Thursday, January 14, 2016

At This Point The Whole Global System Is Untenable......A REALITY IN 2016

At This Point The Whole Global System Is Untenable

China is untenable in its current financial position. That is the primary problem, and so long as it remains so whatever the PBOC does will have but a fleeting impact. In more immediate terms, that is being recognized by the "dollar" run which continues to savage not just China but South America(more than just Brazil), Africa, Asia (more than China) and you might even argue Canada and Mexico. 
From that, we see that it isn't China that is the problem with the "dollar", it is the whole damn system.

We are well past the point of no return where ever major adjustments can be undertaken in order to preserve that past functionality. Volatility itself will ensure that, because once volatility becomes significant the world's mathematical models start flashing uncontrollable warnings (for resource providers, the money dealers, the warning is to get out or get out even quicker; for speculators, the warning is to attack the volatility as a huge opportunity) which then become self-reinforcing. Imbalance no longer able to be maintained becomes a paradigm shift or reset. Unfortunately, 2008 was an attempted reset which is increasingly revealed (past 2011) as an aborted one.

Nobody likes disorder but the orthodox economics textbook has made it exponentially more undesirable by treating market forces as the enemy when in fact it is markets that, when allowed, produce needed efficiency in the long run. Central banks trade short term outbreaks of calm for long run continued problems of inefficiency and imbalance. Market forces, including speculation, is trying to trade short run disorder and turmoil, sometimes very nasty, in order to find a more suitable long run balance. The Fed screwed this whole dynamic up by their very misguided policy actions and delusional 
pronouncements. We are now at the mercy of a very screwed up global economy rife with overvalued asset valuations and few realistic leaders with real solutions.

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