Legalize it
The “Red Ponzi” has now moved to a new level, and this time it’s commodities. China’s central bank issued a new record high of “liquidity” (read: loans) into the economy.
The government is desperate to “keep the dream alive” for the Chinese middle class, but the “China dream” seems to be turning into a nightmare, and don’t get me started on human rights. Dumping 3 trillion yuan (US$460 billion) into the credit markets in January alone seems to have done the trick once again.
The facts are that the central bank blew four bubbles: Chinese equities, corporate bonds, real estate and now commodity futures, all supported by “leverage” (read: borrowing).
This will end badly.
To quote Doug Noland, blogger at Credit Bubble Bulletin, this extraordinary injection of 3 trillion yuan is “providing extraordinary fuel for a rather destabilizing speculative blow-off” and mentions that the effect on housing and commodities “upsets the applecart.”
He says that the credit and speculation are “monetary disorder on steroids” and that “its credit system is self-destructing.”
In fact, “there is no correlation between the explosion in interest in Chinese commodity futures and any economic activity,” Noland added. “Volumes have increased 17-fold in a month — the economy has not.”
Taiwan has a massive economic time-bomb on the other side of the water. Investors and businesspeople everywhere need to face up to the facts. The “system” has failed, and soon it will be each nation for itself.
I’m terribly afraid that the incoming occupant of the Rust House (Taipei’s presidential palace) will not have the staff and advisers in place to promote proper economic policies.
It’s time for Taiwan to hunker down in the face of a global financial catastrophe. China’s economy will explode, leading to widespread unrest there. The yuan would collapse if it’s priced at what it deserves.
I’ve advocated before about a juche policy for Taiwan, especially considering all the fallow fields that could be growing hemp and thereby improving the soil. If we can’t even grow our own food, we have a problem.
There’s no silver bullet for fixing Taiwan’s economy, but one idea is to legalize cannabis/hemp in Taiwan, following the Portugal model, albeit step-by-step.
As everyone knows, “hempcrete” is earning worldwide popularity; hemp can be used to make fuel, medicine, biodegradable plastics, paper (it grows four times faster than trees) and various types of cloth.
If Taiwan wants to jump-start a totally new industry, I’d go with this one right away! Heavy drug use and violent crime may also go down, as seen in the US state of Colorado.
Let’s not forget the miraculous example of Uruguay.
Wise then-Uruguayan president Jose Mujica said “these rules are stupid. Grow your own,” with terrific results and less gun violence.
The US Trans-Pacific Partnership project will be a disaster and will force Taiwanese to eat genetically modified crops and questionable pork imports.
In the end, Taiwan will either stand or fall on its merits, and the strength of its people. I hope that wise, inclusive leadership wins out in the new administration.
Torch Pratt
New Taipei City
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