Economic Timeline

By pjain      Published Aug. 9, 2020, 2:25 a.m. in blog Invest   

Lessons from Global Economic and Geo-Politics

=== 2020-2050 Futures

IT, Automation - greatly hurt RPO, BPO, Call Centers

Service sector to Hurt Real Bad - eGov, Online Edu, RPAs, Telehealth

30% of Jobs Loss to AI

Rise of Big Tech Unstoppable - 2018 DotCom

Rise of Automation, AI, Robotics is Good - 30% of Global Jobs at stake

US blocked by Regional Powers : Iran, China, Russia, China


2015+ Rise of India Under Modi

Rise of Services Offshoring, H1B really took off in 1992+ and Y2K

  • In globalization, companies could just, like, Offshoring or even outright Outsource parts of their operation to those other markets where labor was cheaper.

Public Sector Curse in India


Reforms to make India more Competitive

Leveraging India Demographic Dividend - PLI manufacture of Smartphones in India

Unique case of Solar Panel production in India

2016+ Rise of China under Xi

China 2000+ is special - How it screwed the West TODO

Wishful 2001 China in WTO got them huge benefits

  • In the '80s and '90s China was a lot weaker and the West had a lot more leverage over China
  • And yes, we will let them in with very few conditions.
  • As WTO China was able to export to the West much more freely
  • It was treated as a developing country and allowed some subsidies, which would be illegal for developed countries.
  • Treated and TRUSTED as a developed country in that it has the full privileges of WTO membership.
  • Smarter thought: China should have been given a provisional candidate status subject to good behavior.

Robert Rubin, who was Clinton's chief adviser on economics, really wanted China in the World Trade Organization subject to Wall Street getting cut in on some of these deals. And Rubin's affiliations, of course, were with Goldman and with Citigroup. And he epitomized the revolving door. He came from one, he went back to the other. And so China was given a free pass not just because of ideological blinders or a geopolitical naivete but because of a lot of powerful people in the United States who made a lot of money off of this. -- Robert Kuttner

Chinese MASSIVE EXPORT SURPLUSES - used to finance its dominance on world stage!

  • China has become more of a dictatorship, less of a democracy - fewer rights.
  • China's five year plans became effective industrial policy
  • It subsidizes the creation of competitiveness in industry after industry. They are state-owned, or they're assisted by the state, or the state is a partner.
  • Its Princelings - sons and daughters of CCP leaders/Politburo members often returned from Harvard/Stanford to lead enterprises with silver spoons
  • At upper middle class levels, massive capital flight was achieved to buy real estate globally - often by underpricing exports to sister concerns.
  • China used technology to create a communications firewall, that allowed its BIG TECH to grow hugely and block FB,GOOG,MSFT,YHOO,etc.

Why is it "UNFAIR", Uncle Sam is crying Uncle!

  • SUBSIDIES: Free trade withers under China's massive Subsidies and Cheap Financing (usually hiding huge losses)
  • BARRIERS - China created non-tariff barriers to block - China does is it puts up barriers to imports of products from the West that would otherwise be competitive because it wants to shelter its own industry.
  • BLOCKS DOMESTIC MARKET. Western MNCs can only produce for export, not for domestic consumption. We want to leave that to our burgeoning domestic Chinese companies.
  • Instead of importing agricultural goods from USA, in many instances, it ended up exporting even those
  • China focused on electronics, solar cells, steel, aluminum etc and "dumped" at prices that were killing European and US mills
  • China forced technology transfer 51% JV ownership - "you have to share trade secrets with a Chinese partner that we're going to give you, which a few years from now is going to take your technology and compete you out of business. "
  • SPYING with outright industrial espionage (just like Russia, France and Israel) > China was using techniques of espionage to steal trade secrets.

Reverse MNC acquisitions = Chinese "sponsors" buying up Western companies

Until very recently, Chinese companies and, for that matter, the Chinese government were allowed to buy up anything they wanted to buy up unless there was a very narrowly defined national security reason to keep them from buying up a very sensitive technology.

