Financial, Economic and Social Mood Update (October 1, 2016)
The Dow Jones 30 Industrial Index and the S&P 500 Index both made new record nominal highs on August 15, 2016.
Our world is constantly in a state of change. Where is it going right now – where do its leaders want it to go, where do its people want it to go, and is there a difference between the two? The infamous “leaders” at the top of the so-called “New World Order” have been pushing for more supra-national governmental organizations and ultimately for a one-world government. They seek less democracy, more uniformity, more government bureaucracy, more socialism for the masses, the elimination of the middle class and more privilege and power for an extremely tiny upper class, i.e., for themselves. Socialism and government welfare benefit programs are a means of “dumbing down” the masses, to make them dependent upon the leadership and to prevent them from altering their social status, i.e. from advancing into the middle class and ultimately into the upper class.
The first attempt at global government came in the form of the League of Nations after World War One in 1918. The impetus for this body was to prevent another destructive world war. It obviously failed in that attempt, and since the end of World War Two in 1945 it has been replaced by the United Nations – much more enduring than the League of Nations, but limited in its effectiveness. The most advanced form of a regional supra-national government has been the European Union, which has created an entirely new level of government bureaucracy complete with policy-making authority, a supra-national parliament in Strassburg (French spelling = Strasbourg) and a vast central authority in Brussels. The impetus behind the EU was, once again, to avoid destructive wars such as World Wars One and Two. It sought to prevent the resurgence of the Prussian-German national state (1866-1933) and of the National Socialist German dictatorship (1933-1945).
The EU has antagonized many of its inhabitants & citizens by creating a central authority which is too far-reaching in its scope, by having too much government bureaucracy (which is too expensive) and most recently by having a policy of mass human immigration which is too open to too many people from outside of the European cultural realm. The EU would do well to study the forms of German empire which existed prior to the Prussian-German national state of 1866-1933, namely that of the Holy Roman Empire of the German Nation (800-1806), the brief Federation of the Rhine (1806-1815) and the subsequent Germanic Confederation (1815-1866).
With the exception of the Napoleonic Federation of the Rhine (1806-1815), the period from 800-1866 was marked by an elective monarchy in which the strongest German Noble Houses came to the forefront of leadership, where the German Throne was ultimately inherited by the Noble House of Habsburg-Lorraine – the same aristocratic family that ruled Austria-Hungary until 1918. Austria had become the most powerful German-speaking state by 1438, and she was only successfully challenged & defeated by Brandenburg-Prussia in 1866. What enabled Austrian leadership over the Noble Houses of Europe to endure for so many years (800-1866) was the fact that her style of leadership was far less centralized – it allowed for much more regional control and autonomy.
The Holy Roman Empire of the German Nation (800-1806) was both a Germanic and a Christian medieval empire. The great old Roman Empire (753 B.C.-A.D. 800) fell from within much like the USA is in the process of doing today. Rome was overrun by Barbaric Germanic tribes, but this was much more like a vacuum as opposed to a planned invasion – the Barbaric Germanic tribes were merely filling the void left by a collapsing society. These Indo-Germanic (or Indo-European, which is identical) tribes founded what became the modern nation-states of Europe (both east and west) and of North Africa. It is for this reason that all of the Noble families of Europe have an ultimate ancestry in Germany – this is Europe’s undeniable political heritage. The white (or Caucasian) human race is also of Indo-Germanic / Indo-European ancestry – a trail which leads from the European continent all the way to the northern majority of the Indian subcontinent………….this common ancestry encompasses the Indo-Germanic / Indo-European peoples, the Semitic peoples (Jews and Arabs), the Turkic peoples and the Indo-Ayran peoples of the Indian subcontinent.
Asia
Great as Europe is, it was not one of the original “superpowers” in the world and will not likely be so in the future. Most of the world (60 percent in terms of population) is from Asia. The earliest centers of human civilization in Asia were in Mainland China, on the Indian subcontinent and in the “Fertile Crescent” of the Holy Bible – the oldest “recorded” (or “advanced”) human civilization located in between the Tigris and the Euphrates Rivers. The other great human civilizations of the ancient world centered in ancient Egypt, Central America (the Aztecs) and in South America (the Incas) were also Asian in terms of their ancestral roots. The people who founded these empires had migrated from Asia – over the former land bridge in between Siberia and North America in the case of the Native American Aztecs of Mexico and Incas of Peru.
