‘Economists’ bamboozling over Bamboo Curtain threats
- indigestible chop suey
South Africa’s professional electrical engineers willingly subjected themselves to a brainwashing by Investec Asset Management’s Dr Michael Power – high gloss deception prevailed with not one engineer rebutting.
(UPDATE Oct 2015: China's stockmarkets have emulated the fraudulent money-machines of the West – it is why dense, highly populated megacities have sprouted, all dependent upon & providing slave labour – see also paper: Wolfson Economics Prize 2012)
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SA’s EE Publishers, a privately owned publisher that somehow claims to be the official voice of the SA Institute of Electrical Engineers, hosted a breakfast talk in February 2006.
Guest speaker was Dr Michael Power of Investec Asset Management – the title of his presentation was “Bamboo Curtain splits – and the world changes” (see pasted copy below).
EE Publishers printed this article in their recent editions along with high gloss photo’s of the speaker & various delegates.
The general impression from EE Publisher’s presentations in their magazines was that the speaker was a person of academic authority, from a respected institution, & his views were of high importance.
What is more to the truth, as will be seen when perspective is gained, is that a bunch of professional engineers, educated & trained in systems & controls, had mindlessly lapped up deceptions presented to them in a gloss environment – i.e. they bought into the gloss facade.
Before addressing the fundamental flaws of Dr Power’s paper/presentation it is important to put perspective onto his position:-
- In telecon with Dr Power he confirmed that he was based in Investec’s Cape Town office – that his position was of a similar standing to that of Professor Brian Kantor but in opposing market functions (as far as duties are concerned) – he is not an economist per se but from discussions & admission it is evident that he is self educated in this area.
- Investec is a major international financial services company. It has been embroiled, for decades, in numerous fraudulent investment scams/products/services some of which, generically, have been exposed by the writer and adjudicated by an ex Reserve Bank Governor & 2 others; and which scams have formed part of government/judicial dishonest involvement. More recently, SA’s TV judge Dennis Davis covered up certain of these major fraud issues pertaining to a Cape High Court case in which Sanlam were cited for various irregularities over pension funds.
Davis refused to allow the writer to submit evidence concerning proven frauds in pension funds.
Davis later accepted an invitation to a lavish social event staged by the Financial Services Industry; this despite severe sanctions from the Chief Justice against the entire Cape High Court judiciary for accepting an invitation to a lavish 2005 Christmas dinner staged by Old Mutual.This point clearly demonstrates the extent to which SA’s judiciary are protecting corrupt FinServInd institutions & service providers.
- The key point is that Investec is deeply embroiled in these, and many other, generic fraud scams & issues, globally; and Power, like Professor Brian Kantor, had/has not transparently aired these issues – it goes to prove that both Power & Kantor do not/will not present the truth – instead they, because of financial inducement, present deceptions that best suit Investec. (See Historical Archives, Home Page lhs, CHAMSA – Economics for Prosperity – dismal failure)
It is important to bear this frame in mind when reading Power’s paper.
The proofs of Investec’s blatant fraud & dishonesty is well established & long standing and it is not the intent to belabour this further herein, merely to set the backdrop – which is that if anyone from Investec, or any FinServInd player, says anything then they should by default be distrusted.
What is of major significance is that a whole bunch of professional electrical engineers gave tacit credibility to such mindless rubbish simply by attending & giving gloss to the breakfast presentation; and without challenging defective arguments as Power presented.
These engineers are educated & trained in systems & controls – even if their postgrad experience is not directly related to this their education is sufficient for them to be discerning & to detect when rubbish is being presented, as was the case with this EE Publisher’s breakfast presentation.
What is of further importance is, that by not challenging Power, that engineers confirmed their reluctance to enter the commercial world.
Alternatively stated, engineers are happy to remain entrenched in their world – the nett result being that a gap is maintained, a massive chasm of understanding.
It is because of this chasm, and the reluctance of engineers to cross over, that defective economy systems & controls exist; and that such massive fraud can be perpetrated by corporate & financial companies & their executives/employees.
Putting Power’s paper/presentation into context:
Power’s argument takes an approach of presenting (falsely); as a representative of a reputable institution, an analysis which has substance, and in light of which SA, and the world, should act accordingly – it pre-supposes that the existing global environment is acceptable, since it is a given.
