The (Economic) World in 2030

[cynic]

I am very sorry because i have to destroy some popular opinions on some things, but i just have to do that.

Glen48, this is the first time I've actually read something in one of your posts that I think I disagree with. Are you genuinely obligated to dispel other's misconceptions and contrite when you do so?

(When I read this part of your post I had a mental image of you grinning like a Cheshire cat whilst busily tapping away at your keyboard.)

Go on, admit it! You love jumping on the opportunity to share your insight into the primal aspects of human nature when others are opining human civility, orderly behaviour etc.

Whilst I take comfort in finding that I am not totally alone in my awareness that much of the human civility we enjoy today is likely to dissipate when the instinct to survive precepitates pursuant to crises, I do still consider this to be one of those rare occasions when I would be delighted to have my perceptions disproven as I take no delight in the prospect of the human misery and conflict which I believe to be inevitable at this juncture in mankind's evolution.

 

[damien275x]

You people are too negative. I think you underestimate the ingenuity of people and our ability to adapt and progress as a society. Here is my take on 2030:


2030: An Insight
The year is 2030. The baby boomers projected that they would have a good 10-20 years of life at least, after they retired. The reality is that due to medical/pharmaceutical breakthroughs the average baby boomer is now living an extra 5-10 years of quality life on average. The Government has implemented a program called Boomer Boost, which is basically a scheme in which the younger generations are taxed at a higher rate to support those who are living longer than they expected. This fact combined with advancements in technology and the rise of virtual housekeepers see more with the capacity to live at home instead of relocating to aged care homes.

Population has increased substantially. Food shortages were on the rise in the 2020's, but when these shortages occurred, prices rose, and when prices rose, those in farming and agriculture all made more money, the fact that they were making 10 x that of the suits on Wall Street combined with breakthroughs in the renewable energy sector fueled the great boom of the late 2020's. I, of course lost a few hundred thousand dollars because I was one of the many fools who believed he could ride the wave up to the top and then get out. I was dead wrong, and came to the party later than I thought I had. I was only 10 years old when the tech wreck happened in 2000 but having a background in IT/Software development I remember reading about it wishing I was 20 then. That regret fades from my mind because I probably would have lost it all then, too.

Scientific breakthroughs are through the roof in 2030, literally. We have just seen the completion of the 77th Farm Tower that has 200 floors of farming fit plains, with each floor perfectly replicating optimum growing conditions. Fruit and vegetables which were traditionally seasonal can now be grown all year round and we are seeing the pressure on prices finally ease. These towers are powered completely by a new, clean, reliable source of energy. The only downside is that the governments tax the use of this substance heavily despite it being as abundant as oxygen, but they need to pay public servants and paper shufflers inflated wages somehow.

The cost of air travel is now so cheap that even people in the lower class can travel. It is as common as riding a bus. The travel time on an aircraft from Australia to the other side of the world has been cut in half, and because of the in- flight entertainment and virtual reality headsets, you don't even notice this time because you are too busy taking a walk around your destination and checking out places before you get there, bookmaking them on Walkthrough. Walkthrough is the newest social networking site that utilizes virtual reality technology and allows users to share HD, 3D, 360 degree snapshots of images and experiences they have in “Real Life” Real life is a term that has recently been added to the Collins and Macquarie Dictionaries, defined as the difference between ones physical life and ones online life. The advancement in virtual reality technology is seeing a whole new world of addiction for those who want to escape reality, escapism reached an all time record high at the height of the second great depression in 2017.

Facebook of course died a horrible death in 2019 during the brutal Cyber Terror attacks co-ordinated by the Anonymous group: Not only were billions of irreplaceable personal images lost, but records and crucial files of blue chip companies who placed their faith in the cloud vanished into a black hole on October 4, 2019. Conspiracy theories emerged on Youtube2, detailing why they believed the US Government to be behind the attacks given how out of control their countries fiscal situation had become. Call me crazy but some of these arguments don’t sound that farfetched. I just don’t see how it could have been done by somebody who wasn’t “in the loop” After all – top secret location data centers were also destroyed! There was no recovering anything. I lost thousands of wedding pictures and photos of my overseas travels that day. I lost my job at a large Software Development firm, all their source code was in the cloud as all 15 datacenters across 9 different countries were blown up simultaneously. They did have data stored locally but all their financial records were destroyed. The fact that so many people placed such faith in somebody else holding their information was just incredible. The banking system was upset too. Accounts were frozen and nobody could get their money out, at least in America and Europe. Our banks did close too despite records being there, probably due to the connection and globalization. A state of panic broke out during this time. Thank god all records and systems were recovered, people were starting to believe that their savings had been wiped out.

