G-7 leaders met this week to discuss tax evasion and currency manipulation. Well, not really but I'm simplifying for those who didn't read the statements. The former being an essential element in the illusory "recovery" of U.S. equities with countless U.S. corporations off-shoring their profits only to drip them back home in the form of dividends and corporate debt leverage basis. The latter serving as the latest evidence of sanctioned collusion - currently a stimulation of last resort for the flagging Japanese Yen and Japanese corporations. Against the backdrop of criminal conspiratorial allegations on LIBOR and CDS, I find it somewhat ironic that, as long as you meet in public to discuss inappropriate acts they cease to have their legal or moral consequence.
Noteworthy, I think, that the finance ministers met in Aylesbury just outside of
During the English Civil War, Aylesbury
served as a center for the Parliamentarians who sought to end the tyranny of a
monarchy that was, in the best of days, oppressive and on the worst of days
psychopathic. Paradoxically, our modern
metaphor for Charles I happens to be the tiny clutch of men who, armed with
their divine right of economist acclaim, ignore the evidence of the futility of
their outmoded models and, with patronizing contempt, steer the global
economy into deeper ruin.
I am sympathetic to the struggle of the Japanese government and the businesses it seeks to support. In the late 1990s,
excessive consumption and opaque accountability triggered an economic collapse
for which neither policy manipulation nor social reform has constructed an
escape-hatch. The Yen's further collapse will
not aid in structural and social reform. The G-7's willingness to go along with Bank of
Japan Governor Haruhiko Kuroda's intervention is not because it's a good idea.
It's because those who are not already
executing the same strategy want to know that they're complicity gives them a
pass when they implement the same manipulation. Kuroda's allegation that his intervention is
to hit inflation targets by 2015 and not an attempt to "artificially help
exporters" is a flagrant assault on integrity.
Base erosion, profit-shifting, currency manipulation and the like are all modern tools of accountability deferral. The skullduggery in the legendary halls of William the Conqueror are no more beneficial today than they were nearly 950 years ago. Tragically, while we go about our Hallmark-sponsored celebrations of matriarchal care, the very household stewardship we celebrate is being held in contempt. This is hardly a surprise.
When you examine the biographies of those who are architects for the global economic reformation, it's little wonder that we're in pickle that besets us. Like the Heads of State that appoint them, the G-7 ministers have not actually executed the strategies they believe to be efficacious. They have accepted the dogma dished out by their affiliated Central Bankers who are not surprisingly interested in their member bank profits first and economic collateral implications remotely second. It is amusing to see that the "Free Market Capitalist" doctrine is entirely based on central planning with socialist justification! Amusing if it weren't so destructive.
Productive economic policies do not, at their foundation, start with currency manipulation and rate compression on bonds. They start with an understanding of the enterprise mandate - to create and transact goods and services that have sufficient perceived value that producers and consumers will agree to their exchange. Counter-productive regimes focus on the capital flow first and then seek to impose capital advantage to centrally-planned incumbencies.
present failure is not a capital failure and cannot be solved with capital
I remember my early business interactions in
remarkable alacrity. I was a young
business executive and found that my ideas - while accepted as prudent and
productive - were constantly held to a critical review by 'experts' who
themselves had never conceived of my approaches and had no competence upon
which they could opine. A few courageous
firms in Tokyo
finally realized that convention would smother them and they opted for
innovative alternatives. They were in
the minority. As the success of my
endeavors manifested, my business expanded. However, at no time did I ever experience
decision makers who could react at the speed of the global market. Defaulting to the 'safe' consensus is
accepted. Self-evident innovation is
questioned and seldom reflexive. In a Moore's Law world, the Meiji
deliberative method is a friction that stymies adaptation. Fixing inflation doesn't address that
got the spotlight this week, it's hardly the lead invalid with misdiagnosed
maladies being treated with charlatan cures. The ward is filled with ventilated comas. Housing sales do not indicate economic growth
- they indicate investors seeking to find 'safe' places to park money in a
market where risk-free sovereigns are an oxymoron. Employment statistics still do not reflect
that actual employable base and still fail to demonstrate what economists
predicted QE3 would deliver. When
William the Conqueror landed in England,
he reportedly picked up sand and as it slipped through his fingers said,
"See I grasp England
in my hand." Nearly a thousand
years later, the G-7 ministers equally mired in the sodden muck held the
elusive in their hands. Unlike William,
their solidarity to be complicit with one another so that none are held to
account will earn them little quarter in march of history. Emancipated from the divine right of
arrogance, We the People need to build what our architects have never seen -
productive, engaging enterprises worthy of transaction and accretion of value.