Partisan politics is the main cause of economy downturn

 

      Frank  Feb. 28, 2016  in Waterloo, On. Ca.

 

Faced with economy sustained in recession, people worldwide put the eyes to the South neighbor of Canada; eagerly wide open eyes, in looking for an economic miracle popping out to lead world economy out of quagmire.

However, the historical facts lesson us that are a day dream. It will be a great contribution if the partisan politicians in that country do not make new trouble.

In the start of the documentary The Ascent of Money: A Financial History of The World, the writer professor Niall Ferguson introduces with that: “In our time, we’ve witnessed the zenith of global finance. 2006，the world total economic output was worth around $47 trillion, that’s 47 followed by 12 zeroes, the total value of stock and bond markets was roughly $110 trillion, more than twice the size, and the amount outstanding of the strange new financial life form known as derivatives was $473 trillion, 10 times larger.”

That was in 2006, 10 years ago, the financial derivatives have been over 10 times more than real economy. Today, that may be many times more. In simply say that was more than ten people plundering on the wealth that one people hard created. In such plundering activities, the main players and leaders are in the Wall Street under the conducting of partisan politicians in the South neighbor of Canada.

It said in two decades ago, in the United States, there were many Academic Elites entered financial sector from Universities to have engaged in the development of financial derivatives. Mr. Richard Bookstaber was one of them.

After working in financial system 23 years, as an insider and an designer of financial derivatives, Mr. Richard Bookstaber who pointed out the guilty of own engaged work, by writing A Demon of Our Own Design, markets, hedge funds, and the perils of Financial innovation in 2007, in just before several months of the financial crisis outbreak. The book is noted for its foreshadowing of the financial crisis of 2007–08.

Now, the wild speculative activities are making stock market and exchange rate in fluctuations violently. It is clear that small retail investors do not have such power; apparently it was caused by hedge funds or some financial institutions that are with huge amount of money.

Many countries regard real estate market as a means for develop economy. Though, the real estate market is a part of the real economy, however, it is a wand with opposite magic that either can benefit or harm to the economy. Since that real estate has effect as a hedge against inflation, it has been taking a kind of tool for looting real economy.

In Canada, the wild speculative activities have been pushing the prices of house and farmland in unreasonable high, especially, unreasonable high cost of living has been squeezing the labors and businesses out of Vancouver. Canada’s economy is being destroyed fundamentally.

Canada is following the dust of Japan failed road.

Jan. 6, 2009, on the Japan Times, the report Lessons from when the bubble burst said with that: after the crash in late 1990, economic growth stalled various government-sponsored fiscal and economic stimulus measures, including trillions of yen in failed public works projects, did nothing to revive the economy. This was started roughly in 1991, when the effects of the stock market crash became clear.

People claim that Japan’s economic recession is due to the Government wrongfully extinguished overheated real estate market in Bubble Economy 1980s by continued series polices.

As my view, that was not true, the main cause was that overheated real estate market damaged the quality of Japanese - Industrious and social responsibility. Because, that greed of human inborn nature will drive people as profit-chasing speculators in addicting for unearned opportunistic, and the unearned speculation can distort the life philosophy of people with advocating unearned riches, but despising for social wealth creation.

Japan’s economic recession is due to that deterioration of the quality of nationals has deteriorated basic cell of the economy – corporations. There many international famous Japanese companies are declining.

In my Aug. 24, 2014 article Overheated real estate market is ruining Canadian economy from Japan mirroring Canada, I translate the writings of Japanese scholar Mr. Kondo Daisuke about decline of Sharp and Sony Corporation, in which we can see that how low quality damaged Japan’s economy from high quality that once made Japan as world economic powerhouse. For facilitating reading, I excerpted with independent title from above article.

Japanese Disease - Evading Responsibility ruins Sharp Corporation.

The ridiculous management ruins Sony Corporation.