The thrust of Power’s paper gives warning to the dangers of China’s emergence onto the global stage due to the bamboo curtain splitting, similarly with Russia’s emergence with its iron curtain falling. Power assumes the irrational position that the world must reactively engage directly & openly, without protections, with these emerging colossi.
What should have immediately triggered in the minds of the majority of those engineers present was that individual national economies have no rational controls – so on what basis is this massive Chinese economy allowed to flood and destroy our markets & economy?????
BUT, by all accounts, from reading the EE publications, not one engineer challenged such an obvious defect in Power’s presentation/paper – nor did EE Publisher’s editorial raise anything in challenge; completely the opposite, they lauded such nonsense.
In telecon with Dr Power he counter-argued (to the effect) that because societies decline that it is a given, therefore to attempt to develop rational controls to counter this is pointless.
Putting Power’s argument into perspective – Russian aircraft are known to crash & with regularity, therefore since they crash there is no point in doing anything about it.
We know this makes no sense – but we know this because we are dealing with a tangible entity, i.e. an aircraft that crashes & kills people.
With an economy it is intangible; but we also know that people are killed through poverty & despair directly caused through defective, irrational, economy controls. But the relational link between a 1st World economy and a crashed 3rd with its starving, impoverished, millions is distanced by 1000’s of kilometres.
We do not directly see or feel the tangibility of the cause & effect – we therefore are “brainwashed” by the world’s powerful financial manipulators into accepting that 1st World business/economy practises are acceptable and that the fault of poverty rests with the impoverished.
Therefore, Power’s argument: that people decline, that it is a natural occurrence, therefore do nothing about it – is nonsense.
A further point in telecon with Dr Power was that, despite all of Investec’s wealth & computer power & global information network, that he was not aware of key economic (real system) parameters for various 1st Worlds nations – he therefore had no understanding of the critical importance of system control parameters such as Inflation, Interest Rates, Mortgage Rates of UK, or US, or EU.
Not having an understanding of these critical control parameters, or their prevailing positions, is not dissimilar to a pilot not knowing what his engine power, or flap, or elevator, settings are, what his fuel consumption is, etc. – it means that he cannot correctly control, or analyse, his aircraft’s dynamics. It means that he is a danger to himself, his passengers & society.
Economies are no different – they need rational controls & system protections – but governments do not have the courage to stand up to the financially powerful few that manipulate global markets – and engineers do not have the courage to stand up and tell people such as Dr Michael Power & Professor Brian Kantor that they are talking puerile rubbish, that they are simply prostituting themselves so as to give credibility to a fundamentally dishonest, fraudulent, institution; which Investec is.
And financial institutions actively sway governments to their dishonest way of thinking – Blair, Bush, & other G8’s are very much in this mindset trap – it is why the initiative to address the poverty symptom has fizzled to token inputs & hot air from these leaders, and from the UN.
It was also put to Power that the US’s massive deficit was such that it could never be repaid, and further that the US would, at some critical point, in all likelihood simply issue invoices to all nations for “Global policing services rendered” thus writing the debt off. Power pooh-poohed this by saying, to the effect, that US Treasury bills were not instruments to which such an approach could be applied. Power overlooks the realities in the UK of privately owned homes being effectively rent controlled simply through tenure protection.
The point here is that it demonstrates the extremely limited abilities that economists, commercialists, have in understanding & detecting system & control parameters within economies; hence their inabilities to develop & implement sound solutions.
It is these kinds of inabilities that are at the core of the poor analysis & insight of Power’s presentation/paper
To the extent that Power’s article argues within an assumptive model in which the world must adopt an irrational open global economy with all economies interacting without appropriate protections, his paper has some weight - very limited though!!!
But this is not what engineers, nor society at large, should expect from a highly qualified person such as Power (or Kantor) – these qualified people are supposed to be developing solutions so as to attain/maintain global stability, but in truth they are presenting deceptions that destabilise the world.
Society has the right to expect the truth from these qualified people, their qualifications from an academic institution is supposed to be a sign of a person that seeks the truth – but in reality they present deceptions for their paymaster, Investec.
Such people should be stripped of their professional status – this is what professional engineers are faced with (see Engineering Council website www.ecsa.co.za and the Continuing Professional Development, CPD, Programme, and the Code of Ethics).
What professional body regulates the deceptions from qualified people such as Power & Kantor???????
Power’s argument presents in much the same way as any financial advisor selling a fraudulent institutional “investment product” – which option would you prefer? this or that? – i.e. an either/or scenario – but the point is that both options are seriously defective.
