Beyond the Cusp

June 25, 2016

Brexit Passes and Cameron Plans to Resign and Jo Cox Memorialized

 

All of the votes have been counted and it is official as 52% voted yes to Brexit and 48% voted to remain in the European Union (E. U.). Along with the Brexit yes vote comes news that Prime Minister Cameron will resign, as he stated, “But the British people made a very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction. I will do everything I can as Prime Minister to steady the ship over the coming weeks and months. But I do not think it would be right for me to try and be the captain that steers our country to its next destination.” Well, he said the if vote went against his preference that he would pass the torch, and the good news is we will have another national vote for new leaders to give us a break from the Hillary and Donald catastrophe across the pond. Below is his entire talk from in front of 10 Downing Street to the media. He stated that he would like to see new leadership by October when the Conservative Party is holding their national conference. I can only assume he expects his Conservative Party to continue to lead the nation such that the new Prime Minister will also lead the party; and if they fail, then he can step forward to lead the nation in repealing the Brexit as I doubt he would change his stated view on E. U. membership.

 

 

Now we will see the rush for the door. Already France and the Netherlands have had public pressure for their own exit vote on their E. U. As we had stated earlier, with Brexit passing, and not by what should be considered anything but a fairly definitive vote, all right, landslide it wasn’t; but any politician would be very happy to have a 4% margin of victory which the media in any election would report that the people had made their decision known as if it was a really definitive vote. One has to further note that initially the “remain” vote was comfortably leading after the early vote count from London and other metropolitan cities where the population is younger and considered more erudite, but the rest of the country was definitively of a different mind. This was sort of reminiscent of the Dewey Defeats Truman headline which proved erroneous as the rural votes came in and Truman won the day. The vote was expected to be close with the older population favoring leaving while the youth desired to remain in the E. U.; so once again it fell to that favorite item of pollsters, the ever unpredictable middle. This time the middle was not the middle between conservatives and liberals but the middle aged people, those who may not have lived or only their childhood witnessed Britain before the E. U. but were raised by people who lived through both before E. U. membership and after joining E. U. From appearances this middle aged voting public really did not want to remain in the E. U. or they really wanted to remove Cameron, whichever, the vote is done and the British are free of the Brussels Bureaucracy and their dictatorial ultimatums.

 

Dewey Defeats Truman

Dewey Defeats Truman

 

It will be interesting to see which nations now have similar demands for being allowed to see whether their people desires remaining in the E. U. or demanding their government be empowered and freed from the restrictions and economic directives from Brussels. As noted, France and the Netherlands may already be heading for a vote and if there has been sufficient public outcry, we can expect they too will vote favorably for leaving the E. U. and in many ways the E. U. has brought this upon themselves with their slow but steady suffocation of individual sovereignty. The E. U. was supposedly a mostly economic and trade union and not supposed to replace the individual government’s dominion. But as time went the E. U. grew and assumed more and more power taking these decisions from the individual governments and supplanting them with the dictations and ultimatums from Brussels. They took control over immigration erasing borders between the separate nations. Further they began taking from the wealthier nations and giving to those faltering nations which are where the idea of central planning began to fail. There we are again with central planning being the difficulty, the causational problem. This had a dual effect which simply furthered the problems. The wealthier nations were put out for being made to cover these other nations which they regarded as slacker nations where the people did not have the same work ethic of say Germany or Britain and at the other end these faltering nations were being dictated on decisions which they refused to obey which caused further friction. Both the sides found the demands placed upon them by an unelected set of faceless bureaucrats to be onerous and distasteful. The E. U. will press the predictions that leaving their overseeing guidance as resulting in confusion, trade wars, and every problem conceivable as should the E. U. be disbanded these bureaucrats and the governing central planners will all be out of a job and with no prospects for future employment. What will these poor central planners do without the power of the E. U. charter, a document they have stretch beyond all recognition, to empower them and grant them powers, well, some of the powers they wield as some might be beyond the original intents the member nations originally agreed upon. Overreach can really be a downer that can lead to resentment followed by people actually doing something about being so dictated to.