At the time of the Birth of Jesus Christ of Nazareth, roughly one-quarter (25 percent) of the human race lived in Mainland China. Today, that figure is around 20 percent. Prior to the European-led subjugation of the ancient Chinese Empire (around 1840 when the British Empire took possession of the great ports of Singapore and Hong Kong, an incredible 40 percent of the human race lived in the great “Middle Kingdom” of the Empire of China. China and Asia lost the technology race in the 19th Century and were encroached upon especially by the British Empire (India, Burma, Malaysia, Brunei Singapore and Hong Kong which were central to the dreadful Opium trade), which was joined by the likes of the Empires of France (Indo-China including Vietnam, Laos and Cambodia), the Empire of Japan (Taiwan, Korea and Manchuria), the Russian Empire (Mongolia and Siberia), the German Empire (the Province of Shantung which became central to the failed “Boxer Rebellion,” Micronesia, Palau, the Marshall Islands, Nauru, Samoa and Papua New Guinea), the Dutch Empire (Indonesia) and the American Empire (the Philippines, Guam and Hawaii). Portugal had been in the region as well (Macau), but her presence was far less intrusive and oppressive. The same can be said for Austria-Hungary (the City of Tientsin, the Nicobar Islands and Sabah) whose military commander in Tientsin expressed open sympathy for China during the Boxer Rebellion – he said “if I were Chinese, I too would be a Boxer.” The Opium Wars and their aftermath would keep China “down” from 1840 through the brutal Imperial Japanese invasion (1930-1945) and the devastating communist “Cultural Revolution” of Chairman Mao (1949-1976). The monumental changes in China since 1976 have brought us to where we are today – a world in which China now has the largest national GDP and fully 50 percent of the global manufacturing base. China’s leadership seeks to restore the ancient “Silk Road” which led from China to the rest of Asia, Europe and Africa – an infrastructure of trade which was the economic foundation of the ancient world. China’s 700 cities will generate 30 percent of all global GDP growth in between now and the year 2030.
OBOR
The modern Chinese policy of “One Belt, one Road” (OBOR) seeks to restore the ancient Silk Road which was founded two centuries before the Birth of Christ. It now includes an amazing US $8 TRILLION investment in land infrastructure (North Asia, Central Asia and Europe) and maritime infrastructure (Southeast Asia, South Asia and Africa) which will connect these regions to Mainland China via two-way economic trade. The land-based initiative is known as the “Silk Road Economic Belt” (SREB) and the maritime arm of the investment is known as “Maritime Silk Road” (MSR). They were unveiled in September and October of 2013, respectively. Much of this is being funded through the Asian Infrastructure Investment Bank (AIIB) which is based in China, and which has funded US $300 BILLION worth of infrastructure projects thus far. The MSR reaches into the South China Sea, the South Pacific Ocean, the wider Indian Ocean area and into Africa (especially Zanzibar, and with a modern standard-gauge rail link in between the cities of Nairobi, Kenya and Kampala, Uganda). Much of this is being managed from the city of Hong Kong.
The USA seeks to thwart OBOR via their efforts in the Trans-Pacific trade partnership (which lacks significant member countries) and in the Trans-Atlantic trade partnership (which seeks to unite the USA and the EU, but which as little popular support in the EU).
OBOR encompasses (as of September 2016) 60 percent of the human race and 40 percent of global GDP.
A Global Economy in Flux
A globe in flux (change) means that those who were once powerful and prosperous may no longer be so, and vice versa. These changes are visible within national borders and across them.
In Germany (the country with the largest population and GDP in the EU) real estate prices in “booming” cities such as Berlin, Hamburg, Munich & Cologne are 100 times as expensive compared to in economically depressed towns in the eastern provinces of the former GDR (German Democratic Republic, or “East Germany”). In the USA, real estate prices for very nice single family homes in Honolulu, Hawaii are 19 times as expensive compared to in Dayton, Ohio in America’s formerly industrialized Midwest. The most expensive metro region on earth is the eastern French Riviera (population 933,000) where real estate prices are 210 times as high as in Dayton. Other very affluent & expensive metropolitan regions include London (population almost 14 million = 81 times as pricey as Dayton), Hong Kong (population over 7 million = 76 times Dayton prices), Paris (population over 12 million = 71 times Dayton), Singapore (population over 5 million = 66 times Dayton), Mumbai-Bombay (population over 20 million = 51 times Dayton), Geneva (population 197,000 = 47 times Dayton), Rome (population over 4 million = 38 times Dayton), Helsinki (population 1,431,000 = 32 times Dayton), Manila (population almost 23 million = 31 times Dayton), Bermuda (population 64,000 = 31 times Dayton), Luxembourg (population 562,000 = 30 times Dayton), Taipei (population over 7 million = 28 times Dayton), Tel Aviv (population 3.7 million = 28 times Dayton), Sydney (population 4.84 million = 27 times Dayton), Shanghai (population 34 million = 27 times Dayton) and Cebu City (population 2.619 million = 25 times as expensive as Dayton, Ohio). Santa Clara, California (in the heart of the ultra-prosperous Silicon Valley) has housing prices 15 fold of housing prices in ultra-depressed Dayton, Ohio.