I would have thought that during times of no money, people would have broken into shops, stolen, trampled over each other for the last pieces of bread. But no, surprisingly, despite job loss, a loss of financial security, and a loss of identity across the board, people are spending more face to face time together than ever before, helping each other out and doing things like repairing shoes instead of buying a new pair, repairing clothes, reusing and recycling everything possible. There has been a real shift towards quality, style, and elegance after the great collapse. Looking back at the 2010’s I feel disgusted at just how disconnected and self absorbed we had become as a society. We all thought the world was going to end by life went on and we did recover.

Traveling to and from work is now a 10 minute trip into the CBD on the Ziptrain for those living in the outer suburbs, not that this matters anymore because Gen Y have risen up the ranks and are now in middle and senior management. Everyday is a casual Friday, and employees work times are scheduled to stagnate based on personal preference, some starting at 6am right through until 12pm. Stagnating start times and placing a stronger emphasis on decentralization and working from home has seen the end of traffic jams on freeways and over crowdedness on public transport.

Gone are the days where "work life balance" was just a stupid slogan thrown around by drones that still live in the 1970's. Work life balance in 2030 really is work life balance. “It’s amazing that we continued living the way that we did for so long, despite advancements in the IT and Telecommunications sector which saw us with the ability to operate the way we do today decades ago” Amanda Synnot, Business Development Advisor for the State Government said at the 2029 annual economic conference. “Since the great depression of 2008 - 2020, the last 10 years in terms of economic growth have been fantastic. Australians are experiencing a higher standard of living than ever before and it appears that we have reached a new paradigm and a permanently high plateau”

 

[Glen48]

Panasonic makes 10% of the Worlds 42" Plasma TV and employ 15 people in their factory Robot's do the rest.
Plus of course the transports, shipping etc that should help the long term under employed.
In 2035 the depression should be drawing to close.

 

[Julia]

Damien, a fascinating scenario which sounds entirely possible.
Thank you for describing the future you see. Good to know imagination and insight are not actually dead.

 

[lurker123]

3d printing becomes mainstream,
http://blog.ted.com/2012/01/23/a-primer-on-3d-printing-lisa-harouni-on-ted-com/

What effects this has is uncertain, whether massive unemployment due to massive job losses in manufacturing will result.

Or whether this will result in massive intellectual property infringement as has occured with the internet. From the pirating of music to the pirating of cars. Someone distributes the blue prints of a car online and people download the blue prints and the 3d printer they have at home prints every component required to make a car. They will then assemble the car with the help of the accompanying instructions to put it together which was also downloaded. This stage however will probably not be possible till 2040 assuming similar advancement to the PC industry which took off in the 1970s. 3d printing still requires more advancement in the use of different materials at the same time e.t.c.

Regardless of what results from 3d printing, most likely the status quo will be maintained and wealth will continue to transfer to the top and rising unemployment due to technology replacing people. The general population will continue to be fooled with the creation of more useless jobs and a few highly skilled jobs to replace the jobs displaced by technology however the creation of useless jobs cannot keep up with job losses. This results in more financial trickery such as already evident now, with the promotion of credit cards and inflating of house/land prices. Continued maintence of high government debt until system collapses and resets itself. System reset will result in more of the same.

The system in place is designed for scarcity of human labour, technology has produced abundance of human labour. There are only 3 real needs: food, water and shelter. The other 2 requirements in the modern world being energy/electricity and resources. Technology has reached the point where there are not enough jobs in these areas, the result is that jobs need to be created in other areas. Manufacturing fullfilled that role, however even manufacturing couldn't stop technology. The result products designed to fail. Instead of creating products that last, they create products that fail right after the warranty expires. Globalization exacerbates the problem in developed countries resulting in stability through government and personal debt.

What should have happened to counter the effect of technology was less working hours and hiring of more people due to lower working hours. Instead those at the top have successfully used the phenomenon called technology to transfer wealth up through globalization and other financial trickery. A fake world of endless growth was created.

