In desperation, North Korea resorts to private markets

SEOUL — Bowing to reality, the North Korean government has lifted all restrictions on private markets — a last-resort option for a regime desperate to prevent its people from starving.

In recent weeks, according to North Korea observers and defector groups with sources in the country, Kim Jong Il’s government admitted its inability to solve the current food shortage and encouraged its people to rely on private markets for the purchase of goods. Though the policy reversal will not alter daily patterns — North Koreans have depended on such markets for more than 15 years — the latest order from Pyongyang abandons a key pillar of a central, planned economy.

With November’s currency revaluation, Kim wiped out his citizens’ personal savings and struck a blow against the private food distribution system sustaining his country. The latest policy switch, though, stands as an acknowledgment that the currency move was a failure and that only capitalist-style trading can prevent widespread famine.

“The North Korean government has tried all possible ways [for a planned economy] and failed, and it now has to resort to the last option,” said Koh Yu-hwan, professor of North Korean studies at Dongguk University in Seoul. “There’s been lots of back and forth in what the government has been willing to tolerate, and I cannot rule out the possibility of them trying to bring back restrictions on the markets. But it is hard for the government to reverse it now.”

Ironically, though, it may well be the private markets that came into being in the wake of the mid-90s famine that end up saving the North Korean people from another disaster:

Pravda deconstructs world history, sees U.S. groping for new direction

Obama’s decision not to build the Missile Defense System in Poland and the Czech Republic and his Nobel Prize have not yet been comprehended from a philosophical viewpoint. It’s time to do it.

The last turning point similar to the current one happened approximately 400 years ago. The Western European society discovered a new hierarchy of values. Feudalism that valued service and chivalry was replaced with capitalism. Wealth became the measure of success, and everyone was to care about his own pocket only. The cult of money replaced all other values, including religious.

Capitalism turned everything upside down and made people more excited about stuffing their bank accounts than anything else. This system turned out to be extremely efficient in terms of production of goods, services, and comfort. America benefited from the system the most, and decided that the rest of the world has to adopt it as well. If some underdeveloped countries are unable to appreciate the benefits of capitalism, they should be forced to do it.

Meanwhile, philosophers say that capitalism is driven not by hard cash, but rather, striving for hard cash. It’s driven not by the production of goods, but rather, striving for consumption of these goods.

If everyone had these values, the “dog-eat-dog” principal would be the major principal in the world history. But America failed to do it. There are plenty of “underdeveloped” people in the world who continue to cherish spiritual values. There are not that many chances left to force them into worshiping money since these “underdeveloped” people adopt western technology and become stronger. The appeal to adopt American values doesn’t work either. Why would we adopt the system if the system is in crisis? Pragmatic America realized that billions of people are not willing to live in the kingdom of hard cash and decided that it would be better off leaving this kingdom itself. Now the USA is talking about introducing elements of socialism.

What does Obama’s decision not to build the Eastern European Missile Defense System have to do with all of this? Well, it means that it’s not capitalism that’s undergoing the crisis, but the belief in its high efficiency. And this, in turn, means that America, the bulwark of capitalism, is no longer the boss of the world. And if it’s not the boss any more, it has to be friends with everybody, including Russia. And it’s America’s turn to offer Russia to push the reset button. Or maybe it’s just tired of imposing its rules on others and felt that friendship is more valuable than money and power? If this is the case, we will soon witness another turning point in the world history.

Obama should pivot from populism to capitalism

"President Obama is enamored of government investment in new green technologies, but his problem is timing. It could take years for these efforts to come on stream, including the sorting out of likely winners from losers. Meanwhile, our economy, green shoots and all, could go over a cliff.

As Bill Clinton discovered in the 1990s, private investment can turbocharge an economy, quickly and powerfully. That's why Barack Obama needs to strategically pivot. For starters, he must rein in Washington's new anti-capitalist populism. Then he needs to engage in a new love affair with private sector investment, innovation, and entrepreneurial risk. If he pivots now, he can move us out of this quagmire."

http://money.cnn.com/2009/07/16/news/economy/anti_capitalism_economy_growth.fortune/index.htm?postversion=2009071614

Reckless capitalists doing deals without nanny

"That lethargic patient known as the American capital market showed signs of life this week. Washington's decision to put away the defibrillator paddles and let nature take its course at CIT Group means that, finally, Beltway physicians have done no more harm. More good news came from Credit Suisse, which sold mortgage-backed securities with no government guarantees and no opinions from the credit-ratings agencies.

That's right, someone has managed to finance mortgages without putting taxpayers at risk. Just as encouraging, it turns out that investors really can analyze bonds not rated by the government-anointed geniuses at Standard & Poor's, Moody's and Fitch. We'll get to the caveats in a moment, but first let's savor that Washington is willing to consider a new course of treatment that includes the freedom to fail, while Wall Street is showing that markets can solve the problem of opaque securities."

http://online.wsj.com/article/SB124779737373155801.html