When I was in the translation of those articles, I could not believe the facts are true, due to that should not happen in a human society. So that I added a special note to indicate that I do not have bad intention in writing such articles. And also, I emailed to Mr. Kondo Daisuke and got his permission after he checked my article.

In my Dec. 13, 2015 article World economy will continue towards recession, I translated Dr. Mengyuan Wang’s article in Mandarin: The future trends in the world economy, it predict that 10 years later, Japan will face a highly ageing society, and hollowing out of the economy due to many industrial sectors losing ground, more worse is that Japan have to burden government debt that is equivalent 400 +% GDP (400% is one of key nodes, because, that required to pay interest on the national debt will be over the lump sum of government revenue).

Recently, Japan introduced negative interest rates with a purpose to stimulate real economy; however, the actual effect will be more damage to the real economy, due to that there more money will flow into financial economy to make money by plundering on real economy.

Hard-working and responsible citizen is the foundation of national economy, also, it is the foundation that Keynesian macroeconomics can play its role. Otherwise, extremely easing monetary policy or even negative interest rates all cannot play positive role, but to make the country into the abyss.

The out of control predatory activities of financial economy are acting as that of strongest tornado in destructing real economy - the foundation for human survival.

As result, material wealth creation – manufacturing is in a sharp decline with the commercial activities of imports and exports in a sharp decline…… The facts prove my Dec. 2015 prediction that world economy will continue towards recession, at least, it is far away as expected.

Today, I would like to say that It is that over developed financial economy wild plundering real economy caused economic downturn, and to have made people’s life more and more difficult, which is the main cause for most of social unrest.

In Feb. 26-27, 2016 G20 summit, German Finance Minister Wolfgang Schäuble opposes the appeal that increases government spending to boost demanding due to he believed that growth model of debt financing has reached its limit, there is no shortcut besides reform. The euro zone policy has been relaxed to the counterproductive step that may have a negative impact on the economic growth.

The view of German Finance Minister is the established practice in Germany, in Feb. 16, 2014 article Why Can German Economy Fly Against Economic Recession, I once indicate that:

“In the last century, after the U.S. President Roosevelt successfully saved the Great Depression by the means of the government intervene in the economy, the most of countries take Keynesian theory, such as, Fiscal Deficit, as the magic to stimulate their economy. Now, most of them are debt-ridden, and some of them become losers with bared buttocks and broken spine.”

“However, at that time, rational Germans did not silly go with the flow. May be that they have foreseen that Keynesian Fiscal Deficit is the economic heroin with instant excitement, but long-term fatal. So, they adopts own Freiburg School neoliberal theory that can sustain for long-term stable development.”

“Now, nearly 80 years practices have shown that the choice of Germans was smart prescient.”

“As my view, one kind of medicine corresponds to one kind of disease, the disease has changed, and the good medicine may become deadly poison.”

However, In the Feb. 26-27, 2016 G20 summit; German Finance Minister Wolfgang Schäuble did not mention that how to reform.

Then, what is the medicine for treating current economic disease?

Dec. 13, 2015, in article World economy will continue towards recession, I once indicate that The two big economies – the United States and China is both reviewing its economic development policies, which may leads economy from current Demand side economics (Keynesian economics) turning to Supply-side economics.

Given that economic stimulating effect of monetary easing and government investment is more and more weak, that turns demand side economics to supply-side economics is inevitable trends.

However, such a economic model relaying needs a longer time for operable adjustment economically and structurally, it would inevitably slow down current economy.

A better way out for quick boosting real economy is to restrict the plunder of financial economy, such as, to permanently ban all Hedge Funds, to permanently ban on short selling ……Thereby, to reduce the cost of manufacturing from reducing raw material speculation, and also, more importantly, to reduce social panic about the prospects of the economy from violent volatility in stock market and exchange rates, such panic will badly affect people's consumption and investment in the manufacturing sector – the two sectors are the key in developing real economy.

