Beyond the Cusp

April 28, 2016

It’s Final and It’s Clinton and Trump

 

Sure it is still possible for Cruz/Kasich or Bernie Sanders to steal the limelight with the teaming up of Cruz/Kasich to temporarily stop Trump or for Bernie to turn the world on its head and win the nomination outright, but pigs have a better chance of flying. So we may as well face it that the United States election will place a criminal against an egotistical buffoon. Such a choice will likely produce the smallest turnout for a Presidential election in American history with over half the eligible voters blowing off the election out of sheer disinterest. The election will be won by whichever of the two candidates sickens their base less than the other. Call it the election where large portions will be voting for the one that makes them less ill. The question must seriously be looked at as to what each Presidency would look like and what the world can expect.

 

Hillary will quite likely be the more predictable of the two as she will be a true leftist performing exactly as advertised. She will continue to spend on social issues taking it from the military. She will cut the NASA budget and we will hear repeatedly about the billions of dollars going to NASA and how such expenditures cannot be justified when the social issues are so dire. She will raise taxes even further on businesses forcing even more companies to flee from what will be an even more oppressive atmosphere. Amnesty for illegal immigrants will be a given and will include a number of millions additional from the troubled Middle East and North Africa (MENA). The flood gates will open for Syrian, Afghani, Iraqi, Libyan, and who knows where else from the failing MENA nations and will be brought in as Europe refuses to accept millions of these immigrants and their nations of origin will disavow them leaving them as people without a country until Hillary rides to their rescue. All financing will be returned to Planned Parenthood. All this and more will result if Hillary has a democratic Congress, especially if they remake the rules preventing filibusters in the Senate by requiring a mere majority vote for cloture as was enacted early in President Obama’s first term.

 

Clinton vs Trump

Clinton vs Trump

 

There will also be a push towards raising the minimum wage above $12.00 and eventually up to $15.00 an hour. This will speed up the automation of fast food service centers, calling such a restaurant would be a stretch. The first company amongst the burger giants to come out with a completely automated service and retrieval and cleaning using robotic servers and cleaning robotic units, especially if they appear humanoid but still obviously robotic to avoid that gulch where they are too humanlike but just enough off to be spooky. We believe the term for such robots are they are in the Uncanny Valley where they freak people out and make them uncomfortable. Unemployment will skyrocket along with the minimum wage hike as more and more jobs simply disappear either through automation of certain sectors of industry or simply fleeing to Asia and other places of lower production costs.

 

There will be pressure by the green movement to tighten pollution standards and a strong push to tax gasoline internal combustion engine vehicles to higher prices making electric vehicles more attractive. Expect a European style carburetor tax or even cylinder tax with a tax based on number of cylinders where production of a car has such a tax pushing the prices skyward. Gasoline taxes will also push gas to European levels or higher. Expect a mileage tax to be levied with GPS mileage tracking systems required on all cars including retrofitting older vehicles. If such a requirement makes keeping your old vehicle on the road too expensive to install the GPS mileage tracking system, enjoy walking or the bus. Automated trucking with self-driving vehicles will become more common. This too might also be another item built into the GPS mileage tracking where every vehicle signals its GPS location, direction and speed which can be read by the automated vehicles to assist them in driving decisions. Such systems could also automate speeding tickets as your speed would be recorded at all times and exceeding the speed limit could result in an automated system sending you a ticket for each violation. Who needs speed cameras when the vehicle itself can turn itself in for speed violations? Cities might even enact car free zones where vehicles are forbidden forcing people to use mass transit. All this and more could be a result of a Hillary Clinton Presidency.

 

Donald Trump will be far more difficult to predict as it will depend largely on whom he appoints as his Cabinet and advisors. The biggest danger of a Trump Presidency would be if his policies become unpredictable, especially in economic programs. Should he start one set of economic programs and after five or six months not have the results he desired so he changes the game and again every four to six months then investors will sit on their money as such a game would become too risky and they would turn into risk adverse investors placing their investments in predictable sectors or overseas. Trump might react to pressures from ecology lobbies and make some concessions and it would depend on which as to the effect. CAFÉ standards might be increased demanding higher MPG ratings for vehicles. Taxes on businesses would likely be lowered which would be a positive; and minimum wage, where it may be raised, would not approach $15.00 which would permit for lower unemployment numbers.

