Former Morgan Stanley Chief Asia Economist: "Don't Listen To The Ruling Elite, The World Economy Is In Real Trouble"
Andy Xie says the world's elite that are attending the G7, G20, Davos and other wasteful meetings are wrong to try to pin the blame for the turmoil on people’s psychology; all signs point to a prolonged period of global stagnation and instability.
Before the current G7 meetings waste of time, The G20 working group meeting in Shanghai didn’t come up with any constructive proposals for reviving the global economy and, instead, complained that the recent market turmoil didn’t reflect the “underlying fundamentals of the global economy”. The oil price has declined by 70 per cent since June 2014, while the Brazilian real has halved, and the Russian rouble is down by 60 per cent. The global economy is on the cusp of another recession, and these important people blamed it all on some sort of psychological problem of the people.
Over the past two decades, the global economy has been blessed with the entry and participation of 800 million hard-working Chinese, plus the information revolution. The pie should have increased enough in size to make most people happier. Yet, the opposite has happened. The world has gone from one crisis to another. People are complaining everywhere. This is due to mismanagement by the very people who attend the G20 meetings, the Davos boondoggle, and so many other global meetings that waste taxpayers’ money and put inept leaders in the limelight.
One major complaint that people have is that the system is rigged – that is, the rising income concentration is not due to free market competition, but a rigged system that favours the politically powerful. This is largely true. The new billionaires over the past two decades have come mostly from finance and property. Few made it the way Steve Jobs or Bill Gates did, creating something that makes people more productive.
The most important factor in the rigged system is monetary policy being used to pump up financial markets in the name of stimulating growth for people’s benefit. This is essentially the trickle-down wealth effect, that is, making some people in the financial food chain rich while the spillover gives people a few crumbs. Yet, instead of crumbs, the wealth effect has pumped up property prices in Manhattan, London and Hong Kong, as well as the price of modern art. Essentially, the wealth effect has stayed within the small circle of the wealthy. And these people show up at Davos to congratulate policymakers on their “successes”.
Wasting resources is an equally important factor in making the global economy weak and prone to crisis. After the 2008 financial crisis, the US government and Federal Reserve spent trillions of dollars to bail out the people who created the crisis. Instead of facing bankruptcy and jail, these people have become richer than ever. Predictably, they have used their resources to rig the system further.
After 2008, when Beijing launched a massive investment push, the global ruling elite all praised China for saving the global economy. China has increased credit by over US$20 trillion to finance the construction of factories and homes. However, investment does not guarantee final demand. The process of building up a factory creates demand. But, when it is completed, it needs to sell its goods to someone. What China did was build even more factories to keep this factory occupied. This Ponzi scheme couldn’t last long. We are just seeing the beginning of its devastating consequences.
This mountain of debt is floating on a commodity Ponzi scheme that is floating on China’s investment Ponzi scheme. Its bursting is just the beginning. Its impact on the global financial system could be bigger than the 2008 financial crisis.
The global economy is facing years of stagnation, deflation and financial crises. The current economic managers will resort to the same tricks of pumping up the financial markets with liquidity, to no avail. In the meantime, political instability will spread around the world. It will take a long time for the right leaders to emerge.
The world is on the cusp of a prolonged period of stagnation and instability. Our ruling elite is blaming it on people seeing things. Their strategy is to change people’s psychology. Unfortunately for them, the world is catching fire and that fire will eventually reach their Davos chalets.
Nowhere in Greece do people love Russia and its President Vladimir Putin so much as in the Orthodox monastic community in Holy Mount Athos, German magazine Spiegel Online wrote.
At the end of his official visit to the country, the Russian leader made a pilgrimage to the holy place, where he was met with excitement and admiration.
"As Putin, completing his visit to Greece, reached Athos this Saturday, the monks welcomed him as a superstar, and even more: as the defender of their faith and a loyal ally of Greece," Spiegel Online wrote.
The local residents were very happy to welcome the Russian leader, even if his arrival brought chaos to their otherwise peaceful lives. While port police boats patrolled the water, employees of the Russian Security Service wearing glasses and suits carefully watched every street in the area.