 

Perhaps the lesson here is that when the representatives that the people elect are slowly but ever so steadily disempowered by an unelected group of central planners who have been overreaching and taking more and more power to themselves, well, you eventually get blowback. The decision to also allow thousands of refugees from Syria, Afghanistan and beyond into the E. U. may have been the final straw. Then there were the terror attacks which many blamed on the E. U. and their immigration policies. This was possibly brought to the fore last week with the horrible event where a Labor Party Minister of Parliament, Jo Cox, was murdered by a reportedly mentally unstable fanatic who was anti-refugee and believed to have been a white supremacist. We can only hope he gets treatment and remains incarcerated in a mental health institution or prison for the mentally unstable such that he never again has the opportunity to harm anyone. This crime did bring an end to the discussion a full week before the vote and was thought would suppress the voters favoring Brexit. If that was true then the Brexit was even more favored than the vote may have indicated though it is more likely that this crime had little if any effect.

 

Late Minister Jo Cox Refugee Advocate Killed by Anti-Refugee Fanatic

Late Minister Jo Cox
Refugee Advocate
Killed by Anti-Refugee Fanatic

 

This crime also deserves some investigation. Jo Cox was both shot and stabbed as was a 77-year-old man, who intervened to help Cox and sustained a serious injury to his abdomen and remains in stable condition in the hospital. Britain had gun laws which are amongst the strictest in the world and yet this unstable individual somehow came to possess and use a firearm in this criminal act of murder. This goes a long way in proving that if a person is determined to murder, there are no laws which will prevent them from attaining a firearm with which to commit their heinous crimes. As long as there are firearms, and that means as long as nations have armies, then people will find a way of attaining weapons. We don’t want to get into a gun control vs. gun rights argument beyond the understanding that anyone willing to commit a violent criminal act will never be deterred by laws about weapon possession or any other law as they are already committed to violating far more serious laws than possession laws or crossing the street outside a crosswalk or stalking or anything else on the books, period.

 

As far as we have been capable of determining, Jo Cox was a refugee advocate and had been quite vocal about the responsibility of the wealthier and peaceful nations of Europe to offer open doors and open arms to the refugees from the war torn areas of the Middle East and Africa. The man who murdered her in cold blood was an adamant and vehement opponent to immigration of those people he saw as from an inferior society and likely incapable of acting and interacting with Europeans and would be a disaster waiting to happen. He had a history of prescribing to white supremacist and apartheid organizations as well as other, according to police and media reports were “right-wing” and “extremist” groups. The Southern Poverty Law Center, a left-leaning United States ‘human rights and minority rights’ organization, has published what it says are documents showing that the suspected murderer, Mr. Mair, had a history of purchasing material from the National Alliance white supremacist organization based in the United States. They released copies of receipts and a 2013 subscription to the National Alliance’s publication, National Vanguard, as well as receipts from 1999 showing purchases for neo-Nazi book “Ich Kampfe,” the “Improvised Munitions Handbook” and other books and traced his activities back to his having also subscribed to a pro-apartheid group’s magazine in the 1980s. Thank you Southern Poverty Law Center for your timely research into this person’s history.

 

