i have just got this crazy idea that might work. i was reading about fallen states in the economist msg.
they categorized into 3 types, hobbes-ian, brutal nasty old rule, modern n post-modern.
post-modern is european union where they sacrificed a certain amount of their soverignities in order to be in an union. they get the same money, euro; n have certain restricted to their bugetary policy, like the national debt would not be more than for example, 4% of GDP.
of course, some EU countries do not always obey the law, n everyone just want to devaluate their money to get out of an economic crisis. (sorry, i am not going to explain the economic theory, too tired to, just sth to do with export, raise output....)
anyway, i was reading this other articules on japan, how even their banks got fucked, not because of the american toxic assets, they have very little of that,
more of the jap banks have stakes in the japanese companies, like sony, sharp, toyota....
so when the stock market was down, because less products are sold in america & others...
the jap banks got hitted very hard, suddenly their balance sheet got fucked up too. (jap economies, half of jap GDP is export, so imagine when the export is down by half, that means 25% of GDP is down,
economy works in cycle, less money coming back, more laid off, less money to spent at home..... so maybe another 15-20%off, it will be like 60ish GDP of a year ago, that is alot!!!!)
n they hit out in the banks as the banks own the economy, no money to lend out, less investment, less job, second cycle of laid-off.......yes, very crap.)
anyway. so what is my idea? u know there is a failed Doha round.
basically countries come together to arguing, trying to divide the cake, who gets what, how much tarriff they can impose on their imports, how many products go from chile to america for example....
the point is that we have no international rule, arbitrary of saying if someone breaks the rule they will be punished, but the Doha round is the nearest thing we have.
it is basically bigger countries rule, i have more power over u, n u have to obey my rule if u are going to do biz with me.
but what if we set some sort of EU for the world, we are not going to talk about human rights....
but say that all countries cannot go beyond certains percentage of debts of their GDP if u want to join in the union.
1.u see, if u want to subsidary ur goods, say that a corn costs $3, gov't A gives $1 to the farmers, then if it is sells $3, the farmers will still get $1 of profit, while drive other countries farmers bankrupt, n
country A has a bigger share of the market...monopoly, raise the price of corn later, n bigger say in the Doha round, more unfair rules...vicious cycle.
but if every gov't cannot go beyond a certain debt level, they paying subsidy to one thing, means less on the other thing. in normal time, they would prefer to run in bigger debt, get bigger GDP, then the debt can be paid off later. now they cannot do that.
2. if the country is not in debt, the interest rate is stable, so the currency is stable, n so financial markets would not play in hedging currency, so no hot money or flight of money.
(hot money, i.e. Soros in 1997 asia financial crisis) , so no further currency stability.
ok, interest rate stable, do u get what i mean, if ur bank account n credit history is good, the bank would not view u as dangerous, run n not pay back, so they do not charge a higher interest rate, to offset their risks. u are good biz, they would like to keep u as client, so lower interest rate for u.
3. other countries know that u have the money to pay back, they would like to do more biz with u. n so u do more biz with other countries.
if u want to run into unreasonable debt to expand ur biz too quickly, u cannot, as u would be kicked out of the union n no biz at all for u. so it is very safe.
4. if they try to heat up the property/ stock market to raise consumption, thus GDP, by letting their households borrow from their houses to buy goods n stock..., n so stock/property goes up, borrow more, more for consumption, bigger GDP...stock goes up again...
they cannot, because they are not allow to run beyond certain amount of debts.
5. if the company n gov't has excess saving, like in china, even when the ave. workers paycheck has been less n less.... those gov'ts would not know what to do with their saving, because nobody can borrow from them, so they would need to invest back to their own economies, raise the workers' wages for more buying, thus bigger GDP.
so the disturbed present cycle could not have been possible. all the countries would have developped more normally, n evenly, so eventually between the poor n the rich is not so big, n so fairer societies for all.
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i am sure my model could have some falses. i have not thought everything thru...
but the first problem i see in implementation, they are going to argue what is the wrong amount of debt.
2. should developed, n developping countries have the same percentage of debt of GDP, afterall developping countries need more money to develop...etc, it is not fair...etc.
3. some countries would start to do insider deal, hey, i have excess saving, do u want some?
i won't tell anyone, esp if it is big, like america n china, nobody would dare to say anything.
yes, in union, we are strength, in parts, we fall.
4. some countries would try to cook up numbers, what is count as debts, what isn't.... statistic, accounting... u will be amazed by what some experts' hand can do.
5. how to count the debt level, an ave out of 5yrs, is every yr being too strict? but if every 5yrs, some countries would use political influence to delay or cheat, round out numbers....etc, n say it is almost alright, ppl turn a blind eye from it.
hey, i help u out, u help me out; hey if it is not today, u never know when u would need my help, so...
they are all so lowlifes, i swear, freaking politicians.
even if it works, maybe it is like in the starworld, a good republic, until some forgones all the rules, it is so peaceful, nobody have anymore anti-bodies to fight if they are attacked by the diseases.
i don't know, history is a funny thing, maybe i have thought too many steps ahead. only God knows!!!
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IMF, bretton woods, UN... most of them were built after the WW2, are they not outdated?
Cold war, 1989, 9/11... is it not the time to build something that reflect our times?
the idea i have got properly would not work out in one rule fit all..., but should not we move more gradually to trade with countries that are fiscally responsible?
we buy from brandnames that give us a sense of confidence, quality, safety...
in an unfair, injustice world, it would seem stupid to play it fair, but everything is so distorted, nothing seems to make sense, everyone feels disoriented one way or another.
someone called it post-modern angst, but what is the point?
who is really winning here? u win some, u lose some.... in- between anxiety and stress have aged u decades in a few yrs. i am talking about wallstreet, washington. they are so overworked, overloaded in monitoring every bit of distortions.
that they cannot think straight, not until the day u have left the gambling table, u would not know if u have won or lost. but by then.... what have u really done for the world, maybe even for urself?
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