النجاة من إعصار سوق الإسكان التالي

Jan 31, 2017 Mark J. Roe

كي ويست ــ كنت أقود دراجتي على طول الشاطئ هنا انتظارا لرؤية شروق الشمس، عندما أنار مصباح دراجتي علامات الإرشاد الدالة عل طريق الإخلاء إلى ميامي في حالات الإعصار. ولم أندهش لرؤية تلك العلامات، نظرا لشدة العواصف التي قد تضرب منطقة فلوريدا كيز. الأمر المدهش حقا هو أن تلك العلامات تحمل دروسا مهمة للتنظيم المالي.

الواقع أن منطقة فلوريدا كيز أكثر تطورا مما كانت عليه خلال حياة إرنست هيمنجواي على سبيل المثال. فعلى طول الأرخبيل الذي يبلغ طوله مائة ميل، يمكنك أن ترى تدابير الحماية المحكمة من الأعاصير. ومعايير البناء هناك أعلى، أي أن المقيمين هناك يمكنهم انتظار الإعصار حتى ينتهي داخل مساكنهم ــ أو على الأقل في مباني محلية. وإذا تطلب الأمر الإخلاء، فهناك ما يسمى "أوفرسيز هاي واي" ــ وهو إنجاز هندسي باهظ التكلفة يربط جزر الأرخبيل ببعضها بعضا وبالبر الرئيسي.

ولكن إذا لم يتم تنفيذ خطة الإخلاء على النحو اللائق، فقد تتسبب الاختناقات على طول الطريق الذي يبلغ 113 ميلا في عرقلة المواطنين الذين يجري إخلاؤهم. وإذا وجدت نفسك محصورا في اختناق مروري على الطريق، فلن تجد أمامك خيارات تُذكَر غير الانتظار والأمل.

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Mauricio Duran-Loriga Feb 7, 2017

@ Hector

There is no way out whatsoever if we want to keep oblivious stock market prices, irrational growth of welfare rights, and peace altogether at the same time.

But I can suggest some ideas that could be implemented within a week (o tempora, o mores, o Narendra Modi), for a good start.

1) Go back to sound money

Replicate basic legislation according to the Peel Banking Act of 1844 but without exempting the demand deposits from the legal requirement of a 100-percent reserve which it did demand with respect to the issuance of paper money.
Yes that is killing commercial banking as we know it. Innovation please.
Open the mint to new metal discoveries.
Reinstate the 90 day real bill market.
Anchor national currency units to a metal value according to which, all debts can be extinguished upon ultimate payment in metal.

Central banking utter fraud is that they can print unlimited amounts of currency. But the are unable to print a single REAL cup of milk.

Of course this would disable oblivious P/E for all ! So ? Are we no longer able to withstand ever changing state of affairs, included poverty?

Of course this would create commodities wars at home too ! So ? Are we too lazy to fight wars at home all of a sudden ?

Of course this will kill the lunacy of financing long terms maturing goods (like a mortgage) with overnight phantom repos rehypothecated several times at the central bank as "eligible collateral".

Of course this would considerably shrink the current welfare state ! So ? Have we already been so badly sugar-coated that we feel no longer handsome eating without all our teeth?

2) Chop down welfare state

Welfare state is mandatory, meaning that whatever happens to the economic cycle, the government MUST provide by law a predetermined amount of goods and services for the needy.

An example would do great. In Spain, 2007 was base 100. By 2037, Spaniards must provide up to 30 GDP points in additional welfare state to that of 2007. Whatever happens ! No human nature can deliver such a compounded gains in productivity. But such is the rule of law.

Until central bankers print their first real glass of fresh milk, welfare state should be postponed.

Wars yes. Revolutions, welcome !
History is made of wars. Of are we just bringing conflict to a halt...? By currency printing ? That would be THE real first !!

When the needy couldn't stand it anymore, the rose up in revolutions to grab the assets of the dominant class, or they grabbed assets from their neighboring countries. So the needy, rise up from your sofa guys! Sponsored nap time over.