 

Certain advances are going to be unavoidable. The driverless automated trucks are coming and there is no preventing that short of making them illegal, not going to happen. Mileage taxes will be levied by the individual states even if not done by the Federal Government. Requiring GPS reporting mileage and possibly constant recording and reporting trip data to the government is coming and will be used to try and force driverless vehicles to replace human drivers even before the technology is perfected, though it is very close, which is why it will be unavoidable. Trump might actually listen to the car manufacturers and allow for hydrogen powered vehicles as an alternative to electric cars. What the ecology lobby does not want people to know is that electric cars do little to lessen pollution and just change the location of the pollution as charging the electric cars requires greater output by power plants most of which burn fossil fuels with extra demand making up for the pollution presumably not produced by driving gasoline powered vehicles. The hydrogen powered vehicles exhaust is water vapor and its main pollution is thermal as the exhaust is in the form of steam predominantly. Perhaps some system could be installed which would permit some degree of condensation before release into the atmosphere, but the efficiency of such a system would need to be proven before any great claims could be made.

 

The area where either a Trump or a Clinton Presidency would be most in doubt would be foreign policy. Hillary might be more willing to intervene militarily and then leave too quickly after declaring job accomplished which may or may not be a better policy providing the parties understand that intervention remains an option if things are not improved after any regime change. Another Libyan style disaster would serve nobody. Trump, on the other hand, is a complete unknown and the sole plus is that as a complete unknown and with his reputation as being somewhat unstable and capable of flying off the handle, other nations might be tempered in their desires to test a President Trump. There will always be at least one foreign country which will test any new President and how they react to such a test can set the mood for the remainder of their term. After the Bay of Pigs disaster Khrushchev tested President Kennedy by shipping nuclear capable missiles into Cuba sparking the Cuban Missile Crisis and the rest is history. Needless to say there were no more tests after President Kennedy literally blockaded Cuba and prevented any additional missile deliveries and demanded the removal of those already in place. Things got a good deal quieter after that faceoff.

 

What will be the test for the incoming President? We predict it would likely come via the situation in what used to be Syria and potentially Iraq and could be either from Russia or Islamic State. There is the already existing threat in the South China Sea with the Chinese literally building and arming islands right in the heart of the existing sea lanes forcing shipping to detour adding hundreds of miles to the routes between Japan and Asia as they need to circumnavigate around these Chinese newly-fashioned and militarized islands. These also could be utilized to prevent any reinforcement in a timely manner of Taiwan should China finally attempt to make good on their standing threat to restore their province which they claim Taiwan actually should be. Then there is the challenge which is sure to be presented by Iran as they continue to flaunt their disregard for any limitations presumably set by the Iran deal which likely was simply an agreement that Iran not announce or test a nuclear weapon until after President Obama has set off for golfing and placing his Presidential Library between the ninth hole and tenth tee next to the clubhouse on his Presidential Golf Course. Foreign challenges are always an area where second guessing is commonplace as nobody can predict everything accurately as there is always that surprise awaiting around every corner. The one predictable item is foreign powers are less likely to challenge Trump than they are Clinton. That might be a very seriously bad mistake, period. Hillary Clinton could be their worst nightmare if she was having a bad hair day when they pushed her; she could be far more vicious and unpredictable than Trump could ever be. Trump, though potentially unpredictable, would at least be relatively logical even if that logic might be unfathomable to some. Hillary Clinton would be simply terrifying should she feel threatened or being made a fool of or made to appear hesitant and weak as she would be more likely to overreact to any situation and press it to unnecessary levels or even use overwhelming force where a strong show of force without pulling the trigger was all that was necessary to end the threat peacefully. We have far more trepidation when it comes to Hillary over Donald when it comes to foreign threats despite both being unpredictable. No matter which wins there will be no telling the results until either has settled in and the initial actions and reactions have been initiated.