Dr Michael Power does not recognise the seriously fraudulent defects within Investec’s “investment products”. How then can he detect and advise on macro-economic issues; the more so when institutions are significantly influencing them, destructively so?
Dr Michael Power was directed to the adjudicated proofs of the generic scams that Investec have been involved in and has been given ample opportunity to rectify his position – he has not done so!!!!
The reason that an irrational economy system & controls prevails within South Africa is a direct consequence of government refusing to fund Business/Social/Development Engineering – instead they are swayed by corporate & financial institutions.
Read Power’s paper in the right light and see the deceptions for what they are – ‘economists’ bamboozling over Bamboo Curtain threats - indigestible chop suey.
Chris Addington Pr.Eng.
+27 (0)83 962 7098.
To gain understanding of economy systems & controls see, amongst others, the following under Historical Archives, Home Page, lhs panel:
Interest Rates & loans
Economic Momentum
Poverty, Disparity Unfair Rules – a need to rethink
Global Instability
UNODC convention against Corruption
Mastermind of Organised Crime
& others.
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Views, Comments, Opinions
Elektron February 2006
The Bamboo Curtain splits - and the world changes
by Dr. Michael Power, Investec
This article is based on the presentation given by Dr. Michael Power, equity strategist, Investec, at the annual EE Publishers breakfast in February 2006.
Virtually every economist I speak to in South Africa has singularly failed to grasp the enormity of the changes that have been unleashed upon the world by the falling of the Bamboo Curtain of China in 1979 and then the collapse of the Iron Curtain of the Soviet Bloc a decade later. And since 1991, the Silk Curtain of India has, if not yet been fully crumpled, at least been torn.
Most South African economic commentators – both in the public and the private sector – are still trapped in the old paradigm, one where the structure of the global economy is headed by the United States über alles. Increasingly, their benchmarks – be they risk free rates or PPP currency comparisons - are out of date. As a result, their understanding of the practicalities of modern geo-economics verges on the pre-historic. Not surprisingly, their conventional wisdom is built around a world of macroeconomic management that, echoing the Keynesian Revolution, is little more than demand management writ large. They believe governments should spend counter-cyclically – even when hyper-democracy dictates that they cannot “down-spend” as much as they should in up-cycles – whilst central banks, echoing the Friedman Revolution, should do their best to keep inflation (much of it generated by unproductive government spending) in check. And the typical outcome of this old paradigm is the Anglo-Saxon style economy: long on consumption, short on savings, debt-fuelled, experiencing a boom in property prices and running a large current account deficit. Sound familiar, South Africa?
Harvard’s Richard Freeman recently noted: “The entry of China, India and the former Soviet bloc to the global capitalist economy is a turning point in economic history”. And into this transforming world has been born the New South Africa. But with the IMF as its policy midwife, it is not surprising that the Rainbow Nation was baptized in the spirit of the Washington Consensus. And, not surprisingly but very sadly, this newborn has ended up building its post-apartheid economy largely in the image of the Old World – one led by consumption and not production, and reinforced when necessary by “prudent” government spending. In today’s world, and especially for an emerging market, this quite simply creates a back-to-front economy, one that puts the consumptive cart before the productive horse.
To understand this, one has to realise just how differently the next economy that will probably claim the über alles title – China – is gearing itself up. Only then can one appreciate how the Chinese model is quite literally turning modern economics – and, with it, the world economy – on its head. South Africans, take note; your future depends upon appreciating the implications of this stunning volte-face.
It may help to think of China as a space-ship full of a billion plus people which crash-landed into Mother Earth in 1979. This followed the 1976 death of its communist pilot, Chairman Mao. Its new captain, Deng Xiao Ping, forced opened the door of that stricken vessel and persuaded China’s Communist Party that the only way forward was to integrate its ramshackle economy into the capitalist world in which it now found itself.
What is perhaps less appreciated is that the price structures and value hierarchies that characterized the economy of communist China – think of them as the spaceship’s own particular atmospheric pressure – were completely different from the capitalist world that Deng was now forcing his compatriots to join. To say that it was lower would be to miss the point entirely: it was so much lower that it was off the barometric scale that was in use in the global economy of 1979. So for the next decade, as the capitalist air rushed through the breach in the superstructure of that Sino space-ship, China was forced to adjust its previously closed economy to the capitalist atmosphere outside, and do so at breakneck speed. The result was that, during the 1980s, its warped economy endured a rollercoaster ride of high economic growth, but one that was regularly interrupted by painful dislocations to its key macroeconomic metrics. The most formative experience came in early 1993 when, after a decade of haphazard and disjointed liberalisation, a serious bout of inflation caused the value of the Remnimbi to fall over 50% in less than six months.