My prediction of the world in 2030, "more of the same" with the addition of possible major wars over resources and massive problems due to the limited resources of our planet only going to the top. Technology and population has eroded the value of human labour dramatically, real value now lies only in resources such as arable land, oil, e.t.c.

 

[meric]

Relevant short story: http://marshallbrain.com/manna1.htm

A bit too optimistic at the end but sort of aligns with my vision and partially explains my urge to save and invest today.

 

[Glen48]

The biggest threat to mankind is the Virgin in the $300 hat telling all follower's not to use birth control, if this rule was changed and enforced strongly we would see a decline in births world wide and a good start to helping the world economy to crank up again.
Until that starts we have no hope of stopping depressions, war, famine etc.

 

[konkon]

There are lots of interesting blogs, books etc on the so called inevitability of the $US's downfall. I still don't see it happening but see the $US as an even more formidable phenomenon moving forward. Watching Bernanke's testimony to Congress (especially when it came to question time) last week, got me thinking Bernanke seems to be a lot more confident about the $US itself, when referring to it, although he did spell-out concerns about the US economy and Congress' lack of ingenuity regarding the real economy.

The Fed has many mandates and perhaps some indirect ones like making sure the $US does not begin to destruct or implode, like many academics, bloggers etc claim will happen over time. I felt that Bernanke seemed a lot more content about not only the $US's current state, but about its future in global economic affairs and the like. Treasury yields are, at the time being, much lower than when either of the QEs were in effect, and this is mostly due to the flight to safety issue the past month or so. The Fed can probably see that the $US is a more secure 'asset' to most asset classes out there, given the current turmoil in the markets. This is an important step moving forward as it may very well underlie many of the future economic risks to be taken, moving forward from here.

While we all have to endure more and more debt to tackle preexisting debt, the $US appears to be a more attractive than what those who forecast its decline would want. This does not only include many academics, bloggers, but also perhaps a central bank or two (or more!) or some type of 'world bank' (not the World Bank!). I reckon they might, in the year 2030 for example, be a little disappointed to find that the $US's influence by then has remained the most sought after currency in the world, even given the sets of economic problems we may face from now to then; even with the unprecedented sets of debts that seem to be increasing on a regular basis and probably will continue to do so.

So where does this leave the Federal Reserve, for example, in a couple of decades or so? Probably in the box seat. Having said this I would still rather prefer US defense to set up a new, independent, accountable and more transparent agency and take responsibility over what the current Federal Reserve system does overall. Reasons are spelled out in other threads and are broadly based on the overall prosperity of the United States, all its economic classes, its success moving forward as a nation, if it became a more inclusive system. This would not be a coup or the onset of a dictatorship (as this would not make any sense to any US defense organisation that would still need a dynamic capitalist model to continue to prosper too), but a better way of ensuring that the US (inclusively as a nation, not referring to multinationals here) has a more inclusively structured future with a pretty good guarantee that the strength of US treasuries on a global, macro picture can provide, moving forward. Part of what I'm saying here is that the US should have more ownership (not in a literal sense) over the most formidable asset moving forward, the $US, and the fact that its not an inclusive system, may mean that the benefits that the $US can and will continue to provide may be skewered more to elite organisations than the middle classes, military etc within the USA. This proposal would be more of a structured response and would probably do away with the (retail) banks first, the masses second ethos that is crippling growth prospects in the real economy. US defense needs and would continue to need the middle classes, for example, to prosper as their revenue is solely responsible for the strength of the military etc. So it would be a way of ensuring that the middle class system is thriving and not going backwards, like many suggest.

This aside, the (even greater) power that the Federal Reserve might have over the next few decades may decide where things are headed. One might suggest 'its' US banks will enjoy greater prosperity moving forward, as the Fed is pretty much there to support these large US banks. But I see a problem arising here, as do many; there is no ultimate support for some of the risky business practices that these large banking institutions partake in. Take the complex and risky derivatives markets for example that can land them in hot water. It probably wouldn't take much for a large bank to make extreme losses 'gambling' with some of these instruments, that would affect their share price and trigger margin calls which would put more downward pressure on trading prices. Extreme kinds of gambling seems to be gaining momentum. It's clouded in complexities and misunderstandings and this would make measurements at any given time, less reliable.

