- Jun 6, 2007
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Economically this year has been off to a terrible start, if the world economy is to get on a good trajectory developments seem to call for major governments and their peoples to exercise the following good judgment.
China's drop in their equity markets and it's currency and the very harmful reverberations from this throughout the world call for the Chinese government to get their act together better than it has been. The Chinese government needs to recognize that although the fundamental Chinese economy is solid and strong for it has an abundance of businesses in a wide spectrum of industries that are very profitable and competitive the Chinese economy has profound problems significant over capacity in a significant number of industries and excessive public and private debt to name a few. The Chinese government needs to recognize it's more pressing problems that its propping up its equity markets is causing great harm to it's own economy and the world economy and equally important the Chinese government is doing an absolutely terrible job as a caretaker of its currency which is causing reverberations throughout the world.
The Chinese government needs to accept that the yuan is over-valued, for heaven sake your own people want to dump the yuan, if your government didn't have capital flight controls your people would be setting records taking money out of China. What all this means is that the Chinese government needs to stop having conniptions that investors are profiting driving down the value of your currency specifically you need to stop artificially propping up your currency which is resulting in this struggle between you and the currency investors which is rattling the world-wide investment community, the Chinese government needs to let the yuan fall in value to a stable range. China needs to have a stable currency for China's economy and major world economies. This is not to say that the Chinese government should not defend it's currency in the future referring to threats from speculators, those disregarding the fundamentals of the Chinese economy and driving down the value of the currency to fulfill greed but this is not the case in the current times.
The Chinese government needs to vastly improve in the area of having "sound" and "stable" equity and bond markets, your failing in this area and it is sending shock waves throughout the world economies which hurts you and these economies and remember these economies are your industries customers and hurting customers gives hurting business. In a nutshell many chinese company stocks are over valued the chinese government needs to steadily and in a deliberate manner let these stock prices fall so the world can see stability in the Chinese equity markets and world-wide investors especially chinese investors can have confidence in investing in the chinese equity markets. For starters why don't you follow the advice of Mohamed El Erian who said your equity market circuit breakers are too sensitive (why don't you mimic U.S. equity market circuit breakers), this mandate on owners of five-percent or more of certain stocks that they cannot sell those stocks this has to go your system has no credibility with this mandate extricate yourself from this mandate by saying that over each consecutive nine months period these owners can sell twenty percent of their holdings so that in approx. four years this mandate won't exist and lastly why don't you crystal clearly ban short selling for a seven year period to give your equity markets time to heal and get in good working order this is not such a big deal during the great recession major equity markets suspended short selling!
In the U.S. elements of the economy hit a bump in the road and the living dead come out in droves. First off, you knuckleheads the Fed does not need to suspend its interest rate hiking plans. Prudent Americans saying everyone needs to accept that the Fed needs to make three or four interest hike this year ending with interest rates one to one and a quarter percent are spot on; the Fed needs to do this because they need to get interest rates at a level where if the country falls into a significant recession they have the tools to jump-start it out of this state in addition and probably more important the Fed needs to press through with this interest rate normalization because being in this abnormal state causes a myriad of serious problems including in part investors know that normalization will bring a decline in the equity markets and an increase in investment in the bond markets so they are sitting on the sidelines depriving the economy of a huge amount of capital in addition as the country has seen over the last two years being in this abnormal state causes wide swings in the equity markets which rattle investors and consumers confidence which hurts the economy. It would be very helpful if individual members of the Fed's Open Market Committee would come out publicly and emphatically say the Fed is staying the course on its interest rate plan don't be looking for any monetary stimulus from the Fed and the U.S. economy doesn't need any such stimulus, the knuckleheads need to stop causing any trouble here!
All this turmoil over the last ten days underscores how important this Presidential and Congressional elections are this year. This turmoil shines a spotlight on the economic state of the world that being that the Chinese economy is decelerating offering little growth prospects for the world, the European Union economy is hobbling along even though its leaders are doing everything they can to stimulate it, the Russian and Brazilian economies are on the ropes because commodity prices are in the cellar and the U.S. economy sputters along with no significant definitive growth prospects in site. To tell you the truth the only real economic hope for the world is that the US. elections this year will produce a functional government that knows how stimulate the U.S. economy for the long-term so that U.S. economy will return to a vibrant growth rate and the world can ride America's coat tails. To this end, good judgment indicates that the American people have three choices: choose a Democrat and you get Obama Two or worse whereby the country's economy sputters along, choose the Republican Trump, Cruz, Rubio or Christie and you get extremism, gridlock and probably political and social unrest or choose the Republican Kasich and to a lesser extent but to a reliable degree Bush and you get someone who can lead a bipartisan coalition to pass the three pieces of legislation needed to get America's economy on the good path that being on business tax reform, regulation reform and healthcare reform (it's a no brainer that this will stimulate the economy dramatically and Americans in high numbers across all spectrums will see significant increases in their incomes because of it), The American people need to stop hoping for a different reality than what exists in the world there is no silver bullet out there there is no magic wand out there the world when Americans wake-up on November 9 2016 will be the same world that existed on November 8th 2016 no matter who is elected where a capitalist system that emphasizes the private sector and believes in small government and correspondingly low taxes offers the best standard of living and quality of live for any people in the world! The question the American people need to answer this election cycle is will they be wise which means be realistic and choose the best Presidential candidate to do this job that needs doin which was just outlined and if they don't America will live with the consequences which will be experiencing great hardship!
