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Thursday, February 12, 2009

Obama vexed: United States' Stock Exchance to reward Obama Administration Finance Supporting Package

© Thomas Ramseyer-Volkart

12. Februar 2009
  • Wall Street analysts consider Obama Scheme too vague, too complex if not too misty
  • Obama to believe that there is no easy way out of the actual crisis
  • Obama is said to send bankers to boot camps for having them make transparent the financial system
  • Finance Minister Tim Geithner introduced three item action plan to boost economy back to former performance
  • Financial sector to stabilize - boost credit market
The reaction of the Stock exchange market to the Tim Geithner scheme is more than realistic.The disastrous situation on the international financial and economic markets in the developped northern hemisphere countries being extremly unorthodox it must be fought with unorthodox weapons. For the time being the Obama administration is fighting by the use of antiquated weaponry such as outmoded massive liquidity injections and other once upon a time effective measures. It is just like Worldwar One Red Baron dogfighting Tom Cruise.
Core remarks
  • Economical growth only is driven by actually growing or expectedly expanding population
  • Further activities are derived but from consumer basic needs and demand
Chain of cause and effect - egg or hen, hen or egg?
To remind any administration of the chain of cause and effect consumer needs provoke the population's whatever productivity. Productivity leads to higher capacity utilization. Once capacity has reached the end of its rope equipment investments are triggered thus capital expenditure is taking place. In case of lacking liquidity toxic refinancing is being undertaken by tapping the consumers' actual and future savings. When financial intermediaries such as banks and whatsoever proving themselves undertakers again the consumer - this time his role is that of a taxpayer - is called to pay at the cash desk. Some of the consumers - their role now being jobless at the mercy of still working fellow citizens - pay by being sacked. The remaining ones pay by fostering the sacked. The government - in fact the population - steps in to drag itself out of the mud. As there is only debt yet unborn generations - the consumers' children and the children's childrens - are compromised by the greed of present leisured classes the former simply being helpless. Present rulers know there will be not enough production in the future to ever pay back the huge encumbrance. Seduced by luxury and needless gadgets the population descending from ancestors whatsoever are full with paper up to the brim of their hats. Their liabilities to be their owner assets.
All taken measures will not help. The trust has vanished . . . people sit on paper. Consume by order is not possible because of lacking means.
Way out of the disaster
Tap further markets by sustainable acitivity. Subdue but don't subdue. Instead of a recovery programme implement a development programme. Transfer skills to numerous population. No charity nor money being needed. Straighten paper business.
Central bank gets back full control over the monetary basis; the so called central bank money. This to achieve deserves a rigorous attitude to be adopted. Print new bills and declare nil the old ones by a distinct lapse of time. For the better total absence of paper money is recommended thus having exogenous influence vanish and paper trail is granted.
Finance - Ones' assets being others' liabilities suggest the following procedure
Implement a central clearing authority regulated by the governments. All stakeholders but for the private households must centrally state their financial assets and liabilites. As paper as well as book wealth is only an illusive zero sum game, it will be easy to unwind. This to be done not at market levels but by simple cancellation. Vanished companies will reappear. It is even recommended to cancel all transactions back to eighteen months.
Papermoney versus durable goods
Transactions must be based - not backed - by durable goods. Money will be used for transaction purpose only. Paper is not a mean for store of value. It is to be replaced by durables such as precious metal, other resources, houses and productive factors. Debt has to be eliminated thus this behaviour has render people independent of interest rate volatility. E.g. a house values a house. There is no impact on wealth by changing interest rates. The keys stay with the owner.
DerivativesIn principle they are forbidden. Only covered transactions are allowed. Toxic security borrowing and lending is prohibited as well as all the structureds.
Development of further markets
Based on demographics it is easy to spot the way out of the disaster. Tapping further markets means developing domestic economies. Too much speed provoking culture shocks has to be avoided. All we have to do is partly repeat the history. E.g. Switzerland some 100 years ago was a farmers' country just alike a lot of others. Only stones, soil and the will to survive existed. Even some people were forced to leave the country by drawing lots. Swiss citizens in Diaspora; Americas, Caribics, Africa, Middle and Fareast, Russia, you name it they were everywhere. Political stability, character as well as skills imported from abroad had wealthy people trust the country and the third sector emerge. The Swiss became the Japanese of the early twentieth century. Just copy paste. Brown, Boveri, Sandoz, Hoffmann, Rothschild; all of them brought knowledge, experience and skills. Intelligence emerged, Switzerland stood for changes, quality, research and development. This has to be repeated elsewhere. Domestic markets will emerge become mature and convert to fully-fledged economies. But it takes time. No administrators wanted, pioneers are needed. Native people must participate in skills and wealth. Slow but enduring prosperity will appear.
Impact on financial "industry"
Financial industry will substantially shrink to healthy levels. Velocity will lower, sustainability will replace austerity.
Hindrance, risk and threat - odds, prospects and chances
Restructering the financial intermediaries will cause further lay-offs with the consequences thereof. Political instability, hunger, uproars in the developed countries might lead to police states dictatorship included. Then wanted by the anxious citizens.
This has to be avoided by taking cautious actions such as Knowledge transfer, unlimited access to science, frank speach, no unfair dialectics nor mobbing and intrigue, talk at equal level, reasoning instead of totem poles. Immediate response, time delay is decay.
With everybody thriving for the same goal overall enduring prosperity arise.
© Thomas Ramseyer-Volkart