 

The final item is Israel. Trump will depend on who his advisors are on foreign policy, but we believe he will be more even handed and accommodating regarding Israel once he is made fully appreciative of the situation. Trump will need to weigh what the Pentagon and Defense Department give him and what the State Department tells him. With such conflicting information, he will necessarily have to choose and hopefully will have visited Israel and talked to both sides and gotten his measure of the land. Hillary Clinton will likely make President Obama appear to have been a supporter of Israel and best of friends with Prime Minister Netanyahu. We already are fully aware of the lack of good relations between Bibi and Hillary and the special hate she holds for Israel. Expect the chill between Israel and the United States to become an ice age under Hillary with no possible thaw and open threats to become commonplace from the White House to Jerusalem. There will be nobody to answer the calls from Hillary as her animosity is well known in Israel and she will manage to even alienate the Israeli left within the first year of her screeching demands for Israel to surrender completely to Abbas. Any dealing with Hillary by Israel would be suicidal. Trump may initially be an unknown but would at least not enter the situation convinced of their preconceived notions as Hillary would be, and she would be completely anti-Israel no matter what lies she told AIPAC.

 

Beyond the Cusp

 

April 25, 2016

Potential British Exit from European Union

 

Despite the unsolicited commentary and thinly veiled threats from President Obama, the British governance from both sides of the aisle have always endeavored to keep open the financial freedom of the British Isles to depart from the European Union (EU) by retaining the Pound Sterling as their independent Coin of the Realm and merely recognized the Euros as legitimate for use within its boundaries giving it a right above that of any normative foreign currency. One cannot use the Dollar, or other foreign currency, without changing them for Euros or Pounds to pay for items in the United Kingdom (UK). Further, the British were late entries into the European exclusive club which itself had their doubts about allowing the British into the EU as the British were seen to have too close and almost personal relations with the United States (US), especially in trade relations as there existed independent of the EU a free trade agreement between the US and the UK. This agreement between the two Anglo nations was all part of the Anglophile and the relationships of its members. This was seen by the EU as an economic threat which by permitting the UK membership into the EU was tantamount to granting the US membership in the EU, something fought against by presumed friendly nations of France and Germany. Now, all of a sudden President Obama speaks of sending the British to the back of the line for receiving a trade agreement which they retained independent from the EU with the United States as a member of the Anglophile.

 

So why might President Obama issue such a veiled threat to London over their coming vote for independence from the EU and its potential harnessing of the UK economic health as a source for propping up the less productive members of the EU who are experiencing serious economic downturns which they are feigning an inability to reverse. This was a problem which was obvious in its eventuality of the less productive states of southern Europe would have difficulties if forced to use the Euros as their coinage as the value of the Euro was set often in conjunction of German industrial strength and not upon the lesser nations utilizing the Euro as their coinage of preference. The UK likely saw the inevitability of economic uproar and eventual disintegration of the EU and especially this exact division where the wealthier nations would demand a higher setting of the Euros’ value, a value not supported by the economic doldrums many EU member states are currently facing and the lack of monetary policy freedom these states faced. The weaker economies within the EU, such as Greece, Spain, Italy and many of the former East European nations, to sustain an economic growth equivalent to the strength and economic growth by the Euro due to the main productive nations such as Germany, Britain and France, with potentially former Warsaw Pact nations more recently added to the EU such as Poland, have economic growth which often does not equal the valuations of the Euro.

 

 

Map of the European Union

Map of the European Union

 

 

The British by retaining their Pound were free to establish an acceptable level for the value of the Euro compared to the pound upon which the UK established their financial policies. Had Greece, Italy, Spain and the other weaker economic nations retained their original coinage and simply permitted a relative limit to its adjustment against the Euros would have provided for some level of independence which over time would permit for the lowering the value of their independent national coinage which would provide a greater latitude for the value of each countries’ economic jumpstart policies thus permitting that level of economic independence they so desperately require in order to retain their financial independence. The current system originally set these national economic standards to mitigate the different economic indicators by making for allowances between the less industrial and less growth oriented nations and the engines driving the EU economy. The system used basically allowed for a limited form of welfare for the lesser productive nations which grew to the point where the less productive member states inability to match German growth in wealth driving their unemployment higher as they found themselves often incapable of matching the economic expectations of the EU through its presumed common economic policies dictated most often from German economic strength, or at the worst the French economic growth, neither of which were matched by the southern European states.