As we're well aware, the backstop to any kind of problems above tends to be the masses. But what would more and more debt mean moving forward? There seems to be growing euphoria over bailouts but these bailouts are just adding to national debts. Some central banks seem to be immune from a potential crisis of piling on to national debts. Are we paving the way for a more powerful force of central banks, that have the capacity to reinvent themselves and adjust at times like these, and broaden their influence in global matters? I think so, and although this may have been the case for decades if not a century, this has to be a first on such a grand and global scale. The ability to control (not necessarily logistically) the creation and distribution of money by some central banks, may make them the most formidable force moving forward, but unlike the background stance they would have had previously, some central banks are beginning to enjoy a more offensive, foreground presence.

I think the Federal Reserve will continue to be the most powerful of central banks, even post 2030. US debt and most debts will continue to increase on a net scale, even with periods of prosperity. Not because of the growing trend in this area, as it seems logical to follow charts that suggest this, but because of the need by most to continue to take financial risks of all kinds, to aggressively speculate and inflate all types of markets, asset classes and the ongoing perpetual debt that's set-up in such a way to continue building on previous levels of debts, just to name three. Not so good for some of the retail banks too as they draw a considerable amount of their revenue from middle class prosperity. But this may be why we are continuing to see these and other organisations speculate heavily in ie derivative markets and the like. It doesn't seem like these practices will go away any time soon, and if this is their primary way of (trying to) make money, then this game will continue even post any potential catastrophe on ie the derivatives markets. They'll probably find newer ways of making or trying to make money.

to be continued ..

 

[konkon]

By 2030, the US will still have the most sophisticated (at nearly all levels) defense organisations on the planet, and its funding will have to come via indirect intrinsic strength (and all that's associated with it) of the $US and the strong presence of the Federal Reserve System on the global economic front. The Federal Reserve cannot go at it alone, and not only will it need the US consumer to find its footing, it will require additional strength of US defense.

Any notion of a certain central bank (or more!) trying to undermine US defense in some capacity, by helping overburden US taxpayers to the point of not generating adequate funding for defense, will come to a halt, as there is little choice but for US defense to get back into the game (and recent cutbacks will end up being reversed) like it should, if for example the Federal Reserve needs to continue to reinforce its strength over time. The Federal Reserve System needs US defense, just like they both need a strong (not just in a price sense) $US. So any (non physical, of course!) battle, would be won by US defense. It will and has to come roaring back, as a sophisticated proactive phenomenon. The cut backs won't last for too long.

The uptick in non $US swaps or bilateral transactions of non $US between certain countries, is an interesting development. Sure counties are free to trade the way they like, within given market parameters etc, but I can't help thinking that this is a move to do away with trading in $US, thus trying to lessen its influence, and reinforcing strength in other currencies, some of which may be seen as potential replacements of the $US reserve currency status over time. It may just make sense for them to trade in more localised currencies. But I think, as I'm sure do many, that this may be an attempt to undermine the strength in the $US.

It won't lessen the $US reinforcement as the reserve currency. Love it or hate it, the Federal Reserve System is one of the most powerful economic system on the planet. It's not just another central bank. Analogous to a casino, the Federal Reserve would be the house and most prolific player!

Politics is politics, and the US's enhanced involvement in the Asia-Pacific region, is welcoming news to me, although not for others I'm sure. I can almost feel the bitterness.

On China: I admire the Chinese people, but not their system they happen to be 'governed' under, within China. That system as a whole is largely flawed at many levels, and it's one key reason why China will never be able to have a reserve currency, for example. Sure China is bound to be the most wealthiest nation, but it will continue to be hampered by intrinsic and unbreakable restrictions that won't enable it to progress to higher dynamic levels, that would be needed if it was to replace the USA as the dominant world economic player, and even establish a reserve currency.

China's rule by force and threats against those that challenge their system are two key factors working against them, and a communist system is still a communist system no matter how much you want to dilute it with other dynamics. It is one of the few communist countries that isn't close to bankruptcy, which is a good thing, so it may defy this form of economic logic, as it continues to build wealth (disproportionately, of course).

China's real dominance is over what it can control, and this is largely within the confines of its boundaries. It can and does get its way outside of China too, no doubt. But its internal restrictive economic practices does not transform well with freer external ones. This is going to be an increasing problem for China on at least two key fronts (and there are more than two); 1. the economic world is bound to get looser, more transparent with all forms of economic practices on multitudes of levels, and 2. the ruling communist (or call it what you like) elite (including the military etc) within China will not want to loosen their grip on all fronts, and the knots will continue to get tighter and tighter.