In the wake of this salutary lesson, China’s policy makers resolved “never again”. To ensure this, they designed a set of policies that would still deliver high GDP growth but which would also ensure that this hyper-growth did not lead to periodic bouts of inflation and so uncontrolled devaluations. To do this, China effectively reconstituted its own atmospheric pressure for capital, but at a barometric level that, whilst lower than the outside world, was sustainable for the foreseeable future. Their primary decision in this process was to fix the Chinese Remnimbi to the US Dollar at a rate that would help generate about 10 million new jobs a year.
In the decade since 1994, this policy has proved to be a stunning success, but only now is it easy to see why – it allowed China’s economy to gain traction with the Western consumer by offering the latter all manner of goods at much cheaper prices. Since then, China has prospered mightily, because it has avoided being sucked into the lop-sided Western paradigm. This means it has essentially shunned a world characterised by a savings deficient US at its core, sucking in often scarce capital from the periphery. China has controlled its own atmosphere through a combination of “pressure valves”, essentially a fixed exchange rate backed up by capital controls on domestic individuals and institutions. In doing so, it not only retained its own capital (with all the attendant risks with regards to the misallocation of that capital), but it has now firmly established itself as the world’s premier destination for FDI, surpassing the US in this status in 2003.
One benefit to the West of this Sino-centric arrangement – which perhaps explains why the West has been prepared to live with it for so long – was that Chinese-made goods entered the rest of the world at so much lower levels than previously prevailing and Western consumers (and so voters!) lapped up this windfall, even if it was for the most part financed by debt! Think of China as a giant air-conditioning unit, cooling the world’s price structure and creating a deflationary undertow that has allowed Western central bankers to claim they had slain the dragon of inflation. The reality, of course, is that the dragon itself had played a greater role in inflation’s ‘death’! (Since then, a second AC unit has been hitched up to the Western economy. Supplementing China’s cold air in the form of cheaper goods, India has generated more cold air in the service sector, using the ‘vents’ of the internet to deliver these lower ‘temperatures’ across the Western world).
Adding weight to this alternate paradigm, China has, in the wake of the 1997 Asian Crisis, garnered itself an East Asian fan club. This includes Hong Kong, Taiwan, South Korea, Malaysia, Thailand, Singapore, the Philippines and Indonesia; indeed one might even argue that Japan has become a de facto member. This cabal of countries has, to varying degrees, attached themselves to China’s atmosphere thereby reinforcing China’s policy. This they did by employing similar tactics to those used by China: a managed exchange rate with exchange controls on locals. This has enabled them to regulate their own “air pressures”.
The balancing item in this global equation – for otherwise the US-centric paradigm would have imploded – has been a willingness by Asian central banks (Japan included) to support the Old Order via purchases of US dollars and especially US treasury bills. This was necessary because foreign private sector purchases of US dollar assets would have in no way been sufficient to keep the US show on the road.
This ‘atmosphere’ analogy suggests what China will do in the next decade as the Asian Century dawns. These pressures will be very gradually equalised through a combination of “deflation” (never has that word been so graphically correct!) via the slow devaluation of Western currencies and “reflation” via slow revaluation of Eastern ones, particularly the Remnimbi. The new currency regime China put in place during last August is the mechanism by which this equalisation will be achieved, though every indication thus far suggests it will be done at a pace dictated by Beijing, and no one else.
Over the next decade, the Grand Strategy of China must be to avoid the global hard landing that would surely happen if one or other side was to deflate or reflate too fast. To achieve this, China must grow up its domestic consumptive power to wean itself off a debt-drenched Western consumer. No doubt there will be hiccoughs along the way but, if the mandarins of Beijing are careful, they can minimise the buffeting caused these “atmospheric disturbances” as China’s economy comes down to earth.
Meantime, have the oil price and perhaps even the gold price become the most visible barometers of rising Chinese atmospheric pressure?
Contact Dr. Michael Power, Investec, Tel (021) 423-8305, This email address is being protected from spambots. You need JavaScript enabled to view it.