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China announces plans for the economy

Some plans from the China government to support the economy

  • Plans to deepen medium and small lenders reforms, and to improve their governance and internal risk control
  • To deepen state owned enterprise reforms, support medium and small firms to develop
  • To improve legal environment that supports private economy and foreign entities
  • to prevent various kinds of risks and to keep a stable economy
  • to support capital replenishment of small to medium banks via multiple channels
  • to strengthen financial infrastructure supervision and development
  • to make financial institutions, local governments and financial regulators to carry out their responsibilities
  • China is set a punitive compensation system for intellectual property infringement (is that internally in China or does it include compensation to foreign companies that are subject to IP infringement?)
A list of “to do’s” as the US -China trade talks continue toward a Phase I fnish line (which is not yet reached).

Calamitous Consequences

Karl Marx died in March 1883, yet there has been a rebirth of the ideas he detailed on the inherent flaws of capitalism. Recently, Paul Tudor Jones gave a ‘Ted Talk’ about capitalism needing re-definition. My paper entitled ‘2014 and Beyond’ began with the sentence, “Modern day capitalism appears to need a different moniker”.  It is quite possible that future developments in capitalism will have profound and on-going influence on markets and valuations.

Let me first go on record and say that in the 135 years since Marx’ death, capitalism has been the single greatest engine for human advancement.  It has certainly been an outstanding way to organize the production and distribution of goods and services. Its free-market structure encouraged innovation, leading to new methods and products whose technological advancements allowed for globalization and the general shrinking of the world.  Entrepreneurship aided improvements to health and education, and was the cornerstone to economic progress. No other social construct in history has done more to advance the human condition, or lift more people out of poverty, than capitalism. 

A capitalist structure’s main quest is to ensure the real appreciation of capital.  Corporate leaders are incentivized to maximize shareholder value at almost any cost: the best means is to increase output per hour worked (productivity).   Can this be sustained forever? (more…)