Global Impact of the Fed Funds Slash

Excepts from Dr. Enzio von Pfeil's December 19, 2008 appearance on Bloomberg Television Deutschland:

Global

1. How do you rate the Fed Funds slash?
   
   • Now the Fed truly has run out of policy options.
   • Watch the place go into Japanese-style quantitative easing, which has gotten Japan precisely nowhere.
   • My concern is that the Fed is morphing into the world’s shabbiest hedge fund, carrying all of the responsibility but holding junk.
2. Are there any broader concerns that you have regarding the current meltdown?
   
   • Yes: rising social unrest.
   • This will be fueled by a lethal combination of:
     • Job losses,
     • The rich walking away with ill-gotten gains, e.g. some of America’s corporate “titans” being bailed out by the government and still collecting handsome pay packets,
     • The internet easing the publicity of this growing income disparity, and
     • A worsening global Economic Time™.
   • If too few have too much, and too many have too little, revolutions arise. In today’s world, I am afraid that Mumbai is a crass example of the poor attacking the rich.
   • The only “way out” is to enhance education policy, particularly as regards vocational education.

Asia

1. Beijing is easing the property market: will this help the economy?
   
   • It cannot: if people are about to lose their jobs, they are hardly in the mood to buy a new home!
   • Besides, even for existing home owners, a cut in interest rates cannot increase their job security.
2. Do you have any suggestion for how to stimulate private consumption quickly and effectively?
   
   • The easiest would be to introduce universal health care for free.
   • That would at least remove peoples’ fears of having to pay in case they get sick.
   • This, in turn, would unleash huge amounts of precautionary savings.
3. Hong Kong: is the monetary easing of the Fed or of the local Central Bank, the Monetary Authority, helping?
   
   • Not in the least:
     • First, banks are not reducing their lending rates, and
     • If anything, they are reducing their deposit rates, making savings even less attractive. But that won’t stimulate demand because people are income-insecure anyway.

Comments

[Richard Bru...:]

Hank Paulson is going to grow hair before the Chinese citizens fullfill his dreams.

r
allroadsleadtochina.co...

2008 Dec 18 10:54 AM

[Freedoms Truth:]

The easiest would be to introduce universal health care for free."

LUNACY! There is no such thing as 'free' health care. There is a $2 trillion health care system and govt over-controls and pays for most of it and taxes people for it. Further socializing healthcare only hurts people more, restricting choices and raising costs unwisely.

What we need is to liberate the healthcare system. End mandates, end regulations that make health care expensive, end lawsuits that create defensive medicine, end rules that forbid barebones health insurance, end the subsidies that create more 3rd party payers than needed. Allow importation of drugs. Allow qualified RN nurses to give basic prescriptions so a doctors visit isnt needed for a child's sniffles. We need to have prices posted so people dont make insurers and govt pay inflated amounts for care. We need online health records. Overall, we need less health insurance and less govt dictation, and more direct payment and consumer choice, control and direction in healthcare.

Do all those things and the cost of the $2 trillion in healthcare will fall by 30-50%. With the money saved, you can plug any gaps in coverage (which are pretty small).

Alas, Obama and the Democrats will take us in the absolute wrong direction. there.

2008 Dec 18 01:06 PM

[Freedoms Truth:]

I see the author was speaking to Asia policy wrt healthcare, whereas my comment is wrt US policy. Please excuse the misinterpretation.

2008 Dec 18 01:10 PM

[NOWHEREMAN:]

The Article was supposed to be about how China could stimulate consumption but the discussion was entirely about other issues.

I thought the Chinese already had Gov. sponsored health care. That is supposed to be one of the reasons the US can't compete on prices.

So, another Bait and Switch.

2008 Dec 18 05:56 PM

[Thunderlight:]

Change the article's title, imo

2008 Dec 19 08:44 AM

[carolinacoast:]

"The Article was supposed to be about how China could stimulate consumption but the discussion was entirely about other issues."