 

Much of the difference was a result of the completely disparate driver of economic indicators between the industrial EU states and their more agricultural nations whose prices were often dictated by the EU for their crops where a single bad year’s yield would decimate their economic indicators setting standards unfathomably high. Had these lesser nations retained their own separate but equally acceptable coinage their economic indicators would have also grown though not so much as had the Euro which was more attuned to the German economic strength. By retaining a modicum of economic independence their currencies would have reflected their slower growth rate and adjusted against the Euro thus setting the economic indicators somewhat independent of the Euro though retaining their strong bindings both to the EU and to its economic viability. Their newly found elasticity would allow for the continued strong relations which set the overall relationship between the independent nations as a whole when making deals with the rest of the world. This would extend the strength of German, French and British industrial economic indicators as a backing for any deals made with the outside world while permitting some level of independence for the individual nations allowing for the disparate economies to grow in relations to each other in a far healthier environment.

 

That economic story is not the reality which the British will be facing as they decide whether or not to remain as a member state subordinate to the economic policies and other arrangements designed to mitigate the different economic realities within the EU. The reality the British will be facing is the growing pressures from the EU for the UK to give up their independent currency and become a full-fledged Eurocentric economy and matching policies. This would free the UK from economic planning and the freedoms related to such planning having their own currency demanded. Instead, the British are facing the same economic trap which Germany is trapped within where their greater wealth and industrial productivity is being siphoned from German economic health in order to prop up nations who have had the audacity to implement as much freedom from their positions in the interim state of affairs. The German government has been touting this all-for-one-and-one-for-all mindset where all of the EU will sink or swim as a single entity, period, end of story. This has allowed the EU to literally steal German economic wealth and gift it as supposed loans guaranteed by the EU banking system and even used the German’s strong economy to guarantee International Monetary Fund (IMF) loans from international banks in ever increasing amounts just to simply allow the now debtor nations to continue to operate though be it at a far lesser economic growth or even health as has Germany. The British economy is equally healthy as is German economic status with one major difference, the UK is not being forced to uphold and pay the debts of these nations and especially so if the funders of the debt are EU banks including but not limited to the European Central Bank (ECB). This has allowed the UK to deal with much of the Irish secondary economic crash which has stalled the economies of the other UK states such as England, Scotland and others within the UK to have all the national economies to fall within the guidelines of the EU. On the other end of the economic scale there are the nations stalled in their production which may not be forthcoming as there may be a split in the EU which can only be the beginning of the end for the EU as other nations see their path to be more advantageous separated from the stifling policies of the Euro.

 

The controversies in the UK over separation from the EU are splitting even members of the current party leading the British governance with David Cameron as the Prime Minister favoring remaining as a member of the EU while London Mayor Boris Johnson favors leaving the EU which has led to a fight between the two to lead the Conservative Party in the near future. Much of this could be laid at the feet of Boris Johnson’s obvious attempts to lead the Party in the next elections seeking the Prime Minister position for himself. Some have pointed to London Mayor Boris Johnson being for remaining within the EU before he was for the UK-EU Brexit policy. Either way, does it matter as politicians often alter their positions to match the moment and this very well could be Boris Johnson’s eying riding this vote to the top position in all of British politics. Still, this is one controversy which will most likely be resolved before the United States Republican and Democrat presidential national conventions slated for later this summer as the British people will have voted on the referendum slated for June 23, 2016. Finally something which will be decided definitively, unlike the nominees for the American Presidency one of which apparently very likely will not be decided on the first vote in Cleveland. Brexit may or may not be adopted by the June 23, 2016 voting though that vote will be far from the last words and provocations thrown around between the top two politicians of the Conservative Party which will climax before the next election in the UK for Parliament.