  • Geely the Chinese car company bought Volvo. It bought the iconic London black taxis, and it's electrifying a lot of them.
  • Haier the Chinese appliance maker, owns the entire Home Depot (US #1 seller) appliance warehousing and supply chain of Whirlpool, GE and other brands.
  • Qualcomm was approached by Avago a rapidly rising, cost cutting and EXTREMELY well financed tiger based in Singapore, which had already bought Broadcom, and is controlled by a Chinese, who knows what connections to China.
  • Huawei the $100b behemoth already is the huge monster run by an ex-Red Army man.

China's Industrial Policy - Made in China 2025 - #1 in AI, Military and Space Tech TODO


  • CHINESE DRAGON ROARS and challenges West
  • Joke is the future elites like Oxford grads and Chelsea Clintons are going to be nannies for the CCP grandchildren!
  • China is in an ECONOMIC WAR - it invests almost half of its GDP (more than even US in WWII) vs other G20 at most 15%.

China's Silk Roads, BRI and Infra-investment TODO

China's Africa Push - Displacing Lazy West TODO

2020 Coronovirus Bungling RAPID FALL of US

2017+ Decline of US under Trump - Trade Wars

How we got to Trump, Brexit 2016+ TIPPING POINT

Sharply Rising Inequality, 1% get Wealthy TODO

Developed World Goes Insane, Long Term rates Fall! TODO

LET THEM EAT CAKE! Left-Wing ELITE, Enlightened, Liberal: European, US-Democratic

Rising Public Debt and Unemployment, declining Real Living Standards

Globalization in its current form, the author argues, has failed—to hold leaders and institutions accountable; to provide prosperity for any but a small, wealthy elite; to create a stable private economy in the United States. Despite reassurances about the self-regulating nature of markets and the equalizing power of free trade, inequality has widened and benefits have diminished for all but a few. As investment bankers and corporate CEOs have reaped the benefits of mergers and acquisitions and speculative finance, the increasingly vulnerable middle class has watched New Deal–era protections such as Social Security, Medicare and pensions erode. -- Kuttner

The top 1 or 2 percent were significantly better off. The economy is twice as rich on average, but ordinary people feel both very insecure and they feel disrespected.

If you want to open your doors generously to refugees, as some leaders in Western Europe did, you can't at the same time ignore the plight of locals who are suffering the effects of 10 percent unemployment compounded by austerity policies.

This feeling of being let down in 2000 crash, then again in 2009, led to great insecurity for ordinary working people.

Ironically France WAS one of the biggest promoters of immigration and refugees, but after a few Paris, etc. bombings, they essentially closed borders with Italy, and pushed back to "country of EU entrance" refusing to accept any. This cut off Italian EU funding of refugees, as they would have to bear the costs of inviting "boat guests", themselves instead of funding them in transition to rest of Europe. Guess what Italy slammed the doors, in fact started paying Libya, etc. to cut off launch of refugee boats in first place! -- Pradeep Jain

ANGER resulted in Trump, Johnson/Brexit, Rise of Right-Wing Populism and Nationalism

However, the elite were having parties, feeling super-rich, and trying to be very culturally sensitive to new groups who are asking to be let in - promoting the interests of refugees - eg "getting #26,000 per family while after working 45 years pensioners barely get #6000 in UK".