This person, Mr. Mair, had definite problems and if law enforcement or public health had known of his problems, it raises questions as to why he was still permitted to be outside of observation and managed care. There was a movement back in the late 1960s and through the 1970s and continuing to this day which operates under the misconception that people with mental difficulties benefit from living in the real world even if this means their missing taking necessary medications. The numbers of homeless living on the streets rose precipitously coinciding with the decisions that mental institutions were harming the people they cared for and that the monies wasted on such institution could be better used in outpatient services for these people. There were studies done subsequently which varied and conflicted with some reporting that many of the former institutionalized individuals were not receiving their medications and has missed appointments with counselors and had been removed from rolls and left on the street without getting the medical attentions they had received previous to being placed out in the world without any real assistance in adjusting. Others reported how many had obviously found a better life as living in the real world had filled them with and through interactions such that they were no longer in need of medication or counseling. One side of these results has to be horrifically missing the mark as they are opposites though their percentages are remarkably similar. So we have to believe that either there are a number of formerly institutionalized individuals who remarkably recovered or that an equal number of these people have fallen through the cracks and nobody really cares. How many of these people will end up on the wrong side of the law or are being abused by others also on the streets as many are likely easy marks. Either way, if there are even half of these people not receiving the medication and help they need, that is a calamity of tragic proportions. One of the victims of this experiment is now Minister of the British Parliament Jo Cox, and that too is a tragic price that British society has paid.

 

Our final note on Brexit, this is just the beginning and this story is about to take on a whole new and serious proportion as the rest of Europeans force their governments to allow them the same choice and we may soon have a free and independent new Europe free of the dictatorship in Brussels. This might be the start of a healthier Europe when each nation will determine their own trade and future and economically they will now be able to have a free and independent currency as each return to their own currency which then adjusts with their economic strength and needs. The ones who would benefit most from being independent from the E. U. would be Greece, Spain and other areas which have found the Euro to be inhibitive of their economic needs. Time will tell and we can hope that the people will get the freedom to decide for themselves and each nation does what is the best for their economies and people.

 

Beyond the Cusp

 

May 28, 2016

Brexit, Obama, Cameron and the EU Elites

 

What do Brexit’s opposition, President Obama, Prime Minister Cameron and the European Union Elite have in common along with the British Treasury, the International Monetary Fund, the Organization for Economic Cooperation and Development? They all are using hyperbolic, exaggerated paranoid economic forecasts of doom and gloom pitched with great arm waving and volume. Those supporting the British Isles leaving the European Union are equally voluminous and strident. There are entire lists of arguments favoring each side as well as dire predictions of horrific disasters with which to attack each side. So, where is the reality which a sane and measured approach of scientific study would support? The sad truth is that no such rational and unemotional report has actually been released and for good reason, leaving the European Union is a completely unprecedented occurrence. The best thing we can do in approaching Brexit is to simply add another opinion which in reality is not that different from every other opinion out there, the best we can reason out and then we will wait and see what happens should the vote go the way we would advise, but we so not expect to influence too many Brits as the other thing that has been polled is that the populace is divided mostly by age and everybody has chosen and are unlikely to compromise on their assumptions. The older generations, possibly because they remember the pre-European Union Britain, favor Brexit while those who have lived entirely as members of the European Union do not support rocking the boat. Perhaps it does break down to whether you lived in a period when Britain was not just another national entity lost within the folds and bureaucracy known as the European Union.

 

The one thing which the British have done which would facilitate their leaving the European Union much more easily than most other European Union nations is the British kept the Pound Sterling as well as accepted the Euro. This may prove to be one of the smartest decisions the British have ever made as eventually, whether it is next month or not all that far into the future of humankind when the European Union finally tears itself apart as the economic strains of retaining Greece, Italy, Spain, France, Poland and Germany as a single economic union while continuing to allow each of the aforementioned nations to rule themselves and make their own economic decisions within some unenforced presumed limitations which would have made minimal difference anyway. So, there will come a time when Britain will be leaving the European Union or the European Union will be leaving Britain along with every other member nation as it melts down from economic hemorrhage. The one thing which is easy to predict is what will happen if Brexit is voted down next month, nothing, absolutely nothing as the entire world will continue with possibly a slight amount of sighs in Brussels and a few perplexed looks from some of the financial wizards across Europe and in the United States as all their studies and predictions of the perils that Brexit will entail.

