The following vid made the hair on the back of my neck stand up. Granted, there is likely a measure of posturing going on to convince countries they’d better seriously step up … but neither do I think for a moment these people are being frivolous. Kinda made me want to learn how to hunt and grow my own food. DISCLAIMER: I’m not an economist! Just took a couple courses waaaaay back in the day. So this is just my armchair take.

A super important thing to understand: Bank Capitalization

When you give your $1 to the Bank, they then can invest that $1 to make profit (of which a teensy portion goes to you as interest).

Usually, banks invest that $1 by loaning to Joe the Pizza Man down the street so he can buy a second pizza stand, or to Cindy so she can buy a bungalow.

But here’s the super-important bit: The Gov’t allows the bank not to simply lend out that $1, but perhaps $8 or more. Why? Because of faith.

Faith that Joe probably will succeed in his biz and pay back not just that $1, but the full $8.

Faith that Cindy will pay her mortgage as agreed upon every month.

Faith that those effing bastards on Wall Street would similarly use the money with integrity as they select investments. They didn’t.

Bank Capitalization refers to how many $1s they in fact have. In short, how much that have that is real, not faith-based. That faith is well and truly shaken.
And all our intricate webs between banks and businesses and countries are seriously frayed.

Photo Credit: komodoro

Don’t flame or tase me: I have some praise for the Conservatives. Yes, I’m still Green – I think business, particularly small business, can save the world if given every opportunity, with the imperative caveat that we (businesses small and large) must incontrovertibly demonstrate the way we do our business is of benefit to people and the planet in addition to being profitable. How anyone can argue with this beats me.
So am I a lefty? Progressive? Conservative? I like to believe I defy right | left categories.

Certainly I’ve been known, though, to publicly protest actions of Canada’s conservatives and my most popular blog post is one in which I went ape-shit about how we in Vancouver used to treat our homeless (arresting them for sleeping outside, for god’s sake). My point? I’m not typically an apologist for the Conservatives.

But.

After my month in England and concentrated doses of BBC reporting and the immediacy of what’s gong on in Greece, I have a deepened respect for policies which get and keep us out of national debt. National debt, just like personal debt, gets a stranglehold on a country, and then takes them down.

Consider this: Greece funded its many worthy social objectives with debt for years. Now, it has to pay nearly 20% (at time of this writing – July) on its bonds. Canada only has to pay 0.65% because of our relatively sane debt levels. Yes, I know much of that should be attributed to Paul Martin under the Liberals. But it also is attributable to Michael Wilson (Finance Min. under Mulroney) and also attributable to the perception that the Conservative Gov’t will keep the debt in check.

What does this mean? It means the same sort of thing that it means for individuals. Because we are (relatively) in good shape on our debt to earnings ratio, we are considered a good risk and just like individuals who have handled their debt well and can get the best interest rates on their credit cards and their mortgages, so Canada can borrow money from other countries and its own citizens at the best rates. This translates to more of our taxes going to programs and less of our money going to dealing with our debt.

I’m good with that. If I’m going to be taxed (and I don’t inherently object to being taxed at all; I want to live in a society that funds the arts and takes care of the vulnerable and funds higher education) I don’t want it to be paying off debt, or worse, simply paying the interest. And if the Conservative Gov’t helps us on that, measured props to them.

Photo credit: British PMO office (somewhat ironic, eh? no photos avail from the Cdn PMO)

When I was a kid, China, like Russia, scared the crap out of me.  It was communist.  Communist China.  People who shared my faith, Christians, got tortured there.  In fact, lots of people got tortured there.  WE might, under very rare circumstances, be allowed to visit, but Chinese people could never visit us because they were locked inside. It was a secretive, faraway, very scary country.

It’s such a different story now.  We witnessed the opening ceremonies stream from Beijing. I’ve enjoyed getting to know several immigrants from China. And above all it’s become nearly impossible to purchase anything that’s not made in China.

Can you relate?

Let’s get familiar with this new super-power, this country that has encroached our lives every which way. This money coach found some econ 101′s:

China makes

• 1/2 the world’s clothes
• 1/2 the world’s computers
• More than 1/2 the world’s digital electronics
• More than 3/4 of the world’s toys (ed note:  uh-oh)

Factors that make this manufacturing do-able by China

• 104 million workers
• 1/10 of the wage compared to Europe and the US
• for every $1 sale in the US of designer clothers, the manufacturer receives 10¢
• workers can work up to 18 hours a day in busy months

To create these goods, China uses

• 1/2 the world’s iron ore
• 1/3 the world’s aluminum
• 1/2 the world’s copper
• nearly 1/2 the world’s hard coal
• nearly 1/10 the world’s oil production (ed note: that’s less than I’d thought.  I guess because they use coal instead)

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I got these stats from an offbeat but very intelligent magazine called The New Internationalist. It’s introducing me to all kinds behind-the-scenes stories that affect my every day life.  If you, like me, want to be better informed, I recommend subscribing!  It’s causing me to see the world differently – in a good way.  (no, I get nothing for the pitch! I am just really impressed by the mag.  And they use a creative commons license – what’s not to love?)