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Monday, November 17, 2008

Politics: World Finance Summit 2 - OLD WINE in NEW SKINS

© Thomas Ramseyer
Leading Industrialized as well as threshold (emerging) countries (G20) meet at the White House for a closed-door session
Result: So far never seen consensus amongst them: joint force shall cure the Financial Markets. But nobody is prepared to substantially change the financial system. Advised by the Pied Piper of Hamelin's vassals blindfold country leaders take manipulated decisions.

Facts:It is clear-cut that the result has been grown on the soil fertilized by the manure of the so called developed countries' elites: USA, Great Britain, Europe and the sort. Thus the basis for the new financial market order will be lead by countries where the evil behaviour of the last decades originally emerged from. Most of the other attending countries' specialists may be considered mere exotic spectators to be held ignorant at the event's sideline.

Reasoning: On one hand the country-leaders avowed themselves to the actual market principles such as open market and a liberal investment regime. On the other hand they called for more efficient regulation still allowing dynamic (aggressivness?!), innovaton and entrepreneurship.

They even presumed self-criticism and of course criticism.

They consider the last boom to have lead to neglecting risk while thriving for more and more return. (my remark: bonus-driven??) The declared measures to immediately be taken are more stringent regulations to evaluate komplex financial structures/products. Rating agencies shall be supervised more closely as well as compliant behaviour of all market participants. Equity is to be subject to more stringent rules (debt/equity ratio) and regulations. Unfair competition as well as risks implemented by offshore (tax-shelter) companies were also stated. (remark: what is absent Switzerland considered?)

Somehow all this sounds familiar; we have had it.

To cure the disastrously faltering world economy, governments are aiming at the gradually growing number of the population's infantile ignorants. To repeat it: nothing actually is going to be changed but for the market participants' responsibility for their transactions. They just are to be lulled at sleep by the above mentioned measurements. To cut it short: just band-aid cure; we do not want to get rid of the malignant ulcer.

The real cause - i.e. heavy debt burden of today's and future's not yet born generations - has not been addressed; but it has to be tackled.

Suggestion: The lowering of debt by the abdication of consuming is the one and only remedy to cure the disaster in the long run.

New (old) World Order Rules
1) pay back outstanding individual dept.
2) build up savings.
3) forget the use of credit cards, whenever using cards use only debit cards
4) first save only then consume
5) Don't buy just for fancy; your belongings must yours not the banks'
6) Don't buy adventurous and promising financial structures.
7) Apply simply the old rule since ever "the higher the return the higher the risk"
8) There is no free lunch
9) Do not eat unknown things - Do not eat sushi, grow your own potato
10 Go back to the roots - Otherwise the disaster will repeat over and over again

Only austerity will be the remedy for a sound recovery!

Risk: Human beings are most likely to forget.

copyright Thomas Ramseyer