3) Outlaw budget deficit except for natural disasters (nature or man-made)

Provided sound money is reinstated and welfare state has been littered, the is a walk in the park.

4) Tax reform. Fairness and redistribution

- Eliminate by whatever means all tax havens.
- Replace all existing taxes by a minuscule transaction tax on all flow of capital. According to a well known study by Mark Chesney a 0.2% would pay for all currently existing taxes !

This has major redistributing effect, as the working class would be taxed 0.2% at receiving income and an additional 0.2% as they purchased goods, making taxation a maximum 0.4% grand total. Richer people would be taxed 0,2% every time they moved their zillions and so on.

----

Entire civilizations, much greater than ours, have collapsed due to abandonment of sound money, by mandatory spending, by overspending, and or by unfair overtaxing. This time is different right ?

In one week.
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ron smith Feb 3, 2017

I concur with all Mr. Shannon's remarks. My note is to say that a major addition to the problem is that the banking industry is a complex system; one of the primary approaches to reducing instability in a complex system is by increasing diversity in all dimensions. Instead, we have witnessed increasing concentration in the sector.

In addition, attempts to buffer prospective downward feedback loops by regulation have met with skepticism both on the part of some economists, especially the very influential Alan Greenspan, and so have been disabled and/or removed.

If, as seems likely, China's banking sector is inadequate, in whatever sense becomes relevant, to stem the acceleration towards disaster when the next cycle begins, who will remain as a still-productive and profitable outpost in the three major economic zones?

I hope to see more thoughtful articles on this topic such as this one, both here and elsewhere, in the near future.
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John Brian Shannon Feb 1, 2017

Hi Mark,

Thank you for this great piece. It's a subject that doesn't get enough attention, and we know it's going to happen, therefore, it makes impeccable sense to begin to prepare for it now -- as your essay alludes.

I hope to see Per Kurowski's comment here in the coming days, he has thoroughly researched and written extensively on America's banking sector, especially in regards to how to enhance structural solvency for the banking sector. His thinking is one order of magnitude better than the present regulatory system.

I've written about China becoming the next real estate bubble and conceivably, it could be 4.5 to 6 times worse than the 2008 crash in the U.S. and it could come *as late as* 2022. But I'd expect it before then.

Let's hope we have our ducks in a row by then!

Thank you for publicly posting your fine essay at ProSyn!

As always, very best regards, JBS
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Mauricio Duran-Loriga Feb 1, 2017

In early 2009, all standing banks were saved from the slaughterhouse by the magic of amending FASB rule number 157. Since that day onwards, bank's balance sheets statements are plain fiction, and any resemblance to reality is mere coincidence.

It is upon this fictional land that regulators have built "buffers" to withstand the coming economic seizure.

Ultra loose monetary policy has suppressed risk (yield) pricing from securities valuation, making the securities market an almost totally unproductive risk free space, as at least in theory every Treasury issued bond will be bid (indirectly) by outright central bank reserve creation.

Risk pricing experts will concentrate their skills in pricing the risks that influence a given currency bid. In all likelihood, the next big dislocation will come from a sudden removal of a given currency bid.

Imagine trust in the dollar vanished overnight. Dollar bid would disappear. And all dollar "risk-free" denominated securities would be prized at cents on the dollar.

Fictional accounting together with outlandish creation of dubious buffers have shifted risk pricing from the securities market to the currency markets. This tectonic shift will make the next crisis (whenever it comes) several orders of magnitude greater than the previous one.
- Hector Miguel Padilla Feb 3, 2017
  
  Very good concentrated diagnostic, can you please expand on the medicine or preventive alternatives.
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- John Brian Shannon Feb 1, 2017
  
  Hi Mauricio,
  
  It was a pleasure to read your fine comment. Thank you for your candor.
  
  Cheers, JBS
  A new reply to this comment has been posted.
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النجاة من إعصار سوق الإسكان التالي

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