy or a socialist economy.

[waraich]

The curent economic system is not perfect, but so far it is the best humanity has put into use globally. Poor nations and poverty may not be a direct product of the curent systems. These poor country could become wealthier if they adopt the rule of law and have political stability. Corruption have nothing to do with economic system, but rather have more to do with the rule of law. Economy is also not the major source of war. Greed and Ideology (mainly politic and religion) are the major source of war. It can happen with any economic system that you can think of including open economy, planned economy or Islamic economy.

If you want to change the rule of the game start by reducing oil based economy and rely on renewable energy sources and reduce unecessary consumption. It will shift alot of nation's fundamental economy...and reduce global warming :) This is a whole new theory of growth without relying on stored energy source such as fossil fuel.


Stable economic system need conducive environment free from corruption ,lawlessness,greed etc.

Please read below article give us idea of root causes of frequent failure of existing capitalist economy.

"During its history of about 30 years no major Islamic bank failed; on the contrary, these banks proved to be as efficient and profitable as their conventional counterpart. Those cases of Islamic bank failures were caused by, and attributed to, bad governance (people-management risk) and lack of risk management (operational-management risk). But none of the failed bank was the issue of financial products or the design of financial intermediation questioned. This has increased the trust and removed the doubts of sceptics." (Words in brackets added.)


The Conventional Western banking-financial system and practice is "profit motivation" based rather than "socio-religious" based. This "profit motivation" based is only answerable — accountable to the secular regulatory authorities. The spate of 1990s frauds such as the "junk bond" fraud committed by very enterprising Michael Milken caused a widespread uproar in the US. Since this uproar, there was a sudden onrush of US Universities offering courses on "Ethics"! Whereas in the Islamic system "Socio-religious obligation", hence the everpresent "retribution" in the Hereafter, is built-in plus the accountability to the government regulatory authorities.

Islam is clearly against the capitalism game of "privatisation of profits" and "socialisation of losses". In the words of the Economist (August 30-September 5, 2008), this is capitalism at its worst: it means shareholders and executives reap the profits, but the taxpayer bears the losses.

http://www.bt.com.bn/en/opinion/2009/02/25/essence_of_islamic_finance

[Marc 1]

Non muslim have total freedom and protection in muslim society much better then capitalism and socialism but because at the moment there is no state fully comply shariah and islamic financial system it would be difficult to develop confidence of western world.

Really? Tell me, what would happen if I try to sell christian publications in a street market in Tehran? Or Aghanistan under the Taleban? Or Saudi Arabia? How are those freedoms stacking up now? I know here in Australia that Muslim publications can be and are sold in shops and markets here.

Incidentally before you write me off as anti muslim, I'm an athiest - no faith 'owns' me, I just enjoy pointing out the howlers spread by anybody claiming untruthful things in the name of religeon. IMHO, religeon has been responsible for more wars and conflict than any other reason, so religeon, regardless whether you are Hindu, Mslim, Christian, Jewish, or Calathumpian really is poison.

[Marc 1]

During its history of about 30 years no major Islamic bank failed; on the contrary, these banks proved to be as efficient and profitable as their conventional counterpart.

Very impressive. Now consider that many european banks have been going for much longer than 200 years without any issues prior to the credit crunch that occurred last year. I'd call that pretty impressive too. And if it hadn't been for a government meddling in the market to try and encourage people who couldn't afford loans into the market - then the market that had worked fine up until then for the previous 100 plus years would have been fine thanks. The financial crisis wasn't caused by the capitalist system and the free market economy, it was caused by government interferance in the process - much as you are advocating (a centrally controlled banking system).

[Ananda]

"During its history of about 30 years no major Islamic bank failed; on the contrary, these banks proved to be as efficient and profitable as their conventional counterpart. Those cases of Islamic bank failures were caused by, and attributed to, bad governance (people-management risk) and lack of risk management (operational-management risk). But none of the failed bank was the issue of financial products or the design of financial intermediation questioned. This has increased the trust and removed the doubts of sceptics." (Words in brackets added.)

Waraich, currently in Indonesia, the percentage of Non Performing Loans (NPL) between Conventional Banks and Islamic/Syariah Banks are about in similar level. In Fact in some area the average of Syariah Banks NPL is slighly higher than conven banks. Also the Syariah banks fails to delivered better loan-credit price/costs, thus many potential customers go to conven banks when they decided to get new credit or mortgage. This is just show that what's the matter in here not between conventional or islamic banks, but it's more on credit/risk prudence. When you can show you're operating in highly Risk Managed oprations, the result will be same wheter you are operating Syaria or Conventional banking..
Remember Greed can happen in both institutions..

