The fallability of modern economics

Ever since I started to receive western education 11 years ago in
highschool, I was awashed with the virtues of capitalism and more
improtantly, the goodness of globalisation. Adam smith pioneered the
notion of national specialty in the global village and we are all
supposed to contribute unselfishly to the global wellbeing by only
produce what we are efficient at, well in an ideal world anyway. This
politically and economically cirrect answer is shovelled unquestioned
into our innocent little brains by anonymous highschool economics
textbook authors who I shall still remain thankful for for bringing me
into the wonderul and complex realm of macroecnomocs. The idea is a
good one though, but the reality is infinitely more cruel and laced
with human emotion and political and cultural resistance. Keynes
himself actually is a bit of realist and advocated for the happiness
of nations through nation building and argued for the necessity of
maintaining some basic industry with less regard for efficiency.
Globalisation brings about huge foreign acc deficit and asset bubbling
through concentrated investment by capital gambling addicts. Hu jintao
summed it all up quite succinctly in his davos talk which I forgot the
exact wording. We are not happiest when efficiency is maximized, but
rather when we perceive ourselves as the best off in it's current
situation. Politicians are aware of it long before economists and it
shows in their protection of key infrastructures. Locally social
democratic and externally globalist might be the best outcome?

At a micro level, capital pundits with their billions are the chief
drivers of this collapse. Short term rent seeking behaviour underpins
the radical shift of the world financial landscape in the past 8
years. To be fair this could only occur in the land of the free and
heart of the brave though, as any other economy entity will not have
the resource or scale to support such comprehensive. It is to such a
state though that the derivative total is greater than all underlyimg
equity thus have unknown to investor's counterparty risk. I am feeling
that even as we now possess great insight into how all these came
about, the political and under the table deals may never surface or
only be known in 50 years time. If alan Greenspan took bribe it would
be the mother of all scandals. Suppose he did get paid to depress all
financial reform bills, it not only is a huge moral and legal
disaster, but also a failing of modern political-economical system to
an elephantine proportion. Hey he did worked for Morgans.

It always intrigues me how the asset
Bubble is translated into real estate boom in most of oz. I guess a
few factors contribute, the gov policy of negative gearing, the stock
and mining boom which stuffed Ppl with cash, and a influx of foreign
cash.