Friday, May 8, 2009


As posted by Dr. Mahathir Mohamad at Che Det on May 8, 2009 9:40 AM

(This is the conclusion to the series on the trends that led to the present financial crisis)

1. I have listed and explained a little on five schemes for making money out of non-business. The amounts of money involved in these money make money schemes are huge. The hedge funds alone handle 620 trillion dollars. The trade in currency involves 20 times the value of total world trade.

2. These money make money schemes are huge and the earnings of those who manage and invest in these schemes are equally huge.

3. They are not business because they produce nothing and they supply no services. They also create hardly any employment, nor spin off other productive business.

4. Yet the money they generate is real because they can be used to buy goods and services from the real business world.

5. The earners of this money i.e. the fund managers, the bankers and the investors are truly rich and they live the life of the wealthy.

6. Quite naturally the players, i.e. the fund managers, the investors and the banks and bankers make large sums of money. And their earnings must contribute to the national wealth.

7. Since we have developed indices for the wealth of countries, the Per Capita Income and GDP of the countries where these money make money games are played must be high.

8. But if we deduct the wealth from these schemes from the computation of the Per Capita and GDP, obviously the figures would not be as big as claimed.

9. The bubble has now burst and the true Per Capita and GDP can now be seen. And they must be much lower.

10. So the real Per Capita Income and GDP of the rich countries are really not so high compared to the poor countries whose Per Capita and GDP are based on real business.

11. The people in the rich countries who are furiously trying to regain their statistical wealth should not be in denial. You will never be able to recover to your pre-crisis self no matter how many trillions you spend on bailouts.

12. If you accept this fact than you may be able to end the slide to national bankruptcy.