[ReAl PrOeLiTeZ]

throwing a spanner into this, but damn were off topic.

[Feanor]

And that's because pure communism doesn't work on state level.
The same way a fully free capitalistic market doesn't work and doesn't exists.

Both extreme sides are just not feasible and always need to be adjusted at the direction of the middle.
Be it for example a social market economy or a socialist economy.

Do you recognize that there were distinct modes of production throughout history? And while the shift from one to the next wasn't instantaneous, it was relatively short compared to the time spent within each mode of production.

[waraich]

Waraich, currently in Indonesia, the percentage of Non Performing Loans (NPL) between Conventional Banks and Islamic/Syariah Banks are about in similar level. In Fact in some area the average of Syariah Banks NPL is slighly higher than conven banks. Also the Syariah banks fails to delivered better loan-credit price/costs, thus many potential customers go to conven banks when they decided to get new credit or mortgage. This is just show that what's the matter in here not between conventional or islamic banks, but it's more on credit/risk prudence. When you can show you're operating in highly Risk Managed oprations, the result will be same wheter you are operating Syaria or Conventional banking..
Remember Greed can happen in both institutions..

I dont agree with you,please read below article

http://www.usnews.com/articles/news/world/2008/12/10/the-rise-of-islamic-banking-in-a-time-of-economic-crisis.html?PageNr=2

The Rise of Islamic Banking in a Time of Economic Crisis
How some financial institutions avoid trouble by following the strict rules of the Koran
By Thomas K. Grose
Posted December 10, 2008
Shopping for a business loan during a global credit crisis is tough work even if you're a fast-growing start-up like Ireland's Blue Ocean Wireless. And the scrutiny can cut both ways. Blue Ocean, which supplies wireless communications for merchant shipping, was giving a closer-than-normal look at whether possible lenders could be counted on amid the ongoing financial shakeout.


People walk past the first Islamic Bank of Britain in London, England.
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When the company got a $25 million loan this fall, it came from what might seem an unusual source: the Bank of London and the Middle East, or BLME, which strictly follows Islamic sharia law rather than conventional western banking practices. Islamic banking requires transactions be structured in alternative ways since the rules ban interest and trading in debt. Blue Ocean is one of many European companies benefiting from a surge in Islamic financing that's pushing sharia-compliant banking into the mainstream and extending its appeal to non-Muslims. The sector's growth comes at a time when the western banking system is caught in a liquidity crisis. Blue Ocean took comfort in the fact that BLME draws on the petrodollar surpluses of Persian Gulf oil producers. "The liquidity was there," says Blue Ocean's chief financial officer, Tariq Aslam.

The boom in Islamic banking is providing a crescent-shaped sliver of good news for the City, London's beleaguered financial district. It's fast becoming the main hub of Islamic banking outside the Middle East, a development encouraged by Britain's Labor government, which laid out the welcome mat to sharia-compliant banks several years ago. "The government sees it as another way to draw business to London, to bring investors to the U.K.," says Duncan McKenzie, director of economics at International Financial Services London.

Growth field. London now is home to 25 companies offering some form of Islamic financing. BLME is the largest of five wholly sharia-compliant banks operating in Britain. The first, the Islamic Bank of Britain, opened in 2004, and the number is expected to double within five years. Moreover, most of Britain's conventional banks also have established "Islamic windows," units that offer sharia-compliant products. Globally, the sector's total assets are pegged at between $500 billion and $1 trillion and growing at a rate of 10 to 15 percent a year.

Certainly, business is brisk at Kuwaiti-owned BLME, which is somewhat ironic, given that it opened its doors in July 2007, on the eve of the banking crisis. It is just completing a big leasing project for a major transportation company, and other deals it has sealed this year include financing for apartment buildings and a language school in London. It also provided an $11 million loan to RecovCo, a British aluminum reprocessor that is expanding its operations in France. For the first six months of this year, BLME reported pretax profits of $2.7 million and its assets more than doubled, to $931 million.

The basic concepts of Islamic banking go back 1,400 years, but the world's first modern Islamic bank didn't open until 1975. And the sector didn't really blossom until five years ago, when it was buoyed by rising oil prices and the strengthening economies of Asia's Muslim countries. Sharia law prohibits investing in certain industries or products, including alcohol, tobacco, pork, and pornography. The Koran also forbids usury, so financial transactions are structured to rely on income in the form of rents or profits from the loan, technically not interest. Sukuks, for instance, are a type of Islamic bond backed by ownership of a tangible asset that produces a financial return. Another popular instrument is the commodity murabaha, essentially cost-plus financing, which involves the sale and repurchase of a commodity to fund a loan.

