Below are links to some significant subject matter that may directly or indirectly impact on the future direction of the world economy.

 

Some Negatives:

 

  • Secret and Lies of the Bailout (January 2013)

The reader’s attention is drawn to the research section in this website entitled “Ethics – the boundaries between personal righst and social obligations”. In the context of ethics, the following link will take the reader to an analysis of what happened to the bailout money following the GFC:

http://www.rollingstone.com/politics/news/secret-and-lies-of-the-bailout-20130104

 

Some may find this article by Monty Pelerin  depressing, but it is probably accurate and adds yet more  weight to the argument that we need to reassess the way in which we “manage” the economy: http://www.economicnoise.com/2012/08/20/the-government-is-bankrupt-and-will-destroy-the-economy/

 

  •  Quantifying the impact of the compromise fiscal cliff legislation and the expiry of some tax deduction benefits (January 2013)

The following link will take the reader to the December 2012 quarterly review and outlook of Hoisington Investment Management. http://www.hoisingtonmgt.com/pdf/HIM2012Q4NP.pdf 

Quote: “Barry Eichengreen, a Yale Ph.D. in economics and University of California Professor, estimated that without law changes in Social Security and Medicare, federal outlays will reach a staggering 40% of GDP in twenty-five years”

Quote: “The one complete decade of the 21st century (2000 through 2009) ranks as the 21st slowest growth in real GDP of the entire 22 decades since 1790 (Chart 3). Only the experience in the 1930s was worse.”

  • China’s Ghost Cities and Malls. (March 2011)

The following link will take the reader to a TV documentary that talks about 64 million  unoccupied apartments that have been built in China and that remained unsold at March 2011.  http://www.youtube.com/watch?v=rPILhiTJv7E 

 

Some Positives 

 

  • The Chicago Plan Revisited (August 2012)

In the late 1930s, in the depths of the Economic Depression, there was a burst of creative thought. One proposal was known as the “The Chicago Plan”.  The following link will take readers to a plan entitled “The Chicago Plan Revisited“, which was published in August 2012 as an International Monetatry Fund Working Paper. It was prepared by Jaromir Benes and Michael Kumhof.

Abstract:

“At the height of the Great Depression a number of leading U.S. economists advanced a
proposal for monetary reform that became known as the Chicago Plan. It envisaged the
separation of the monetary and credit functions of the banking system, by requiring 100%
reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this
plan: (1) Much better control of a major source of business cycle fluctuations, sudden
increases and contractions of bank credit and of the supply of bank-created money.
(2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt.
(4) Dramatic reduction of private debt, as money creation no longer requires simultaneous
debt creation. We study these claims by embedding a comprehensive and carefully calibrated
model of the banking system in a DSGE model of the U.S. economy. We find support for all
four of Fisher’s claims. Furthermore, output gains approach 10 percent, and steady state
inflation can drop to zero without posing problems for the conduct of monetary policy.”

 

 

  • Energy (the core driver of economic activity) and Long Term Planning

The reader’s attention is drawn to the article on this website entitled “What caused the Global Financial Crisis?” In the West we tend to think in time frames that revolve around political election cycles. “Long Term” planning in the West extends over a couple of decades. By contrast, to illustrate that country’s different view of time, China has a 100 year nuclear energy plan. Quote:” By around 2040, PWRs are expected to level off at 200 GWe and fast reactors progressively increase from 2020 to at least 200 GWe by 2050 and 1400 GWe by 2100.Prior to 2008, the government had planned to increase nuclear generating capacity to 40 GWe by 2020 (out of a total 1000 GWe planned), with a further 18 GWe nuclear being under construction then. However, projections for nuclear power then increased to 70-80 GWe by 2020, 200 GWe by 2030 and 400-500 GWe by 2050.  Following the Fukushima accident and consequent pause in approvals for new plants, the target is now 58 GWe by 2020.  National policy has moved from ‘moderate development’ of nuclear power to ‘positive development’ in 2004, and in 2011-12 to ‘steady development with safety’.  See further comment under Post-Fukushima Review below.In December 2011 the National Energy Administration (NEA) said that China will make nuclear energy the foundation of its power-generation system in the next “10 to 20 years”, adding as much as 300 GWe of nuclear capacity over that period. Two weeks earlier the NDRC vice-director said that China would not swerve from its goal of greater reliance on nuclear power. The former head of the NEA said that full-scale construction of nuclear plants would resume in March 2012″. http://www.world-nuclear.org/info/inf63.html 

 

Quote: “Our job, for those of us who believe that a different system than the one that we have had for the last 100 years, has driven us to this unsustainable crisis, is to be more convincing that there is a wonderful, uncomplicated, and moral system that provides the answers. We had a taste of it in our early history. We need not give up on the notion of advancing this cause.”

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