Add to this that the Federal Reserve System is not going away any time soon, and China is up against a really formidable set of forces, mostly from its own doings, but also from the Federal Reserve System that will continue to consolidate its positionings on the world economic stage.

The best bet for China is to really try and free up its internal systems so it can become a better net competitive player moving forward. Free up its internal markets and allow the markets to price all of the valuable things it has to offer to its own citizens and the rest of the world. Allow proper foreign business to take place within China, without all the paranoia etc. This would end up being a net positive move for China. Time is also against them as it gets harder for any reasonable change to take place, especially if the ruling elite become more adamant about their own positions.

Having said all of this, China won't change these key dynamics that the ruling elite want and need.

to be continued again

 

[konkon]

"China's real dominance is over what it can control, and this is largely within the confines of its boundaries. It can and does get its way outside of China too, no doubt. But its internal restrictive economic practices does not transform well with freer external ones. This is going to be an increasing problem for China on at least two key fronts (and there are more than two); 1. the economic world is bound to get looser, more transparent with all forms of economic practices on multitudes of levels, and 2. the ruling communist (or call it what you like) elite (including the military etc) within China will not want to loosen their grip on all fronts, and the knots will continue to get tighter and tighter." ...from the previous post

If the quote in bold becomes even more true, and that there's an increase in complex market practices involving sophisticated transactions, interactions, communications and the like, and China continues to price itself out (by its ongoing restrictive market practices etc and continuing to stick to quasi communist ways, which it will) from being able to dominate these enhanced, sophisticated economic activities, and China can't get heavily involved in and control the dominance of next generation global market technological activities (ie algorithmic trading platforms), and the Fed continues along its dominant path (which it will), then this would consolidate China's secondary or non primary positioning moving forward. China may become wealthier but it won't matter as much. It would be one the first times the wealthiest country on the planet wasn't the most dominant one.

There's more to be said about this point and others.

 

[konkon]

You can spin a whole heap to try and convince others (and maybe yourself!) about where you're at and where you're heading, but if those statistics, for example, are false, misrepresenting, don't factor in everything (or most things) that should be factored in, then the illusion you've created will probably come back and impact you in more ways than was originally designed to protect and benefit you.

China can't be growing like they and others say or suggest they are. When was the last time (except for this period!) where you could trust the information that comes out of a, yes, communist and dictatorial system? Once again, nothing against the hard working and smart people of China. This has pretty much everything to do with China's inherently faulty communist (and worse) systems that will end up stifling true growth in a country that would otherwise have a great deal to offer; apart form being relied upon (by complacent and greedy westerners and the like) to provide the world with cheap labour and goods etc. There are exceptions, of course, but this is a big part of the China story that even the west has grown to love, except that now that manufacturing is pretty much dead in the water elsewhere, we're kind of looking to see which of our politicians to blame; not their fault!

We're looking at China through the capitalist kaleidoscope and believe that it can work. It won't in the long run. Some of the main reasons have been mentioned before and there's tons of information out there by economists too. But another one of the key reasons, overlooked by many I'd say, is because of every nation's experimentation with a fiat currency, and this will contribute to China's problems and may lead them in to unbelievably really high perpetual debts (disguised at first), that also won't be able to be curbed by their non capitalist systems.

China doesn't have, and won't have, a private sector or sets of them, that can pay down and generate wealth to counteract the perpetual public sector debts it is accumulating rapidly. You, and I'm sure they are, can disguise this fundamental problem for some time and convince many that this isn't happening or won't happen, especially when you have isolated and secretive systems that can not be properly audited, investigated, assessed etc.

One of the main problems with ie Greece, Spain etc is that they have a socialist system that has run up huge debts and now the focus will be on them to privatize areas that were once non profitable organizations. There are other problems too, sure, but these countries operated under the capitalist model, or were meant to, and this has become their end game for this period. As these and other countries need to be less socialist, so will China, but this is not going to happen. And so, this is bound to have a really negative impact on China as a whole, especially under its current socialist/communist etc structure. Don't forget to add the fiat currency dilemma to the mix. And it's not just China's fiat currency. It's the impact of some, most of the others added to the complexities of world wide dynamic economic model.