 

Pound Sterling

Pound Sterling

 

The question which needs examination is what will happen should Brexit pass. The only honest answer is that we have no idea, none at all. President Obama has predicted that should Brexit pass that Britain will lose out in every manner especially in trade with other nations. President Obama threatened that Brexit passing will necessarily place the British at the back of the line in trade with the United States. The President did not explain why this condition would come to pass; he just claimed that would be the result. Perhaps somebody should inform President Obama that first he cannot place anybody at the back of a line which does not exist and unless he was going to place trade sanctions on the British, there was nothing preventing their trade continuing with the United States without suffering any change as membership with the European Union has little effect on United States trade with Britain. The trade between the two nations would simply revert to the same manner as before Britain joined the European Union. Sure there would likely be some legislation passing through the Congress and being sent to the President reverting some of the trade regulations clarifying trade relations but even that would likely be more a reassurance than any drastic alteration such as what President Obama threatened. Even should President Obama veto such legislation, it could be readdressed come January 21 immediately after the new President is sworn in and it is doubtful that whomever should be in the White House would make any difference as such legislation is fairly innocuous and there would be little reason outside obstinacy for a veto.

 

That will not prevent us from offering our point of view. The immediate advantage the British would gain is they would no longer be constrained by the monetary policies of the European Union and the Euro. The British have had the advantage in setting some form of monetary policy free of European Union regulations as they did maintain their old currency, the Pound (we love the old term of Pound Sterling as it sounds so provincial and proud). The British also have their natural relations with the Anglosphere nations of New Zealand, Australia, Canada, United States and a few other more minor English speaking nations. Such a natural set of trading partners being made simpler by a common language grants Britain an easier transition should Brexit pass and they be free to trade under their own desires free of European Union constraints. Further, the British economy would no longer be having some of their resources diverted to support those nations which are in financial meltdown which is causing an ever more serious crisis one after another. Despite the economic restructuring and presumed limitations placed on spending pressed upon those nations suffering economic difficulties ranging from slow economic growth after the 2008 worldwide financial meltdown which began with market collapse in real estate and mortgage collapse due to lax lending standards which were dependent upon rising real estate prices to complete financial freefall such as the collapse in Greece, these nations often ignored these limitations regarding them as impinging on their national pride and being so draconian that they prevent their addressing the economic needs to climb out of their difficulties. Whatever the reasoning, the strain these failing economies place on the productive nations is slowly strangling their monetary gains, threatening to drag them down the same drain with the financially crippled nations. This could be the main reason for the appeal to many British and the reason that establishment supporters of the European Union desire to persuade the defeat of Brexit as they fear an even faster decline of the European Union should the British economy be removed from the sum total of the European Union economy.

 

What those who have as their desire the continued existence of the European Union fear most is Brexit passing as they are completely aware that Brexit would be the first and far from the last nation to exit the European Union. The reality is well known, once Britain leaves the European Union the writing is on the walls in Brussels, the end is nigh. How much longer would France or Germany remain should the British economy become positive and surging forward with a bright future becoming apparent? The answer is not long, weeks, months, but definitely not years. As the European Union is seen as the best stalwart against another ruinous European war and the only manner where the continent of Europe can fairly compete with the United States, China, Brazil, India and any other up and coming economic powers; the European Union core believers are of the mind that only as a unit does the European nations have any hope of competing with any form of equality with the far larger economies and simply larger nations which have the advantage that size brings. The European Union members see their union as the enabler of trade advantages and refuse to see that they are simply another layer of regulatory strangulation and further taxation depriving the nations and some companies from greater profits. They claim that without the European Union such companies as Airbus could never have been created and survived as it was the European Union which allowed the separate nations to work as if a single unit. The reality is that the nations would cooperate as doing so increases their financial strength and in this world of information technology the old differences and impediments which often strangled trade with tariffs and protectionism would not return as the new reality so obviously rewards cooperation between nations and so many of the corporations are now international in nature that nations no longer benefit from such measures. That is the reality and the British remember the freedom of pre-European Union Britain and with any luck, they will be able to reason and influence those without such experience and Brexit will pass and strike a mortal blow to the European Union.