Hillary Clinton, on the one hand, was taking large speaking fees from Goldman Sachs and identifying herself with the kind of globalism that benefits mostly elites and at the same time was really trying to be enlightened on this subject of immigrants, on the subject of transgender people. - RK

If you want to get elected, you can't ignore the plight of ordinary working people at the same time you're asking the voters to open their hearts to immigrants and to other claimants for social justice. It's asking too much of people whose living standards have gone down the drain to expect them to be liberal on social issues. That's just to pour oil on the flames - Brexit was one result, just as Trump's trashing of Hillary in 2016! - RK

Today, a lot of people throughout the West are angry that the good life is being stolen from them .. "they're not quite sure whom to be angry at - immigrants, corporations, the government, politically correct liberals, the rich, the poor. The anger is unfocused but is increasingly articulated by a neo-fascist right," .. Robert Kuttner

Ironically, just a few years later in 2019, the right and even the left seem to maybe agree on one thing: they both oppose globalism.

The Democrats still are a bit lost on immigration and refugees, and Trump is exploiting this anger of populace to the hilt!

Trade Wars = Zero-Sum games Accelerate - Like Smoot-Hayle? TODO

Nationalism for Local Jobs

[Led by Trump's] use of the threat of tariffs in the context of renegotiating the entire arrangement by which China gets to interact with the rest of the world. .. My prediction is that both sides are going to back down and agree to talk, kick the can down the road and not much will change relative to the larger problem of China's entire economic strategy being predatory vis-a-vis the rest of the world. -- Robert Kuttner

China is the one point where there is a little bit more convergence than there is in any other area in that Bannon and progressives both feel that the American economy is being taken to the cleaners by China. - Robert Kuttner

2018 Tax Cuts Impact - Just makes 1% even Richer

The national debt is expected to reach more than $33 trillion by 2028.

  1. Economically, after a bit of GDP growth in first year of tax cuts 2018, growth has settled back down to recent levels.
  2. Other than ~30% - no great inflow of cash from foreign holdings has returned.
  3. Corporations are not investing or boosting their productivity - instead simply buying back more stock often taking on heavy debt to do so.
  4. Infrastructure spending is nowhere to be seen. Obama did it neither - ending up with a "Cash for Clunkers" just sold more GM/Ford gas guzzlers.

The Republicans have played this game going back to Ronald Reagan. You enact a tax cut. You claim that the benefits will be so great that they will pay for the cost of the tax cut. That's known as supply-side economics. And when that turns out not to be true, you discover the peril of the deficit. And then you cut a whole bunch of domestic programs to try and fill in some of the cost of that deficit and rising debt. So that was done under Reagan, was done under Bush one, under Bush two. And now the same script is being repeated under Trump. And the obvious answer is to repeal much of the tax cut if we're really concerned about deficits and debts. .. I think the sponsors of the tax cut are vulnerable because voters are going to make the connection between the tax cut and the fact that Social Security, Medicare, Medicaid, other popular social programs are now going to be put on the chopping block in order to pay for the tax cut. - RK

PKJ> More likely the taxes will be raised but on common people, eg raise the SS tax contributions, etc.

Trump deficits WILL NOT invest wisely

  1. Are you spending the deficit to invest in infrastructure, energy efficiency/green
  2. Are you making your industries more productive, AI, high tech, ready and more competitive?

WASTED: US Deficits to be >$1 T / year! Public 100% debt-to-GDP as GDP slows to <1.8% to 2025

  • After World War II, the debt-to-GDP ratio was 120% BUT because the economy was growing at a nice rate, because we had a moderate rate of inflation, interest rates are not all that high, the ratio of debt to GDP by the time Jimmy Carter was president came down to about 25 percent.

  • The nonpartisan Congressional Budget Office now says the federal deficit will hit $960 billion in fiscal 2019 and average $1.2 trillion in each of the next 10 years. As a share of the economy, the deficit is expected to range from 4.4% to 4.8% over the next decade, well above the average for the past half-century. The deficit would have been even bigger, but the CBO reduced its forecast for interest rates, lowering the government's anticipated borrowing costs. By 2029, the accumulated federal debt is projected to exceed $29 trillion, or 95% of GDP — the highest ratio since just after World War II.