The financing BLME arranged for Blue Ocean, for example, was a commodity murabaha. Here's how it worked: The amount of the first portion that Blue Ocean wanted from its $25 million loan arrangement was relatively small. So an appropriate, low-cost commodity was selected to accommodate the transaction, in this case special high-grade zinc. The bank purchased the commodity—an amount equal to the cash Blue Ocean wanted to withdraw—then sold it at a small profit to the company for the same price on a deferred payment basis. Blue Ocean, with the bank's assistance, then resold the metal at the original purchase price, thus raising the cash it wanted. All transactions occurred nearly simultaneously so that the deal wasn't whipsawed by market price fluctuations
Conservative approach. Islamic banks have avoided the subprime fiasco. "There are no toxic assets," says Natalie Schoon, BLME's head of product development. "As a result, there are no problems with big write-offs. One of the advantages that the Islamic sector has as a whole is that there is still liquidity." That, as well as the conservative nature of its business model, is a big reason that it's attracting more non-Muslim clients. Middle Eastern investors have amassed so many petrodollars they have no choice but to look for opportunities beyond the Persian Gulf region, particularly in the politically stable environments of the United Kingdom and Europe. That's why Islamic banks are setting up operations there. Also, London is attracting those outposts because of Britain's historical links to the region and the strong financial talent pool to draw on. In fact, most of the top executives at the Islamic banks in London are British or European, and they are old hands in City banking. The government's concerted wooing efforts have also helped. "The government is actually supporting Islamic finance," Schoon says. "It's not seen as a threat; it's seen as an opportunity."

As with traditional banks, the Islamic banks in London must meet levels of transparency sometimes lacking in other parts of the world. "Regulation is important," Schoon explains. "Investors like the fact that you are regulated." The London Stock Exchange began listing sukuks this year, and 18 are now trading there, a useful increase of liquidity. The British government, as early as next year, is expected to make the country the first in the West to issue its own sovereign sukuks to raise as much as $3 billion. That should help set a benchmark price and encourage more banks to issue the bonds.

The government's sukuks, which would be the first in the world to be triple-A rated, would also give the United Kingdom an alternative route to raise money from the oil-rich Middle East. The plan is not without critics, however, who claim the government is giving religious-based sharia law official standing. Critics also raise concerns that sukuks could be used to finance terrorism. But Rodney Wilson, an expert on Islamic finance at Durham University, says that's an unlikely scenario. "Most Gulf banks do have fairly sophisticated monitoring systems in place" to ferret out money-laundering, terrorism, or other abuses, Wilson says. The 9/11 terrorists, he notes, used western banks to finance their operations.

A more practical problem is a lack of product standardization. Sharia-compliant financing relies on Islamic scholars to determine if products are in accordance with the Koran. But definitions of what is acceptable can vary greatly, not only from region to region but from bank to bank. Typically, Malaysian scholars tend to offer more flexible interpretations of sharia law than do their counterparts in the Gulf. Each bank has its own board of scholars, and even among the London banks there's no uniformity. Schoon says she's seen deals arranged by rival London banks that BLME's board—which comprises two scholars from the Gulf and two from Asia—would have vetoed.

BLME's toxic-free balance sheet helped convince Blue Ocean's board that, despite being a new bank, it was fundamentally strong. The company also liked the "shared-risk, shared-reward" ethos of Islamic banking, Aslam says. Essentially, each is making a vote of confidence in the other. If they're both right, that bodes well not only for the future of BLME but for the continued growth of Islamic banking in London. And that should give City burghers at least one thing to smile about.

[autumn child]

Stable economic system need conducive environment free from corruption ,lawlessness,greed etc.

Please read below article give us idea of root causes of frequent failure of existing capitalist economy.

"During its history of about 30 years no major Islamic bank failed; on the contrary, these banks proved to be as efficient and profitable as their conventional counterpart. Those cases of Islamic bank failures were caused by, and attributed to, bad governance (people-management risk) and lack of risk management (operational-management risk). But none of the failed bank was the issue of financial products or the design of financial intermediation questioned. This has increased the trust and removed the doubts of sceptics." (Words in brackets added.)


The Conventional Western banking-financial system and practice is "profit motivation" based rather than "socio-religious" based. This "profit motivation" based is only answerable — accountable to the secular regulatory authorities. The spate of 1990s frauds such as the "junk bond" fraud committed by very enterprising Michael Milken caused a widespread uproar in the US. Since this uproar, there was a sudden onrush of US Universities offering courses on "Ethics"! Whereas in the Islamic system "Socio-religious obligation", hence the everpresent "retribution" in the Hereafter, is built-in plus the accountability to the government regulatory authorities.