 

 

Mayor of London Boris Johnson and Prime Minister David Cameron

Mayor of London Boris Johnson and Prime Minister David Cameron

 

 

If the people vote in favor of Brexit expect for David Cameron to press for the Parliament to overrule the people and lay the groundwork for their remaining and potentially doubling down and at long last resigning their Pound Sterling for their full emersion into the Euro financial disaster now gripping the European continent. This is a test of British complacency or unique and visceral independence from the Continent once and for all having the citizens of the UK loudly proclaiming their independency from the European Continent’s overriding controls. Having ties to the British Isles through my father’s side of the family, he was born and raised in a suburb of London and proudly plied his trade as an English Custom Tailor and Designer in Washington DC where he had many high profile customers from both sides of the political isle in America; my feelings are for the British to remain the British and not just become more European Continentalists. It is my opinion, which agrees with others who observed similar stands, that the Pound Sterling and not forsaking their noble currency has been instrumental in retaining the health and vibrancy of the UK economy as a whole despite certain downturns which if handled by the EU would have dragged the rest of the UK down an economic black hole from which return would have proved miraculously difficult. It is not too difficult to see the difference between the British handling their own internal difficulties between the separate states with the EU handling of such difficult economic challenges as posed to the EU by Greece. The EU has demanded, stolen and misappropriated untold millions, if not tens or hundreds of millions, of Euros generated within Germany and gifted them to Greece with a loose understanding that the debt be repaid promptly by Greece even to the point of using German wealth and health of economy to undersign loans from the ECB, IMF and even American banking institutions who have invested entire retirement accounts on Greek bailouts just to have these investments barely break even as these banks have already reached the point where trading with Europe may require payment before rather than after any deal signing just for safe keeping of any promise of payment.

 

The other item of equal importance the future of Europe may be riding on with the Brexit vote is the influx of tens and hundreds of millions of Islamic refugees and a tap left open for too long and now cones the payment for such a deal of trust and opportunity. The concept was that the Islamic refugees and other Islamic immigrants would make up for the lower than required population growth figures. What have happened thus far have been the swelling of the welfare rolls as many Islamic immigrants prefer to collect welfare and remaining unassimilated and demanding that their new homes change their rules and the very fabric of their societies to match the nations they fled. This is preferable to them as they view Europe as their latest conquest and expect the Europeans t work and assume the rolls of Dhimmi supporting their Muslim betters in the lifestyle they wish to become accustomed to. This will not end well for either party as there will be a growing resentment and eventual revolt against these immigrants who are gaming the system and demanding that Islam replace both the remaining Christian and new ranks of the secular societies which the European touted as being so advanced that they could be accepting of all and respect their new arrivals. Respect has to be a two way street or one side will eventually revolt and there begins the problem.

 