Now a country like China, that has for now, dominance in manufacturing, the problems are bound to get worse, as revenue from this, perhaps their only link to a private sector model, won't be enough to stem the perpetual debts that will continue to escalate due to their over reliance on the public sector; any internal growth in China has to become an even more burdensome problem as revenue is highly geared to a similar but much worse socialist structure to the ones Greece, Spain have, but multiplied by a hell of a lot more, considering the needs of China's public systems moving forward.

It is possible that, in the longer term future, China will one day become a bankrupt nation but not only because of these problems. The fiat currency dilemma will impact China later on too and because it doesn't have a capitalist framework the problems will probably be worse in China, even on a per capita basis, than other countries that are experiencing or will experience problems with their own (and other!) fiat currencies. Yes, I think the complexities and dynamics of other fiat currencies is contributing to problems with one's own fiat currency.

I can't flaw the core of the argument regarding fiat currencies. It's not just debts that have the economic world all messed up. The problem is with fiat currencies (including the usd, but this is a special case, and it is contributing to many of the other problems around the world; no need to 'leave' this reserve currency, like many have done or are trying to do, as this won't make a longer term positive difference - from one fiat currency to the next!).

China won't be able to tackle its inevitable fiat currency problem head on, and it won't be able to peg the yuan to gold, and establish a gold standard, for a sustainable period, even if it tried. It will continue to try and peg the yuan to the $US, but it's just piggy-backing another fiat currency. There are a lot of countries already trying this, and even range pegging their currencies to the $US.

As for gold, it will continue to go higher over time, especially in many foreign currencies, and this is already happening, even though there are plenty of gold bears that are pessimistic of gold's future. It has, like the fiat guys suggest, a real future when the printing of paper contracts like currencies cannot be grounded. More and more, yuans, usds etc will have to be printed and distributed. And by default, many other currencies will have to be in even higher circulatory numbers, than would be desired; not that they're immune from the fiat system. This is a complex future (and present) problem that will have everything thrown at it, but the end game is unavoidable, even with sets of different resets, that won't matter as much over time.

more to add soon ...

 

[Knobby22]

As the western world destroys itself with derivatives and lax control of the banks combined with democracies that appear to be becoming under the influence of the predatory rent seeking ruling class the way has opened up for China.

China is able to seize the initiative with its controlled economy.

Though corruption is a continuing problem, the combination of free trade combined with industrialization reminiscent of Victorian age has allowed the Chinese to build up huge reserves of foreign capital.

If they retain their political will, I cannot see a failure occurring any time soon. Maybe a recession, but not a bust.

 

[konkon]

As the western world destroys itself with derivatives and lax control of the banks combined with democracies that appear to be becoming under the influence of the predatory rent seeking ruling class the way has opened up for China.

China is able to seize the initiative with its controlled economy.

Though corruption is a continuing problem, the combination of free trade combined with industrialization reminiscent of Victorian age has allowed the Chinese to build up huge reserves of foreign capital.

If they retain their political will, I cannot see a failure occurring any time soon. Maybe a recession, but not a bust.

Yep, the derivatives problem is potentially very serious (JPM's attempt to 'punish' those responsible for their loss is lame, to me, considering most of these practices that go on are a form of gambling and not a bad investment position) problem and if the whole thing (not specific to JPM) comes unstuck, like many are predicting, it will take China along for the ride. To what extent? Who knows, but it may have unforeseen consequences that China may not be able to cope with.

But what does China have control over given the potential (and over time, highly likely) pressures from some of the points made above. It can control a lot, sure, but at the end of the day, even if their citizens don't push for reforms etc and remain subservient to the coercive forces at work, their fate may be accelerated by all of those stifling socialist, fiat etc dynamics; I still think that 40% of economic dynamics don't have to make much sense, at least for some time. But those relentless fiat, non capitalist economic forces would not apply here; it would fall into that 60% dynamic realm that you can't defeat, given the sets of circumstances your nation finds itself in. They are very real, and it's the sort of thing Greece, Spain etc find themselves in.

Foreign capital is fiat money especially if the @#$% hits the fan. In general the enormous diversification into so called safe-haven paper money (in the Euro Zone) is bizarre considering they're parking their original capital into other potential problematic areas; perhaps this is designed this way (incentives and the like). But then again it can still allow for quick get-aways into ie gold etc if necessary.

