- Jun 6, 2007
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The public image of the Davos "World Economic Forum Meetings" is one of trying to portray that it is a world meeting of the greatest business and social leaders throughout the world the world public should be in awe of the greatness there! The reality of Davos is that it is nothing more than the world's most exclusive job fair, the world's best job fair for CEOs because what goes on there is essentially a serious of pitches by CEO's about what a great job their doing its a cascade of not so subtle solicitations to invest in these CEOs companies. The real tragedy about this is that the world really does need a meeting of such individuals to help try to fix and prevent some of the serious economic problems facing the world!
It would really be nice if the attendees of Davos passed some resolutions to try to help the economic state of the world. Here is one such resolution call for governments throughout the world to immediately institute a seven year moratorium on short selling of currency and the selling of put options for currency and provisions in debt agreements that ban or institute penalties for early redemptions by borrowers whose country's currency is different from that which is the currency the debt obligation requires. This is a really relevant issue in current times because the U.S. dollar is likely to rise in value because prudence calls for the Fed to steadily normalize interest rates, China must steadily stop artificially driving it's GDP which will lower its currency value and commodity prices throughout the world will be low for years to come because of over supply causing commodity based countries' currency to drop in value. What all this means is that currency investors are going to have a field day using short selling and put options driving down currencies where the fundamentals call for the currency to fall. Any knowledgeable person knows these currencies are not going to fall at the rate and to the level that the fundamentals call for greedy investors are going to drive these currencies down in disregard of fundamentals with making maximum speculative profit that which decides the currency value. One of the unfocused on consequences of this decimation of various currencies is that the public and private debtors of these losing countries that owe debt in foreign currency that wasn't devalued are going to experience in many cases severe hardship paying higher amounts of their native currency to pay their obligations than originally planned for. This is not an insignificant sized problem, the Wall Street Journal reported on January 16th 2016 that in the middle of the previous year there was $9.8 trillion of dollar denominated credit extended to non-banks outside the U.S. a very high level especially considering that the level at the end of 2007 was $5.3 trillion. To add to this very sad picture you have Christine Lagarde the Managing Director of the IMF running around the world telling countries that are propping up their currency by buying it in the open market to stop doing this let it fall because propping up your currency is causing you to spend through your dollar reserves which is foolish; this is not to say Ms. Lagarde is wrong because she is not but she should also call for these governments to give their people and businesses notice on when the peg will be removed and try to facilitate them converting their debt from foreign currency to domestic currency so they don't get crushed when the change takes place!
If the attendees at Davos really want to be noble how about calling for a modification of this world economic model of "globalization where there is no trade barriers" how about the common sense model of hybrid globalization where there is international free trade but there is some trade barriers to protect domestic industries so governments can meet their obligation to create good jobs for their people. The writing is on the wall that the world public does not believe the globalization model works. How otherwise can one explain that an American President that negotiated a free trade agreement, the TPP, cannot get it ratified by a Republican Senate. Or how else can one explain the nutty behavior of an American electorate who this year seems very inclined to nominate as the Democrat Presidential nominee a Bernie Sanders whose political leanings are that of a Socialist and to nominate as the Republican Presidential nominee a Donald Trump who has no political leanings he supports whatever policies are the flavor of the times.
It would really be nice if the attendees of Davos passed some resolutions to try to help the economic state of the world. Here is one such resolution call for governments throughout the world to immediately institute a seven year moratorium on short selling of currency and the selling of put options for currency and provisions in debt agreements that ban or institute penalties for early redemptions by borrowers whose country's currency is different from that which is the currency the debt obligation requires. This is a really relevant issue in current times because the U.S. dollar is likely to rise in value because prudence calls for the Fed to steadily normalize interest rates, China must steadily stop artificially driving it's GDP which will lower its currency value and commodity prices throughout the world will be low for years to come because of over supply causing commodity based countries' currency to drop in value. What all this means is that currency investors are going to have a field day using short selling and put options driving down currencies where the fundamentals call for the currency to fall. Any knowledgeable person knows these currencies are not going to fall at the rate and to the level that the fundamentals call for greedy investors are going to drive these currencies down in disregard of fundamentals with making maximum speculative profit that which decides the currency value. One of the unfocused on consequences of this decimation of various currencies is that the public and private debtors of these losing countries that owe debt in foreign currency that wasn't devalued are going to experience in many cases severe hardship paying higher amounts of their native currency to pay their obligations than originally planned for. This is not an insignificant sized problem, the Wall Street Journal reported on January 16th 2016 that in the middle of the previous year there was $9.8 trillion of dollar denominated credit extended to non-banks outside the U.S. a very high level especially considering that the level at the end of 2007 was $5.3 trillion. To add to this very sad picture you have Christine Lagarde the Managing Director of the IMF running around the world telling countries that are propping up their currency by buying it in the open market to stop doing this let it fall because propping up your currency is causing you to spend through your dollar reserves which is foolish; this is not to say Ms. Lagarde is wrong because she is not but she should also call for these governments to give their people and businesses notice on when the peg will be removed and try to facilitate them converting their debt from foreign currency to domestic currency so they don't get crushed when the change takes place!
If the attendees at Davos really want to be noble how about calling for a modification of this world economic model of "globalization where there is no trade barriers" how about the common sense model of hybrid globalization where there is international free trade but there is some trade barriers to protect domestic industries so governments can meet their obligation to create good jobs for their people. The writing is on the wall that the world public does not believe the globalization model works. How otherwise can one explain that an American President that negotiated a free trade agreement, the TPP, cannot get it ratified by a Republican Senate. Or how else can one explain the nutty behavior of an American electorate who this year seems very inclined to nominate as the Democrat Presidential nominee a Bernie Sanders whose political leanings are that of a Socialist and to nominate as the Republican Presidential nominee a Donald Trump who has no political leanings he supports whatever policies are the flavor of the times.