Once European workers realize that their new countrymen are using them as their ticket out of the horrors and squalor of their former homelands and are assuming the role of exalted ones who need not produce but are to be treated to lives free from work or any obligation to the society beyond complete rejection of the underpinnings and instead demanding to have their religious demands and rulings become the bedrock of the new reality where the European slaves toil to support their Islamic betters. Should the British not approve the Brexit proposition then the EU will remain intact and more and more policy and powers will gravitate to Brussels and come under the mastery and control by the unelected EU leaders and even more so its bureaucracy which recently sought an agreement which would permit free entrance for any Turkish citizen. This would lead to a problem as Turkey would then only need to grant citizenship identification cards and paperwork to any and all Arab and Islamic refugees, both due to war or economic, and then pass these refugees unfiltered and without any background checks or terror watches observed eventually crashing the European economies due to their being overrun by unable to be assimilated refugees who would swell the populations of the Muslim communities until something would give, or worse, snap. Already there have been numerous rightist nationalist rallies held unofficially, often without permits and always under the radar as these groups would rather remain anonymous, where the main line of agreement was that something need be done to end this unrestricted inflow of refugees. These groups do not see these refugees as potential additions to the workforce but as foreign invaders in Europe to completely subjugate their societies and destroy secular Europe. These are socialists but not international socialists who believe in the unity of mankind but of the all too familiar fiercely Eurocentric vision socialists. They view the recent refugees flooding into Europe as an invasive disease; an influx of parasitic beasts which must be destroyed before they consume all that these right wing nationalists believe is holy and righteous about Europe. In some ways these are the people who if they had had children instead of living self-serving lives where they lived for the moment and the future be damned the problem of insufficient workforce to generate an economically vibrant functioning society would never have arisen. It was to some extent the old Europe’s own fault that their civilization now lies on the verge of extinction and it may actually be too late to salvage even a remnant of their past. Should Brexit vote succeed then there may be movements throughout Europe starting with France or Germany after which it will be a rush for the exits as the economic heart of the EU will have left the body making it everyone for themselves. This will inevitably lead to a renewed sense of nationalism which will have both a good side and an unavoidable bad side. The good side is there may be birthed a new hope for a future worth having children to enjoy and assure that future and the bad side is the refugees may be sent packing back to their former homelands unless they show signs of cooperating in the building of an assimilated society where everyone is respected and all beliefs or lack thereof are treated equally and respected with no one belief being more equal than others. This will require some adjustments on all sides but through such a situation there may be birthed a new universalism, just one where national pride is valued as a driving force for good and cooperation. The really bad side would be a violent conflict between the two civilizations now occupying the continent which would lead to a bloodbath of unequalled proportions as such a conflict could and likely would lead to yet another generational war, this one being World War III, the war that proves there is no upper limit to carnage. Let’s hope it does not end with such a conflict as the killing weapons of today are beyond imagination compared to just a century ago or even half a century. Mankind cannot afford to go there but also they might not be capable of avoiding such, how sorry.

 

Beyond the Cusp

 

July 10, 2015

Our Economic World is Shakier Than We’ve Been Told

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The mainstream media, especially the European Media, are all the news all the time covering the Greek economic meltdown. Some of the more honest media has also included the crises that could be soon to topple as if dominoes all in a row of which Greece is but the first domino to be tripped to fall and they have shown how Spain and Portugal would be precariously hanging and soon toppled partly as a result of Greece’s defaulting though it might be likely they would have fallen eventually all on their own. These would trigger a crisis in Ireland and Italy as to which would be the fourth victim and which would follow as the fifth victim signaling the end of the most endangered Eurozone nations too close to default to be comforting. The real horrific effect of these five weaker economies finally tripping the default cable and snagging the economic webbing, which has held the European Union and the Euro together since 1999, doing irreparable damage to the delicate webbing, more fragile than the most slightly laced spider’s web, tearing enormous holes in its intricate weaves slashing at the most vital threads and upsetting the ever so precarious balance that underlies its supporting structures threatening to unbalance and collapse even the previously though stable economies of France, Poland and many of the other east European economies possibly pushing them right to the cliff-face and potentially tipping them beyond the cusp and into default thus lacerating the last remnants of the Eurozone and possibly taking with them Germany and the ECB (European Central Bank) causing unimaginable damage to the financial structure of Europe and beyond, the ripple effect causing a second deep recession well more serious and taking longer to tank-out and hit bottom and then begin a long sluggish scent clawing for every single Red Cent and Dollar and Euro after having taken its toll on Asia and beyond. But the Euro, Greece, and the rest of the European Union and the Eurozone is but one whirlpool looking to sink every last economic boat.

 

