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Growth Engines - Go East for Capitalism

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November 20, 2008

Go East for Capitalism

By Yiannis G. Mostrous

The most positive story of late has been the massive stimulus package China announced recently. I posted initial comments on the plan to the At These Levels blog. As I’ve mentioned here quite often, China is trying to bolster its own economy and can’t save the Western financial system and cushion it against the changes it’s going through.

It’s clear that the turn toward socialist-oriented solutions forecast here and here is now becoming reality. US authorities are in full socialization mode, where the capitalist model is being thrown out of the window. Look at the actions, not the words. The more irresponsible a company or individual has been during the past 10 years, the better its chances of being saved. Even the grotesque US automakers will be bailed out, for the nth time.

Market mechanisms were only used on the upside, with the US Federal Reserve providing the proverbial punch bowl during its “golden days” under the charismatic leadership of the Maestro. The results are well known now, and the state has to come to the rescue.

True, we’ve reached a point where very few alternatives are available, and the state hasn’t many options. But being an advocate of free markets, it’s been devastating for me to witness that free market mechanisms weren’t given a chance to adjust the exuberance of the past eight years.

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That said, every major market bottom has seen social changes taking place, and the present will prove no different. When we’re done with this crisis our economic life won’t be the same.

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Growth Engines is a bi-weekly e-zine written by Yiannis G. Mostrous and published by KCI Communications, Inc. Mr. Mostrous is also the author of The Silk Road To Riches: How You Can Profit By Investing In Asia's Newfound Prosperity.

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