However, under current partisan politics, that is definitely impossible, due to those financial derivatives have been used as weapon by some partisan politicians, the 1997 Asian financial crisis, a Hedge Funds made a new war exercise in financial version under a clear purpose.

Maybe, never have people thought about that, suppose that 1997 Asian financial crisis happened in the United States, US Dollar was wild looted by hedge funds, and the trouble maker was from Canada, what it will happen?

In social governance, human being has been going on a wrong way.

In 1992, in view of the fall of the Berlin Wall, the noted sociologist in political economics Francis Fukuyama who cheered that was global triumph of political and economic liberalism and believed that Western liberal democracy was the final form of human government.

However, in 2014, it was in 22 years later after he cheered for the triumph of democracy, in viewing that Elephant and Donkey disabled American government, he despaired with an article America in Decay  in “NO WAY OUT”.

In such partisan politics, the rational business was disabled, but, irrational business was activated. Feb. 20, 2015, WashingtonsBlog posts an article US Has Been At War 93% of the Time – 222 Out of 239 Years, only been at peace for 21 years total since its birth.

Those are the great contribution of American partisan politics.

2013, American economist, Professor Robert Reich distills the story through the lens of widening income inequality to have presented documentary Inequality for All. It indicates that income inequality currently at historic highs.

Following is the video screenshots from Inequality for All.

      

From charts, we can learn that two times economic crashes are caused by that wild developed financial economy. Also we can easily speculate that, if over developed financial economy does not under proper control; the downturn of world economy is far from over.

Follow is the video screenshots from the documentary Inequality for All.

                                                 

              

Professor Robert Reich said that, in 2009, in the time of absolutely recession, the 7 highest paid Hedge funds managers were still taking more than Billions Dollar each.

The Professor continued with that: “Remember, the government sets the rules at which the market functions.”

Anxious Professor’s cry is difficult to impress partisan politicians and greedy financial predators.

Professor Robert Reich and former President Bill Clinton were both the winner of Rhodes Scholarship, they became good friend when the study tour to Europe, and later Clinton won presidential campaign by the idea of his writings and then, he was appointed as secretary of labor, however, he resigned the secretary position.

A rational scholar could not stand in irrational partisan politics, even if under the period of comparative better presidential - Bill Clinton’s tenure.

In Canada, it said that world economic downturn dragged down economy and low oil prices dragged down exchange rate; however, few people are aware that, it is the activities that speculators wildly speculation on oil and Canadian dollar caused the trouble.

I never heard people questioned that why allow oil and dollar to be taken as a gambling chips for free speculation.

I never heard people questioned that why that everything in the world are used to carry out unearned speculation.

June 3, 2015, in article Canada Pension Plan must develop in kind base & as key body of state-owned economy, I once indicate the nature of income inequality.

“People hate social inequality and unfair with arguing that the Rich is too rich and the Poor is too poor. But, the tragedy of Greek Pensioner shoots himself to refuse to search for food in garbage revealed that:”

“The biggest social inequality is that rich individual with poor government.”

“The biggest social unfair is that a society is in favor of individual rich while government poor.”

“The saddest tragedy is that government of a nation is too poor to provide basic life-support for their national.”

The economy is running on the track that based on the policies of government. The subversion of the economy is the failure of the policies; the root cause is the failure of partisan politics.

On this world, partisan politics is a game that is for irrational kidnapping rational, no matter is one-party dictatorship, or a multi-party democracy, even in most types of people grouping, no matter it is how good of initial purpose for grouping people together.

In fact, once the proud of human civilization - Democracy and Universal Values have been distorted and entwined together to complicate social governance and being used as tools for various purposes with more in ignorance less in rational, especially in badly affecting productivity in social wealth creation. 

Faced with jobs losing, and the prices of daily necessities soaring, the life of Canadians in declining, people claim that are due to world economic downturn, however, I never heard people questioned that why the economy of natural resource scarce Singapore and Germany are both outstanding that of natural resource rich Canada, even, Canada’s kinship country Britain now is a rising economic star.