The Euro is what we have been led to believe is the only threat. Where previously economic ships only had to worry about rising and falling tides, now they are adrift and facing not just one whirlpool representing the Euro dying, but now there is a second even more massive whirlpool coming from deep within Asia. China has hit the road’s end and is attempting to push its enormous mountain of debt using a garden trowel while piling on fresh debt using Caterpillar 990K series front end loader shoveling an additional $19.3 billion in an effort to end their three week slide totaling $3.2 trillion downturn in the past three weeks alone. These losses were the result of a Chinese Stock Market where as many as two-thirds of the stocks were frozen in a further attempt to stem the torrents of dollars flowing from their stock market and their economy like the icy waters which flooded the lower decks of the Titanic as she slowly but inexorably fell beneath the waves, something somewhat prophetic for the Chinese markets and economy. There is actually a comparison between the situation in Greece and the downturn in China as one must remember that Greece is as socialist as a nation can be without being either fascist or Communist and Greece has retained their spirit of a democratic Parliamentary system despite it all but China has taken socialism that one final step to communism, the addition of mostly state owned corporations and central planning of the economic engines and manufacturing. Chinese leaders had been attempting to liberalize their economic sectors, though not all of them, selling a number of previously State run businesses and even permitted competition between companies in the same market hoping this would charge their economy further and it had been working but even free-market economic liberalization was unable to stave off this meltdown. The problem obviously is what will this mean for the liberalization of the Chinese economy as the leadership are still Communists who serve the Party and depend on the Party, may decide that much of their financial woes are the result of these new policies and curtail or even reverse some or all of the liberalized companies, markets and take a giant leap backwards to increased government control over every iota of the economy and the manufacturing and sales etc.

 

United States Treasury Secretary Jack Lew commented Wednesday on the current crisis in China stating at the Brookings Institution, that the economies of the United States and China are “still pretty much separated.” In further testimony Secretary Lew queried, “I think the concern … it is a real one … is what does it mean about long term growth in China?” Further in his speech he pointed to the main potential impacts which could emerge as a result to the Chinese Stock Market bleeding financially leaving the leadership seeing ‘Red’ in more ways than one. The leading question is to figure out as soon as possible what the reaction of the leaders of the Communist Party is and whether they may decide that the problem dictates such as appointing new leadership, freezing prices, injecting even more dollars into the markets through the banks and state owned businesses or closing the banks and Stock Market for a week or two cool down and reset to normalcy again; the choices and potential marrying of any two or three makes predictions near to impossible. The one thing which can be computed and predicted as long as the numbers being released and any steps taken are done so in plain view then the impact of the Stock Market freefall on the Chinese economy’s core condition and whether it appears that it will have much elasticity and dynamics when the end is finally reached and the rollercoaster slides on in to the station signaling the end of the ride, and what a ride it was with vigorous growth only to drop who knows how large a percentage of that growth in this correction, and what a correction. Secretary Lew’s closing thoughts are worthy of being repeated as he emphasized, “The question isn’t their commitment to the goal; the question is the pace at which they implemented it, and do they do it fast enough for it to be effective. I hope this is not something that slows down the pace of reform. If the reaction is to put the brakes on reforms, that will slow that process.”

 

With China making a long overdue correction which will be far more severe than it should or could have been if the leadership was not so intent on what numbers they released to the world and on making their predicted economic increase and meet all targets set within the government as to fail was unthinkable and would have been a terrible loss of face thus undermining faith in the economy. This has caused the Chinese to follow the example first used by President George W. Bush and turbocharged by President Barack Hussein Obama which was in the old school simply called a ‘stimulus package’ but is now known by a more enigmatic phrase of ‘Quantitative Easing,’ either of which hides the actual result and method being implemented as who would stand for the government announcing they were devaluing the money supply and taxing every single American by a minimum percentage directly proportional to the percentage increase the total added funding was doled out in stacks of hundred dollar bills, literally thousands of such stacks in the United States and unknown amounts though what is known is the Chinese leadership pumped close to twice the percentage of GDP as did the United States. Just as the United States took their hit starting back in late 2008 and continuing through 2011 and briefly relieved with another round of ‘Quantitative Easing,’ this was like the third pitcher of beer at a table trying to drink their way sober. The economic burst from that mid and late 2011 ‘Quantitative Easing’ gave the economy a burst of hope which appeared to continue due to lowered interest rates and the paring down and mostly neutering of the Dodd-Frank Wall Street Reform Act gave the economy the needed push for President Obama’s reelection as he could run his campaign claiming to have turned the economy around and that great times lie ahead. Well, as far as that goes I’ll point to Greece and China and point out that the United States has followed similar patterns of fueling the economy and especially the Stock Market with borrowed monies and when loans were unavailable the Federal Reserve would electronically buy Treasury Bonds with funds they imagined into existence as a few strokes on a Federal Reserve keyboard and one produces and completed sale with funny money in that the receipt for the Treasury Bonds was used to balance the books as it represented the electronically derived cash used. This is a very convenient way to purchase items this way when you are the government or a very clever fraudster as just try using the sales slip from one register, say men’s clothing from a department store as cash at the Jewelry Counter and see how far that takes you. The catch, and there is always a catch, to ‘Quantitative Easing’ is that eventually you either have to pay back the money that was invented which can only be done some combination of these three methods, first is retire actual money from circulation which can also be done electronically by retiring any electronic payment made on credit cards, second is to remove the funds through higher taxes taking the money directly from the supply, and lastly one could raise the interest rates and siphon off a percentage of each loan to pay the Piper so to speak. The problem is that each of these methods actually hurt the consumer the most; it is the public that pays the price for the economic and financial misdeeds and ill-advised policies.