"Putin is the only true leader in the world," says one of the monks, father Efraimos, cited by the magazine. "Whom should he be compared to? Obama? Merkel? There is simply no comparison," he added.
An episode that occurred later during a liturgy serves as more proof of Putin’s popularity in the local community. The church where the worship took place had only one throne, and it was reserved for the “Russian guest of honor,” even despite the fact that Greek President Prokopis Pavlopoulos also attended the service.
The Russian leader came to Athos for the second time. This time, he visited the holy place to commemorate the millennial anniversary since the first Russian settlement on the Holy Mount Athos.
Despite numerous posters critical of Putin that were seen on the streets of Athens, relations between Greece and Russia remain traditionally good. According to social surveys, the Russian president is far ahead of European politicians in terms of Greek citizens' feelings towards him.
Kurdish self-defense forces in Syria should join forces with the government army and Russia instead of relying on the United States, Syrian lawmaker of Kurdish descent Omar Ose told Sputnik on Sunday.
"I am not advocating a complete boycott of the United States, but one should not rely on them. This is a pragmatic country that cares about its own interests. It is indifferent to Kurds, Syrians or Arabs," Ose said.
The lawmaker gave credit to People's Protection Units (YPG) fighting off Daesh militants with US coalition backing, but stressed that only coordinated actions with the Syrian armed forces and Russia partners would eradicate terrorism.
"Kurdish self-defense unit commanders would be better off crossing into the Syrian-Russian trench, the trench of resistance in the region, otherwise we as Kurds will pay a heavy price," Ose added.
Four Lost Decades
One of the endearing features of the ruling classes is their abiding faith in their own judgment. Despite inexhaustible evidence that they are bumbling incompetents, the power elite stick to their guns – literally – and to their cushy sinecures.
We are now seven years into the “recovery” supposedly engineered by the PhDs at the Fed. At a cost variously estimated between $4 trillion and $10 trillion, we have now achieved a growth rate that is about half what it was 40 years ago – before the internet and debt-based money allegedly freed the economy from earthly tethers.
And thanks to these custodians of the public weal, 99% of the families in the USA now have less wealth than they did before the crisis of ’08 began. But wait – it gets worse. It is now 45 years since the PhDs took control of America’s money. Over those four and a half decades, how much financial progress do you think the average family has made? Approximately zero.
Yes, the Levy Institute has completed a study. It tells us what we suspected already. Nine out of 10 people in the U.S. have roughly the same real earnings today as they did in the early ’70s.
That makes FOUR LOST DECADES, thanks to the feds, with no advance in the material well-being of the American people (aside from technological marvels) since the new money system came on the scene.
Meanwhile, the security elite, too, has proven it cannot be trusted to protect a convenience store, let alone the nation. Trillions have been spent… thousands of people have been killed… offenses against man and God have been committed aplenty (in one case, the Pentagon water-boarded the wrong man 89 times in one month).
Perhaps Sanders and Trump are right; maybe it’s time to take a fresh look at the power elite and how they are running the country. That is the hope that is stirring the voters. But it’s rousing the Deep State to action, too.
“How to defeat rightwing populism” is a headline in the Deep State newspaper of record, the Financial Times, written by Elitist-in-Chief, Martin Wolf. “How to protect the status quo” is his real challenge.
He readily acknowledges the charges against him and other insiders: “[T]he greed, incompetence, and irresponsibility of elites.” This has “brought great populist rage,” he admits.
But his prayers are not with the millions of people the power elite has harmed. Instead, his dark hours are tormented by a thought so chilling, so revolting, so unthinkably awful, he cannot sleep. What if, he worries, because of the Deep State’s errors… what if the elite should lose control?
Horrors! “In any country,” he writes, “embrace of the delusions of populism is disturbing.” Yes, especially to the people who caused it!
Mr. Wolf is not concerned about correcting any of these abominations. Instead, he just hopes to manage the problem so the elite stay in control. Trumpism, he claims, “is a symptom of a disease. We must now find more effective ways to cure it.”
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