 

Counter to what numerous economists claim, and luckily this is not a universal opinion, the European Union is not the answer to the problems faced by the troubled economies such as Greece, Italy and Spain but rather the result of the Economic Union and its common currency, the Euro. Whether Brexit passes inflicting a mortal wound to the European Union or if we need wait for the European Union to reach its inevitable implosion, the individual nations reverting to their natural independent currencies will initially cause some difficulties but will soon be able to alter their currencies in relation to one another and thus permit the struggling nations to have a devalued currency permitting them to have economic advantages of lower manufacturing costs and thus an economic advantage that accompanies such. That will bring a new vitality which is impossible when they must share an equal cost rate against Germany as the two nations are as different as night and day. Greece and the other struggling nations are closer to an agrarian or light industrial base while Germany is a heavily industrialized and entered the information age and has robotic manufacturing in many industries making a similar currency preposterous in the max. Brexit may just be the key to freeing Europe from Brussels and the self-appointed crowned aristocracy which has placed themselves over a continent for far too long and have reached well past the point where they have gone from a unifying and strengthening of the continent to a detractor which now regulates Europe slowly into a stagnation which was unavoidable as the simple fact that the European Union was an unelected oligarchy which thought itself above the people and not for or of the people and saw the people and individual governments and the nations as merely pawns in their social and economic games and misadventures. There may never be a study done which will find exactly when the European Union went from a path for greater economic growth and strength to a drag upon the continent and a guarantee of a slow but inevitable decline as the bureaucracy grew to the point that it became a ponderous beached whale no longer capable of reacting to financial needs and instead squelching any vibrancy making responding to changing economic forecasts next to impossible. The European Union has gone from a force for European economic cooperation to a farce siphoning off an ever increasing price dampening economic activity.

 

Beyond the Cusp

 

July 10, 2015

Our Economic World is Shakier Than We’ve Been Told

Filed under: 24/7 News Reporting,Absolutism,Administration,Appeasement,Appointment,Austerity Measures,Balanced Budget,Banking Failure,Belgium,Binding Resolution,Brussels,Budget,Cabinet,Capitalism,China,Civilization,Class Warfare,Close Banks,Communism,Communism,Consequences,Constitutional Government,Corruption,Debt,Debt Ceiling,Default on Debt,Democracy,ECB,Economic Growth,Economic Independence,Economy,Elections,Emergency Aid,Equal Responsibility,Equal Rights,Equal Treatment,Equality,Euro,Euro Zone,Europe,European Council,European Governments,European Media,European Pressure,European Union,Executive Order,Failed State,Fascism,Finance Minister,Financial Crisis,Fiscal Cliff,Foreign Aid,Foreign Funding,France,Funding,GDP,German Pressure,Germany,Government,Government Control,Government Waste,Government Worker,Greece,Hyper-Inflation,IMF,Increased Spending,Inflated Spending,Inflation,Interest on Debt,Internal Pressures,International Politics,Italy,Leftist Pressures,Livable Wage,Local Government,Mainstream Media,Media,Media Bias,Media Censorship,Minimum Wage,Ministership,National Debt,Nationalist,Nationalist Pressures,Panic Policies,Parliament,Poland,Political Identity,Politicized Findings,Politics,Prime Minister,Protests,Quantitative Easing,Regulations,Relocation,Rioters Pressure,Secular Interests,Secularist Socialism,Sequestration,Shared Currency,Socialism,Spending Cuts,Submission,Taxes,Under Employment,Unemployment,Union Interests,Validate Elections,Victims,Voting,Wealth,Wealth Redistribution,World Opinion,World Pressures — qwertster @ 2:17 AM
Tags: , , , , , , , , , , , , , , , , , , , , , , , , ,

 

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

 

Create a free website or blog at WordPress.com.