Inverted Yield Curves of 2019 TODO

$30T of negative 30year debt TODO

Europe Recession in 2019 TODO

US will do WHATEVER to get Trump Re-elected TODO

2021 US Recession 50% chances - TODO

  • GDP would slow to <1.8% to 2025 - CBO Aug'19
  • Tariffs reduce domestic GDP mostly by raising domestic prices, thereby reducing the purchasing power of consumers and increasing the cost of business investment," Swagel said. Tariffs also affect business investment by increasing uncertainty "about future barriers to trade - CBO

---- 2008-2016 Fake Capitalism - Neo-Liberal/Globalists Economics - Just make 1% Richer

2008+ Crash: 10 Years of Free money for 1% => Slow grid of Wasted Stimulus

Understand WHY the 2008 Crash Happened TODO

Global Financial deregulated and FAIL!

What caused the 2008 financial collapse, was the completely promiscuous deregulation of finance. And globalization played a very major part in that because if a bank operates in New York, and London or Geneva has fewer regulations - and you deregulate global banking - well, the bank can either move to London, or it can move certain products to London, or it can threaten to move to London. And all of that undermines the ability of the government to regulate finance. - Robert Kuttner

To Save Too Big to Fail - Public Chickens handed over to Wolves of Wall Street!

Insane QE: Central Bankers buying up OWN Assets and Govt Debt!

10 Years of Free Money - QE

Central banks in Asia, along with our own Federal Reserve, have drastically increased available credit reserves this decade through purchase of government securities and by artificially holding down interest rates. The flush of credit has encouraged bankers and other investors to make loans that in a normal market would be deemed too risky.

The new money must flow somewhere. During the past decade, world stock markets and real estate markets have absorbed much of the newly-created cash, thus the explosion in their values.

Often the money flowed into "ghost cities" of China (bribing no doubt local warlords and provincial government cronies), or the NPAs of Indian crony capitalists from 2008 on. Asian economies for decades have engaged in "crony capitalism," that is enterprises which are in political favor find themselves first in line for new loans, eg. when the former President Suharto's friends looted Indonesian banks The problem arrives when these shaky enterprises seek more loans, not for capitalization, but rather just to stay afloat. In Asia, and especially Japan and Singapore, there are thousands of these kinds of firms.

New money poured into risky investments temporarily was able to hide the fact that many of these loans could not be paid back. When the day of reckoning comes, it may turn out that these banks have been holding hundreds of billions of dollars in bad loans. This is particularly bad in China, as it takes a 50%+ of GDP investment to boost the economy by bare 5% while it used to give 8%+ growth with far less investment-to-GDP ratios.

Health Care after ObamaCare eats up US wage increases TODO


Free money goes to 1% and Cronies Rampant in the West

  1. Massive tax cuts given to corporations, pass through to upper 1% and make them richer owning higher percentage of all wealth
  2. Keeping interest rates super low robs pensioners from earning safe returns from bonds, T-bills,etc. making mass poorer
  3. Stock market, Real estate, and all assets ballooning, but only rich can really leverage and profit from that.
  4. The true defense budget including veterans, and foreign war budgets is well over $1.2 T/year - as a time when US is being thrown out of Afghanistan, Syria and Iraq, has been outmaneouevered by China in South China and Indian Oceans and sneered at by Iran. Its Patriot missiles and F35 are beat by S400s to the extent that US and Israel have lost air-superiority in the Mideast.
  5. US is now borrowing $1T+/year just going on a credit card binge to pay

Gimme Greed more rampant, Deregulation to Ridiculous levels

I harbor no hope that the faux populism of Trump will yield any improvements for the 99 percent, and he suggests that even the most progressive of corporations are pleased with the deregulatory mood that reigns today, with the result that any chance of resuscitating democracy will require the involvement of “empowered citizens" -- Kuttner