A failure for China not any time soon, but it's on the cards I think, and they may be getting there a bit quicker than what many think. I wouldn't want to be the last person to find out that something serious is happening in China, as this information is bound to lag (by some margin!) the reality of such an event. Of course, this is my opinion, so if others want to believe the information that comes out of China, feel free to do so.

 

[konkon]

Re: The (Economic) World in 2030 and Before That!

These following criticisms are not directed to those working in banking in general, like a buddy of mine, who, like nearly all, is hard working, dedicated etc and just wants to make a positive difference. However ...

Nothing worse (well there is, but anyway) than walking up and seeing five or so heads of large banks around the world, on a television program, talking utter crap about what happened, what is happening and what most likely will happen later on. The worse part is, if they truly believe what they say, then I feel that they can't be truly leading the way they should be; I was about to say 'leading the world', but this is another key problem with the culture in the sort of places they all work in. For one, stop thinking that you are all part of some revered royal unit. I do personally have admiration and respect for true Royals around the world, but not for those bankers who seem to prance around like they're part of some elite of an elite. Just distribute the (fiat) money to, yes, real businesses and let them get on with things, and don't interfere in indirect ways that have and most likely will jeopardize the world's economies. This would also include any secretive ways of getting others and other networks to gatekeep and manipulate all kinds of factors and even ensure that the 'wrong' groups or people, to you, are peddling backwards.

The risks associated with mixing two main parts of banking, not to mention the risks undertaken that are to a large extent unprecedented, have been mentioned by many. My personal view has been that as long as the $US remains in tact, the larger leading banks can take a higher degree of risk than would otherwise be the case. But this can only, I'd say, be done to some extent. There are real risks to the $US down the track if the recklessness, continued appetite for more debt (with no real realistic way of paying most of it back) and the historically low care-factor of ie rewarding poor market performances with higher valuations, more capital etc, continues down this path.

I still am a $US bull for other reasons mentioned in previous posts. But if 'Wall Street's' appetite for what would historically (even in 2007-8) have been considered ludicrous, counter-productive, dangerous and the like, continues along this trend line, then it is conceivable that there would be cracks in the sustainable strength of the $US. Let's not forget there might (probably would) be a line-up of many exploiting this, if it were to happen.

Higher perpetual debts have become the norm and it looks as though this is something we're going to have to put up with for a long time coming. There are a multitude of possible end-game scenarios that one can read, and just yesterday there were Twitter feeds on reports that banks might need to prepare themselves for a possible collapse of certain financial markets later on; I don't know how they can escape this possible vacuum, myself, but that is another issue. Perhaps this is testimony to the sometimes bizarre economic logic used by those in this circle.

If some of the negative points mentioned above about recklessness and the like continue, then I myself have a possible end-game scenario that differs a bit from some of the ones I've read before. There are certain things I'm looking at (I'll mention some later on) that may act as cues down the track. Around about this time in 2007, I was shocked to see the up-tick rule abandoned. Even though back then it made sense to many (on Wall Street), it didn't to me. I don't think the up-tick rule matters that much now, as there are easy ways around it, but it certainly did back then, when for example, there were plenty in the know that a) subprime was a serious problem, b) all types of markets were close to or at all time highs, c) packaged-up collateralized debts were incredibly risky etc. There were other problems too, like a zero-sum gain, but how could this be the case when so so many (a higher proportion than what might be allowed) were ahead!

I won't be mentioning three key 'things' I'm looking at, and have been for some time. Things have a funny way of 'changing' on you once it is revealed (and even observed; schrodinger's cat, I think on the last point).

 

[konkon]

Re: The (Economic) World in 2030; Hu Jintao's speech to China Party Congress 08.11.12

I found the transitional speech in China quite interesting, and I'm going to add a few comments to some of the points raised in the speech.

The following comes from: http://in.reuters.com/article/2012/11/08/china-congress-hu-jintao-idINDEE8A701L20121108 followed by my comments after ie quotations.

"We should enhance our capacity for exploiting marine resources, resolutely safeguard China's maritime rights and interests, and build China into a maritime power."

