Sunday, January 11, 2015

Is There Any Bureaucracy (Or Orthodoxy) In The World With An Intact Legacy? World Upheaval Now Guaranteed.

(Commentary posted by Roger Erickson)





(but not for the reasons the author imagines)
(& all this from an author who thinks that the USA has a "massive debt overhang")
(yet there is agreement that, "financial repression finally backfires" )
Back in Oct, 2014: "the Bank of Japan shocked the world, announcing a massive expansion in its own asset purchases timed to coincide with the government pension fund’s announcement that it was getting out of JGBs and into global equities."
Huh? Given all this out-of-paradigm nonsense, the author is surprised that predicted outcomes sometimes don't occur? Someone should tell him that we have zero predictive power.

[Not to mention that Japan had already announced an increase in sales taxes actually DESIGNED to equalize & thereby invalidate the effect of their fiscal "stimulus" - and was about to hike them further!]

First, Japan's "Gov pension fund" is simply an accounting agency within the Japanese Gov, i.e., one obscure expression of Japanese policy.

Second, let's not even dwell on how the Japanese gov's move into foreign equities turned out. Instead, look for coherence in their internal logic. Is there any?

How many would actually applaud if the Japanese gov next "shocked" the world by issuing Yen (¥) not to directly provision the nation & population of Japan, but instead to directly invest in foreign equities? (Would many eyebrows be raised? How many would really be shocked?)

You couldn't make this up.

Not only does it seems like the Japanese gov agencies collectively don't know what they're doing, ..... but it also seems as though their different bureaucracies and policy lobbies either don't know, don't understand or don't care what one another are doing!

And the picture is not markedly different in the USA or Europe, or elsewhere around the world!


Everywhere you look, in G7 or other country policies, the ongoing outcomes seem more like the results of mob rule by independent agencies or lobbies running on their own auto-pilots, operating at least semi-independently. Regardless of their respective paradigms, there is no coherent, overall policy logic (unless some entity is purposely sowing confusion, in order to disorient, divide & conquer).

Our electorates are electing no leaders capable of commanding? Anywhere? (Or else it's worse, and actual instigators are still operating in stealth mode?) It sure looks that way.

This all means great risk, and complete uncertainty, as well as great opportunity. Seemingly, any dark horse nation has a great chance to win this chess tournament, because every bureaucracy worldwide seems to be operating out of paradigm for current contexts.

I can't sense any coherence in announced policy steps from the USA or G7.

Are you sure we changed administrations? Either we're leaderless, or there really are active agendas which continue to incidentally confuse, divide & conquer the entire world, coming from distributed lobbies now dominating USA (& G7) policy.

Either way, too few lobbies pushing this many boundaries ALWAYS clumsily produce unpredictable outcomes.

This world population is too big & too inter-connected to be either:
a) without a coherent policy formation process (e.g., leaderless &/or fractious), or
b) amenable to world governance (regardless of which Central Planners make a play).

I see only approaching turmoil, or at best, incredible dumb luck.

What's your sense?


2 comments:

Roger Erickson said...

ps: there's also continued amazement


that so many people (even PhDs & "financial advisors!") jump to the conclusion that:

"dollar-denominated credit to non-bank offshore borrowers is now more than $9 TRILLION"

means that the USA Treasury is on the hook for $9trillion of potentially bad loans.

For Pete's sake!

With an audience this large, diverse & uninformed, we need more disclaimers than ever before on public documents masquerading as advice, or informative.

Something like the following?

"A loan between party A & party B, denominated in $US (or any particular currency), does NOT become a liability of the body issuing $US (or any other currency)."

It's up to the creditor/debtor to obtain the currency they want to use to denominate debts.

It's gotten to the point where the fiduciary responsibility to not mislead consumers is equivalent to "not confusing anyone with the financial awareness of a 4yr old."

If a local lender in the USA tried to insist that a loan - esp a mortgage or bond - be repaid in some foreign currency, supposedly sane people would refuse in indignation. Yet they and/or their counterparts blithely agree to $US-denominated loans when in foreign countries.

Go figure.

Dan Lynch said...

We're ruled by psychopaths, Roger. It may not end well.