US Wastes its Treasure 1990-2015

Abuse of Power antagonizes Impotent Developing and Rise of Regional Powers

US Treasure wasted in Bush wars 1992-2020

Iraq War stretches US

Pakistan shelters Bin Laden TODO

Fake Illegal Drug Wars

US 40,000 deaths/year due to Misguided Gun Lobby fighting Gun Controls

US 40,000+ deaths due to PRESCRIPTION Opiod Crisis

US impotent to stop Fentanyl-Super-Addictive renewed South American Drug Push

US Wastes $1.2 T on "Defense" and gets little other than re-elect Second Term

2019 August - Pakistan's ISI a terrorist cult - helping broker Afghanistan exit for US!

GLOBALIZATION - China as Global Factory Floor, Sucking up to MNCs/Elite 1% ---- 1980 to 2016

Globalists all are getting rich on MNC profits, and global financial system

So the left and liberals are the same promote globalization, And so it's a broad critique of an elite in which a lot of ordinary people have lost confidence.

Leftist Elites Embrace Refugees and Immigrants

  1. Immigration and Refugees

    As the aging in Europe hurts the supply of local workers, and millions of refugees from Syria alone land on European shores, mostly caused by policies of bomb and invade in Iraq, Syria, etc. by Bush, Obama and Clinton regimes supported by Europeans. In other words, they poked the ant hill, and caused all this turmoil.

  2. They're the same people who disrespect your religion.

  3. They're the same people who are going to take away your guns.

  4. They are the same people who are promoting transgender use of bathrooms.

1980s to 2016 Globalization Unchained!

Beginning in the '70s and '80s, after 35 years of WWII was forgotten.

Politics weakened Managed Capitalism

The polices of "managed" capitalism were blown up, especially by Regan in the form of "supply-siders" (really meant buy from China). However, Democrats went along too. This was a bipartisan consensus that if we just move to a more globalized market system, everybody will be better off.

The “usual rules,” of capitalism came back - Hobbesian and dog-eat-dog, have generated ever more inequality even as the financial system becomes both more internationalized and less regulated.

At the same time, the “equalizing mechanisms” that allow children from poorer families to participate in the social system and become adults with at least some chance of success have become vastly weaker according to Kuttner.

Myth: free trade is good

Myth: Equalization among global markets is inevitable

  • West can GO UP THE VALUE CHAIN, let Chinese do shitty factory jobs

Myth: Economic benefits accrue to those who work harder and smarter

Myth: As Rest of World income rises, they will be more democratic, we can sell more of our goods to them

  • Western capitalists can CONTROL the third world, by embracing Chinese "liberal" capitalism
  • Lets let China into the global economy, they will become more like us - evolve into a democracy.

Rise of Manufacturing Outsourcing - making MNC CXOs filthy rich!

Outsourcing corporations could either move to a place where labor was cheaper, where there were no unions.

Why Europeans and PacRim Tigers were not enough? Too Expensive? Competitors?

Cronies: Trade Deals undercut

Trade deals were used to undermine the ability of governments to regulate banks. They were used to put cheap labor that had no labor standards into competition with labor in the United States and in Europe that benefited from protections. And so globalization was used to return to a more primitive version of raw capitalism. - Robert Kuttner

  • The use of a certain kind of globalization to dismantle what used to be a manage form of capitalism that delivered broad prosperity. This resulted in the dismantling of protections and safety-nets, and the fall of a social contract that used to help broad groups of people in Western democracies.

Rise of the Big Box Stores - WMT, HD, BBY, Sears!

Reality: Globalization let MNCs will make HUGE profits for Shareholders

  • Our shares in MNCs will be worth a LOT more as profits skyrocket, selling $1 socks for $10 in Walmart, Target or Sears!

1980-2000 Good little Chinamen working hard on CONSUMER goods = Cheap Chinese Shit!

  • All the little china men assembling Dell PCs, helped make Bill Gates and Intel super rich all through the 80s and 90s.

  • They quietly got more and more of the factory production, as US manufacturing jobs fell in half or more, with entire industries destroyed.