China's drop in their equity markets and it's currency and the very harmful reverberations from this throughout the world call for the Chinese government to get their act together better than it has been. The Chinese government needs to recognize that although the fundamental Chinese economy is solid and strong for it has an abundance of businesses in a wide spectrum of industries that are very profitable and competitive the Chinese economy has profound problems significant over capacity in a significant number of industries and excessive public and private debt to name a few. The Chinese government needs to recognize it's more pressing problems that its propping up its equity markets is causing great harm to it's own economy and the world economy and equally important the Chinese government is doing an absolutely terrible job as a caretaker of its currency which is causing reverberations throughout the world.
The Chinese government needs to accept that the yuan is over-valued, for heaven sake your own people want to dump the yuan, if your government didn't have capital flight controls your people would be setting records taking money out of China. What all this means is that the Chinese government needs to stop having conniptions that investors are profiting driving down the value of your currency specifically you need to stop artificially propping up your currency which is resulting in this struggle between you and the currency investors which is rattling the world-wide investment community, the Chinese government needs to let the yuan fall in value to a stable range. China needs to have a stable currency for China's economy and major world economies. This is not to say that the Chinese government should not defend it's currency in the future referring to threats from speculators, those disregarding the fundamentals of the Chinese economy and driving down the value of the currency to fulfill greed but this is not the case in the current times.
The Chinese government needs to vastly improve in the area of having "sound" and "stable" equity and bond markets, your failing in this area and it is sending shock waves throughout the world economies which hurts you and these economies and remember these economies are your industries customers and hurting customers gives hurting business. In a nutshell many chinese company stocks are over valued the chinese government needs to steadily and in a deliberate manner let these stock prices fall so the world can see stability in the Chinese equity markets and world-wide investors especially chinese investors can have confidence in investing in the chinese equity markets. For starters why don't you follow the advice of Mohamed El Erian who said your equity market circuit breakers are too sensitive (why don't you mimic U.S. equity market circuit breakers), this mandate on owners of five-percent or more of certain stocks that they cannot sell those stocks this has to go your system has no credibility with this mandate extricate yourself from this mandate by saying that over each consecutive nine months period these owners can sell twenty percent of their holdings so that in approx. four years this mandate won't exist and lastly why don't you crystal clearly ban short selling for a seven year period to give your equity markets time to heal and get in good working order this is not such a big deal during the great recession major equity markets suspended short selling!
In the U.S. elements of the economy hit a bump in the road and the living dead come out in droves. First off, you knuckleheads the Fed does not need to suspend its interest rate hiking plans. Prudent Americans saying everyone needs to accept that the Fed needs to make three or four interest hike this year ending with interest rates one to one and a quarter percent are spot on; the Fed needs to do this because they need to get interest rates at a level where if the country falls into a significant recession they have the tools to jump-start it out of this state in addition and probably more important the Fed needs to press through with this interest rate normalization because being in this abnormal state causes a myriad of serious problems including in part investors know that normalization will bring a decline in the equity markets and an increase in investment in the bond markets so they are sitting on the sidelines depriving the economy of a huge amount of capital in addition as the country has seen over the last two years being in this abnormal state causes wide swings in the equity markets which rattle investors and consumers confidence which hurts the economy. It would be very helpful if individual members of the Fed's Open Market Committee would come out publicly and emphatically say the Fed is staying the course on its interest rate plan don't be looking for any monetary stimulus from the Fed and the U.S. economy doesn't need any such stimulus, the knuckleheads need to stop causing any trouble here!
All this turmoil over the last ten days underscores how important this Presidential and Congressional elections are this year. This turmoil shines a spotlight on the economic state of the world that being that the Chinese economy is decelerating offering little growth prospects for the world, the European Union economy is hobbling along even though its leaders are doing everything they can to stimulate it, the Russian and Brazilian economies are on the ropes because commodity prices are in the cellar and the U.S. economy sputters along with no significant definitive growth prospects in site. To tell you the truth the only real economic hope for the world is that the US. elections this year will produce a functional government that knows how stimulate the U.S. economy for the long-term so that U.S. economy will return to a vibrant growth rate and the world can ride America's coat tails. To this end, good judgment indicates that the American people have three choices: choose a Democrat and you get Obama Two or worse whereby the country's economy sputters along, choose the Republican Trump, Cruz, Rubio or Christie and you get extremism, gridlock and probably political and social unrest or choose the Republican Kasich and to a lesser extent but to a reliable degree Bush and you get someone who can lead a bipartisan coalition to pass the three pieces of legislation needed to get America's economy on the good path that being on business tax reform, regulation reform and healthcare reform (it's a no brainer that this will stimulate the economy dramatically and Americans in high numbers across all spectrums will see significant increases in their incomes because of it), The American people need to stop hoping for a different reality than what exists in the world there is no silver bullet out there there is no magic wand out there the world when Americans wake-up on November 9 2016 will be the same world that existed on November 8th 2016 no matter who is elected where a capitalist system that emphasizes the private sector and believes in small government and correspondingly low taxes offers the best standard of living and quality of live for any people in the world! The question the American people need to answer this election cycle is will they be wise which means be realistic and choose the best Presidential candidate to do this job that needs doin which was just outlined and if they don't America will live with the consequences which will be experiencing great hardship!