Accompanied with this was reports on Twitter that China may arm its submarines with nukes. But on the quote above, China is seeking world domination through control of the seas, slowly at first, within its own region and it will seek to expand from there. It, I think, will try to dominate the skies too with its capable abilities using aircraft like stealth long range planes and fighters. This was not in the speech, but it's on the cards.

China will also try and dominate the electromagnetic world, via enhanced electronic communications and electromagnetics in general. Next generation type of stuff too. It's getting a head start on this, as opposed to the sea and sky initiatives, although the electromagnetic 'stuff' is crucial for enhanced developments in these fields too.

Why would China need to arm submarines when you have some of the nicest people on Earth, who are pleasant to ie do business with, within the South East Asia region. How comfortable are most of these nations, excluding perhaps Vietnam and Cambodia, with China's push for such technology? Oh, and how does this sit with us here in Australia? Just asking.

China will need to continue to dominate the export markets, like it has done so, for most of this to happen at a much speedier pace than what others might want. If China loses its export prowess its plans above will be quashed to a large extent. It has a growing population, in many respects, that will continue to use up a high percentage of its capital. It needs its export markets to service all of the above. Its eggs are in one basket on this one. I think it will need to get other nations to commit a lot more to ensure it doesn't lose its export powers; wheeling and dealing.

"We should act to meet the new requirements of China's national development and security strategies and ensure that the armed forces fully carry out their historic mission in the new stage in the new century."

Some key words here are 'new', 'armed forces', 'fully carry out', 'historic mission', 'new stage'. Well just about most of it! This one doesn't sit well with me at all. Are we too busy using imported products to pay attention to such a statement? Why did they (the powerbrokers behind the carefully crafted speech) need to include armed forces, for example, here. Where's the threat? 'Historic mission' ?? ehh? It's amazing how the media didn't bother with this at all. The use of the phrase 'armed forces' makes this much less ambiguous. Same with 'carry out their historic mission'. Am I missing something?

"We will never allow any person or force to separate Taiwan from China by any means."

Clearly. The person by any means is interesting. And force by any means is also interesting.

"We should step up efforts to transform to a new growth model and work hard to improve the quality and efficiency of the economy"

This is not something that they would openly admit to. Clearly, there are problems here, irrespective of what their 'statistics' indicate. Patches of their economy must be faultering. Large and established cities that are being serviced by the export industry and reinforced with wealth (models) from within, are being less affected, although there must be a fair bit of overcapitalisation and bubbles present.

"We will continue to encourage domestic companies to accelerate their steps to make outbound investments."

This is needed for their ambitions to dominate the world of finance into the future, and to help make the yuan a reserve currency later on. I often wonder why many including those from the US push for this too, given the structure of China's system that is oppressive and totalitarian. One should make a distinction between the great, intelligent and wonderful people of China and the systems that are enforced on them.

"We should firmly maintain the strategic focus of boosting domestic demand, speed up the establishment of a long-term mechanism for increasing consumer demand, unleash the potential of individual consumption, increase investment at a proper pace, and expand the domestic market."

Well, free up the labour markets and pretty much everything else, while you're at it. Oh, this may screw up your export prowess, especially with a slowing global economy.

"We must never let words act in place of the law or (personal) power replace the law; nor will we allow the ignoring of the law for personal benefit."

Absolute rubbish especially on the last bit.

"If we fail to handle this issue [corruption] well, it could prove fatal to the Party, and even cause the collapse of the Party and the fall of the state."

They'll get even more corrupt for many reasons; money to be taken for one, black markets of all kinds and shadow banking practices for two, a destabilizing (scientific!) socialist/communist system that is inherently flawed for three, mafia style matters to deal with for four, no real central oversight across the whole country for five .. .. Most of these get rooted into the very system that's meant to be clean/er to begin with.

There are plenty that want the collapse of the party and the fall of the state in China, so they are giving them excuses to be more corrupt, cash up wherever possible and hope to get a head start if the system gets changed later on. Wonder if this was going on in the Soviet Union prior to its collapse? forgot to add the exclamation mark here

Combine corruption with some other key elements that can bring down this system and you have a real problem. Try and oversee this whole process from as many angles to help combat ie corruption, and you risk slowing China's mechanisms for real growth and putting a dent into other (future) initiatives. Communism just doesn't work. Their leaders must have some idea of this, but they and co must be making a ton of money out of this whole process, system etc.

more soon. bit tired