Islam is clearly against the capitalism game of "privatisation of profits" and "socialisation of losses". In the words of the Economist (August 30-September 5, 2008), this is capitalism at its worst: it means shareholders and executives reap the profits, but the taxpayer bears the losses.

http://www.bt.com.bn/en/opinion/2009/02/25/essence_of_islamic_finance

Chinese banks is porbably one of the healthiest bank in the world this time around...but are they superior to western banks? I do not understand much about Islamic banking but i do know the reason behind chinese banks this time around is the lack of complex financial products and its large reserves which is controled by the govt. So far its good idea to insulate against financial storm but are they efficient at promoting growth during normal times? I do not agree with the overly complex financial products that western bank sells but i also think that complex financial products can be useful to investors and the industry as a whole. I also agree that the executives at wallstreet are greedy and overpaid, but i do not think that Islamic banking can solve greed and corruptions. We just need a better regulatory systems. My point is not which bank are superiors compared to others, rather that different banks have different strength. Western banks are strong with innovation but relatively weak when crisis hit due to their low savings and risky assets, while chinese banks are strong against crisis, but is inefficient in promoting growth to SME. I am sure Islamic banks have their own strength and weakness, but i cannot comment to much on them.

It is very dangerous to promote a banking system that adheres to just one religious believe. It is not fair for people who believe in other religion. No religion in the world has actually successfuly contain man's greed. Religion has been the cause of war and has many times dissapoint humanity. I agree that business has social responsibilities but definitely not religious responsibilities. By the way, we also cannot blame western companies on ethics. All companies and govt are guilty at some point in this regard. Is selling Oil to western countries ethical? knowing what oil can do to earth, why does islamic countries still sell them to other countries? No one govt, companies or religions have absolute moral authority in our world because at one point they are guilty or prove unable to control human greed.

You are basing your arguments on religious superiority and not basic economics.

[waraich]

Chinese banks is porbably one of the healthiest bank in the world this time around...but are they superior to western banks? I do not understand much about Islamic banking but i do know the reason behind chinese banks this time around is the lack of complex financial products and its large reserves which is controled by the govt. So far its good idea to insulate against financial storm but are they efficient at promoting growth during normal times? I do not agree with the overly complex financial products that western bank sells but i also think that complex financial products can be useful to investors and the industry as a whole. I also agree that the executives at wallstreet are greedy and overpaid, but i do not think that Islamic banking can solve greed and corruptions. We just need a better regulatory systems. My point is not which bank are superiors compared to others, rather that different banks have different strength. Western banks are strong with innovation but relatively weak when crisis hit due to their low savings and risky assets, while chinese banks are strong against crisis, but is inefficient in promoting growth to SME. I am sure Islamic banks have their own strength and weakness, but i cannot comment to much on them.

It is very dangerous to promote a banking system that adheres to just one religious believe. It is not fair for people who believe in other religion. No religion in the world has actually successfuly contain man's greed. Religion has been the cause of war and has many times dissapoint humanity. I agree that business has social responsibilities but definitely not religious responsibilities. By the way, we also cannot blame western companies on ethics. All companies and govt are guilty at some point in this regard. Is selling Oil to western countries ethical? knowing what oil can do to earth, why does islamic countries still sell them to other countries? No one govt, companies or religions have absolute moral authority in our world because at one point they are guilty or prove unable to control human greed.

You are basing your arguments on religious superiority and not basic economics.

We should analyse the satuation considering all aspects and religion is major aspect can not be over looked.
I would like to clarify that in islam socio-economic system every aspect of life move within domain of islamic fundamentals and ethics.
Humans has limited control on world economy,we always need help of mother nature for our protection ,wealth, prosperity and economic growth.
So we can not totally or partially discard the basic laws and regulation made by God.God made these fundmental law and ethics for human betterment and servival and any one can get benefit of these fundamentals without any discremination .
Frequent failure of western financial system itself proof of flaw in its basic fundmentals and ethics.
Democratic system is basically drived from islamic shaura system ,where shoura council is actually controlling the state and head of state has limited powers ,why not we apply this system in banking and financial sector by formation of international economic council to control the world major financial entities instead of giving private banks and investment companies to play with the public money and misuse money in their own intrests.In this regards role of world bank and IMF can be increased.

[Preceptor]

Thread closed pending Mod team discussion.
-Preceptor