  • Free trade thinking and Elitist Group-Thinking and Propaganda. People of the Clinton and Bush era very wishfully thought that if we would just set a good example and let China in, they would evolve into a free market.

Rise of USD as Reserve Currency ---- 1950+ to 1980

1950s-60s - Great Generation - Balance of Regulation and Free Market Capitalism

Managed Balance of Externals-Free market Capitalism

The [democratic nation-states after World War II when millions of lives were lost] - everyone was determined to "we are never going to let this happen again." And so they built a global system that was compatible with a system of managed capitalism domestically so that prosperity would be broadly distributed. Now, globalization, beginning in the '70s and the '80s, overturned that system to the point where economic insecurity increased to the point where ordinary people lost confidence in elites to the point where, in country after country after country, the far-right fill that vacuum very much the way it did in the 1920s. -- Robert Kuttner

So governments were able to regulate markets in the broad public interest so that ordinary people would have economic security and economic prosperity.

The great successes of postwar capitalism were precisely those that expanded the civil and human rights and material well-being of ordinary people, the post–New Deal promise that labor would have a voice and that the social contract would allow access to health care, education, and other public goods, all of which he describes as “a system of political economy, whose rules were drastically different from the usual rules of capitalism. - RK

This was a "managed" form of capitalism that delivered broad prosperity.

Global Reindustrialization, Demilitarization (of Japan, Germany), Prevent rise of fascism

Part of the goal of international trade cooperation after World War II is to try to prevent the rise of fascism again and to prevent another world war through economic cooperation.

This globalization was a form of economic cooperation and a form of - a restarting of normal commerce that was consistent with governments managing capitalism in a broad public interest.

Tight regulation of Banks

And so in the entire West, you had policies that tightly regulated banks. You had policies that protected and empowered labor. You had policies of significant public investment. And it was a very nice balance between the market part of the system and the Democratic part of the system, and it worked. It produced high rates of growth, and it produced very broadly diffused prosperity. And there was no far-right in that era because ordinary people felt that they were getting a fair deal. - Robert Kuttner

Rise OF US as a Global Superpower ---- 1880+ to 1950

1929 Laissez faire capitalism and Free Markets - FAIL!

Laissez faire capitalism, which brought us the Great Depression, had obviously failed. And the capitalism that was prevalent in the 1920s did not just produce the Great Depression, it produced Hitler because unemployment rates were so high and austerity policies were so perverse that people turned to fascists because they were desperate. It's very hard for democracies to survive 20 and 30 percent unemployment.

1930s Great Depression and Trade Wars

In 1930, Congress passed the single worst piece of economic legislation in our nation's history, the Smoot-Hawley Tariff which effectively ended the world trading system. The Hoover Administration - even as bank failures were already shrinking the nation's money supply - urged business and labor unions not to allow wages and prices to fall. This was a prescription for disaster, as prices and wages must be permitted to adjust in order to reflect current realities.

Not satisfied with those measures, President Herbert Hoover and the Republican Congress pushed through a massive tax increase, done, they said, in order to calm nervous markets. The doubling of taxes was the final blow to any economic recovery. They did everything they could to thwart the market system.

When Franklin Roosevelt took office, his New Deal simply kept the depression alive. First, he attempted to arrange the entire U.S. economy into a series of cartels through the National Industrial Recovery Act, he fixed agricultural prices at artificially high levels, then forced violent unionism on businesses in hopes of raising wages.

WWII a direct result of economic stress

The result - unemployment levels did not fall below double digits until the start of World War II.

=== ANCIENT Economics and Capitalism from Ancient times to 1930

Capital in North Italian States : Insurance

Portugal - King's Capital Financed Bold Growth

Insurance and early "Hedging" enabled Risky

  1. Llyods participatory insurance system allowed even greater profits

Indian Ocean, Persian Gulf and Africa is the Battleground - China's String of Pearls


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