 

There are but a few redeeming features out of all of this and one serious and potentially unavoidable problem, and it is a big one. So, we will leave the bad news for last and the good news which will cause doom’s day to come and come quickly first. The best of news is that the meltdown in China is most likely to be relatively unfelt even amongst their Asian markets as China does not purchase many goods from outside and the few major needs she has will continue even if slightly abated, things essential like coal and petroleum. Further, the only nation carrying a trade deficit of any note is the United States and even should quotas be placed on any goods currently purchased from China will very likely have ten other sources with some popping up due to China cutting production. The European crisis is more likely to hit the United States harder than anything else on the economic horizon. Should the Eurozone break apart due to the collapse of several of their nations having financial difficulties and teetering at the edge of financial Armageddon plus one, Greece, which has in all honesty gone beyond the cusp and is currently running with his feet well away from solid ground just hanging there for that brief Wiley Coyote moment before collapsing into the darkness below only to make a small puff of dust rising depicting his hitting bottom. Even should the entire Eurozone collapse it may actually serve to keep a lid on inflation and allow for low interests rates, a necessity for the United States. That brings us back to the one thing that at first everyone would be glad to see, a real recovery with rising workforce participation which in the United States is down to approximately 63%, one of the lowest figures since the mid-1970s. This would also bring jobs, especially higher end job market opening up once again which would allow for a ripple effect. As the overqualified people working at menial or minimum wage jobs would leave those as jobs in their field became available and they gain employment thus making room for these other positions to employ more of the nations’ work force and soon inflation will return, something there has been no worry about as even the few months where such measurements showed a possibility for inflation to develop only for indicators to slide back the next couple of months with it often seeming like one big step forward and all promise breaking out only to be followed by three or four months of small to moderate steps backwards and everything gained to be lost and often more. When inflation does finally return for real then there will be a really bad situation. Once inflation starts to threaten then the interest rates will rise as a counter to inflation. Rising inflation takes a bigger bite out of people’s pockets all but actual theft. Inflation also helps with making the national debt somewhat more manageable by deflating the value of the currency taking the currency to new lows and the lessening to of the value of the debt and the purchasing power of that coinage. This was where Greece and the other nations in the Eurozone faced; they no longer had control over their coinage, their monetary worth so they were unable to simply lessen the value in order to get a handle on their debts and also make their nation more attractive to investors and new businesses. Perhaps leaving the Eurozone for a set period of possibly not less than two years and no longer than a decade or quarter century at which point they can reapply at the short end or must face a permanent decision at the longer end. Granted, this will possibly make some nations more reckless but the consequence is the only alternative to having the Eurozone nations turn their entire control of monetary and fiscal planning over to Brussels, they already control the monetary which is part of the problem, and most nations will refuse to be relieved of the power of the purse even if they are no longer able to control the coinage of said purse. Perhaps even a rotating schedule where every nation has to spend a decade using their own coinage would be another compromise. Until the Eurozone finds the answer they will be facing little impossible challenges as is Greece right now and others down the line. Let’s just hope their mistakes don’t become global economic-mines blowing the world markets haywire.

 

Beyond the Cusp

 

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