The foreign exchange currency futures market is pointing to an eventual dramatic reversal of fortune for the U.S. Dollar. I see certain currencies trading at or near short term “lows” compared to the U.S. Dollar (an exchange in the Dollar’s favor), but the futures prices tell me that this trend is virtually exhausted, and that the U.S. Dollar will soon lose the most value it has lost within the past 27 years.
Much of the Pacific Rim is booming economically, and this reach can be seen quite clearly on the Pacific Coast of the western hemisphere, where states, provinces and countries such as Hawaii, Alaska, British Columbia, Washington State, Oregon, California and Chile far outperform inland states – the latter often resembling “Third World” countries.
In a decade or so, one-third of homes in Japan will be vacant due to demographic collapse – not enough births, not enough young people, very few immigrants and a rapidly ageing older & retired population. Even the world’s number one metropolis of Tokyo-Yokohama (38 million people) has started to lose population. In other Japanese cities and especially in the Japanese countryside, the situation is dire.
One hears about young people fleeing rural areas for big cities, which has become more acute due to declining birth and fertility rates. One also hears about mass human immigration – Middle Easterners & North Africans flooding Europe, Latin Americans flooding the USA, and so forth. Many of the latter two groups of people are lacking in employable skills, but young Europeans migrating from depressed countries such as Spain & Portugal into Germany fill skilled openings. The situation is similar with Eastern Europeans heading into the UK. But guess what? Many talented young Germans are heading toward global boom cities such as Hong Kong, Singapore and Manila, while many of the “interior” states of the USA are dying economically. Much of rural Guatemala & Honduras are dying out – their people have headed north into Mexico and the USA.
The changes are endless, and so are the challenges. What is the solution? Government, central authority and large organizations (be they public sector or be they private sector) tend to stifle human ingenuity and progress. High rates of taxation & generous social welfare programs punish success and reward sloth. The answer is to have far less central authority, far less bureaucracy, much lower taxes and to allow everyone to keep the financial fruits of their labor. China has begun to move in this direction since 1976, but they will make even more progress if they continue in the same direction – open the political process to more parties, allow the freedom of the major religious faiths, remove the central bank from the economy (allow credit & debt to find their own free equilibrium in the open market) and allow couples to have as many children as they want. The last point is critical – China now has a human fertility rate even lower than in the industrialized countries of Europe and North America. The dire result of not having enough children can be seen in Japan today.
The world is becoming more technological. Society of the future should have less government (the public sector is already de facto bankrupt), it should have private health care with many small entities providing that care (the large non-profit organizations of today are swallowing too many public resources and providing highly impersonal care at sky high cost), it will have fewer large corporations (so many have already “downsized,” and that process is far from complete) and it should many more small businesses & sole proprietorships – much like the economy of generations ago. Yet another debt bubble set to burst is that for higher education. The educational system of today is too costly, too bloated with staff, and it teaches so-called skills most of which are not needed. In other words, it is high overrated. The educational system of the future needs to focus more on trade schools & apprenticeships and less on institutions of higher learning (colleges and universities). Much like health care and governmental administration, it needs to be less cumbersome and more tailored to local needs.
Which parts of the world have the highest income levels in September 2016? The 35 most affluent out of 318 nations or autonomous territories on a per capita GDP basis are (in order / by ranking) Luxembourg, Qatar, Norway, Switzerland, Singapore, Ireland (an impressive comeback from near bankruptcy), San Marino, Sweden, Iceland (another impressive comeback), Denmark, Australia, the Netherlands, Austria, Canada, the UK, Germany, Finland, Hong Kong, Belgium, France, New Zealand, the UAE, Israel, Italy, Kuwait, Brunei, South Korea, Spain, Malta, Cyprus (yet another impressive comeback), Taiwan, the Bahamas, Slovenia, Saudi Arabia and Trinidad & Tobago.
The Philippines was the 2nd wealthiest per capita nation in Asia in 1965 (after Japan) but by 1986 they were among the poorest. The Philippines have made an impressive comeback since 1986. They now have among the highest annual economic growth rates in the world. Their per capita GDP ranks them in the top 24 percent of nations or autonomous territories in the entire world. The most affluent Philippine islands of Luzon and Cebu have a per capita GDP on par with the USA, the latter ranking number 37 in the world.
The 16 poorest per capita nations in the world are all in sub-Saharan Africa – these are the Central African Republic, the Congo (formerly Zaire), Burundi, Liberia, Niger, Malawi, Mozambique, Guinea, Eritrea, Madagascar, Togo, Guinea-Bissau, the Comoros Islands, Sierra Leone, Gambia and Burkina Faso (formerly Upper Volta). OBOR should prove to be a very positive force for such countries.
For access to archives and more, please visit www.financialeconomicupdate.comand/or our mirror site at http://www.theborromeofamily.com/the-marc-nonnenkamp-show/.