THANK YOU aitvaras.

THIS IS ONCE AGAIN A PLATFORM FOR Enzio von BS to spew his doctrine on China. I'm very sorry that China doesn't meet his BOGUS political and social standards. Hey Von Pfeil, can't you find something useful and positive to write about? And please, SA, unless you want lower your quality standards aka to a Motley Fool level, don't publish this fool's political viewpoints. This website is a great learning vehicle for traders. Don't bastardize it with this guy's political drama.

2008 Dec 19 10:48 AM

[huangthomas:]

Chinese are concerned about cost of 1. health care, 2. higher education, and 3. unemployment. The per capita income of Chinese is close to sub-Saharan African nations such as Namibia, Botswana.........etc. (the latest World Bank data is 2005). Unless some of the cost of 3 major concerns are taken care of, stimulation of domestic consumer consumption is a myth. Fortunately the national health insurance is under discussion and will be finalized by the end of the year. It will be a government-operated public system. I have my deep concern of how well such a system is going to work. But we just have to wait and see, and hoping for the best.

2008 Dec 19 11:29 AM

[LCACM:]

Freedoms Truth: The title of the article is "How Beiging Could Stimulate Consumption" Threfore, it is to be presumed that the advice is targetted to Beiging and not the US government as your comments imply. Since Communist China has contributed to the Meltdown due to their perennial dumping on World markets, it makes sense for the author of the article to suggest to Beiging to take up some of the responsibility, and do the needful.

2008 Dec 19 11:31 AM

[Angry Middl...:]

Why is it that Americans always talk about the difficulties of universal health care? So many countries have such policies. Time for the U.S to enter the civillised world and become more democratic socially.

As for China adopting such a policy. Fantastic. But is not going to happen. China is about elites protecting their interests, not helping the poor. The only way it could happen is if the leadership believes that it will save their skins, and unfortunately most are too shortsighted to realise this. Guanxi does not promote intelligent and talented leadership.

And before anyone writes that I hate China, my wife is Chinese, daughter half Chinese, and have lived in China many years. Why is it that the people who love China so much always live overseas?

2008 Dec 19 11:47 AM

[fran:]

blame the SA editors. von pfeil does not provide titles . check bloomburg replays--german


On Dec 18 05:56 PM aitvaras wrote:

> The Article was supposed to be about how China could stimulate consumption
> but the discussion was entirely about other issues.
>
> I thought the Chinese already had Gov. sponsored health care. That
> is supposed to be one of the reasons the US can't compete on prices.
>
>
> So, another Bait and Switch.

2008 Dec 19 05:26 PM

[NOWHEREMAN:]

So, China doesn't have universal Health Care. Too many people or too much toxicity on average throughout China?Or both?

Fran: the title of the article is what it is. It is misleading. It doesn't matter who is at fault. People were drawn by the title only to find something else. I can't read everything and I doubt whether you can either. So I go by Titles.

I don't like it when time is wasted, that's all. IMO

2008 Dec 20 02:54 AM

[anarchist:]

Well, thats a misguided opinion also me thinks. Let's see, Americans pay more for health care than any country in the world and still have 50M of it's population with no access to health care. We have an health insurance industry between the consumer and the service that if cut out could probably finance a free health care system. The U.S. has small businesses that are touted to be the entrepreneurial engine for the economy but burdened with health care benefits. The Auto industry is just one example of big business burdened with health care benefits. Just think of how many people are tied to a job they hate because they need the health care benefits. A nation that can create a trillion USD to bail out companies with bloated CEO benefits, poor business plans and stupid business decisions in the past can and should afford free health care for it citizens.


On Dec 18 01:10 PM Freedoms Truth wrote:

> I see the author was speaking to Asia policy wrt healthcare, whereas
> my comment is wrt US policy. Please excuse the misinterpretation.

2008 Dec 21 11:05 AM