The poor governance is the root cause. It said that US productivity is 12% higher than that of Canada, and now it is cheaper to make goods in once-high-cost countries such as Japan or Britain than in Canada.

With the oil wealth lost value, that foundation for manufacturing is also in losing, where is the way out for Canada?

Faced with such sad reality, the Prime Minister Justin Trudeau has showed his disappointment for the incompetence of democratic governance, and Vancouver Mayor Gregor Robertson has also showed similar view.

Above, I have talkative so much; the only purpose is hope that Canadians, especially the team of Justin Trudeau could learn the limitation of democratic government, to explore a radical measure with lesser constraints of democracy, to prepare for a situation in long term world economic downturn, to create a favorable environment for innovation and outstanding manufacturing, thereby to explore a life road for Canadians.

In view of that we cannot change current democratic polity; any ambitious politicians cannot develop Canada's economy as that of successful in Singapore, in Germany, and in the UK – a kinship country of Canada, even if under current Majority Government of Canada.

I am not distrust of Trudeau government at all, please envisage that, in current Canada, is it possible to practice Singapore's strict legal system and Germany’s harsh Agenda 2010, even if that fiscal austerity measures of UK David Cameron hard struggled for?

February 22, 2016, the federal deficit will reach at least 18.4 billion in 2016-17 reported that Canada “planned budget deficit will increase by 14.5 billion and 13.1 billion over the next two years mainly due to the state of the Canadian economy, reaching deficits of 18.4 billion in 2016-17 and 15.5 billion in 2017-18.” “The Trudeau government intends to move ahead with its economic strategy announced during the election campaign: tax measures to help the middle class and massive investment in infrastructure (the Liberals promised to double the investment campaign) to grow the long-term economy.”

Suppose without a strong measure to entirely reverse extreme low productivity and high-cost in manufacturing, any plans will be meaningless, even if put them into practice, will be waste investment, cannot get expected output besides the big burden for Canadians.

The extreme low productivity is destroying the future of Canada.

As a way out in no way, that federal government should authorize a non-partisan Super Leadership as a alternative to play a role as powerful assistant, with the right of policy making and the policy implementing in a limited test zone to perform a demonstration in successfully solving some critical social issue, thereby to convince public and reduce social resistance, and then update the policies to Federal level in step by step as that of successfully practiced in China.

This will be a historical trial in social governance, by such a easily to be widely accepted way, to gradually transit partisan politics to non-partisan politics by a group of non-partisan outstanding social elite by recommended rather than in campaigned.

People must have a sober mind that, in current chaotic world, there no one would have a peaceful life, even if the politicians who are pride for being elected or the wealthiest hedge funds players who are ecstatic for looting money easily.

As senior animals, human beings should not passively continue going on the way that is clearly in self-destruction.

In consideration of increasingly complex economically and socially, it requires the people who will take governing position, have to with profound professional knowledge and deep insight into social problems based on the outstanding research works. So, the candidate for future non-partisan politics may be confined in the field of academia and outstanding entrepreneurs in the industry.

People must have a sober mind that human society has been far from civilized due to wrongful governance; there are only a few people who are with knowledgeable brain that can rationally governing human society.

As rational people, we come to this world, are not for adapting to the reality, and are not for struggling to enjoy vanity, but rather, we come to make some livable changes.

Maybe, we cannot change anything for the world at whole, but, at least, within Canada, with a new Majority Government under a rational Prime Minister, we have potential to create a better life for Canadians.

Under our generation, Canada must build into a fairyland of material wealth creators, rather than a paradise of greedy unearned speculators. So that the Canadians who are willingly to make a living by hard working to be able to live a decent life.

A loveable society is from material wealth creation rather than from unearned speculation.

A rational government of a nation must be able to stop speculators destroying the life of own nationals.

This article will take the oncoming pipeline project of Canada as example to demonstrate the significance of non-partisan politics.