President Trump it is a health crisis and is not a true economic crisis
Dear Mr. President Trump
China tariffs are brilliant
I think you were brilliant in exposing the trading practices of China and implementing tariffs against them. With such trade practices China can hold the American economy to ransom. No other President had the guts to do that. I foresaw China's plan.
Many years earlier, during President Obama's time, I had been warning that too many companies were pirating American and European goods and many American, European and Japanese companies had started factories in China because it was the cheapest in town. Unfortunately they never thought of the consequences if China closed shop. For example 80% of the world supply of Vitamin C is from China. Most face masks and other medical supplies are from China. Many electronic products from Western companies are manufactured in China and exported all over the world. That is a serious economic risk for the rest of the world.
Your tariffs made many companies move out of China so that we become less dependent on China. Thus if China closes its doors we, from the rest of the world, can still survive. What do we do should we run out of medical equipment, medical supplies, face masks, vaccines, cough mixtures, pain killers, antibiotics . . . etc if the Chinese factories can't make them? What do we do? We saw that happen with the corona virus outbreaks. There was a shortage of facemasks because no one else could make face masks as the material came from China.
Many businesses were too foolish and too greedy and that is why we are in this situation. None of them looked at a crisis strategy and planned accordingly.
Not An Economic Crisis
The first thing that America should remember is that this is not an economic crisis. So please do not treat it as one. Do not react to it as an economic crisis. The American economy has been robust and growing very well. It is a health or medical crisis and therein lies the solution.
If the Americans treat it as an economic crisis then stock markets will collapse, companies will lay off staff and banks will pull back and auction off properties and cars which will deepen the severity of the crisis further.
Demand Economics a Pull System
Look after the Demand side of the Real Economy. Forget the financial markets - stock markets, commodity markets and forex. Let them take care of themselves. When the virus situation is solved the markets will recover and boom again.
The whole real economy is a pull system. The consumer desires a product and then if he can afford it, he buys it. That is at that point demand is created. You can have a million factories and services supplying various goods and services but if no one wants them or cannot access them or cannot afford them there will be no demand for their goods and services and the businesses will not be sustainable.
So the most important strategy is to look after Demand.
Looking after Demand
1. Don't' let the banks repossess cars.
I have seen this happen in many recessions. The cars are repossessed and the car owner has no transport to go to work or go shopping. Worst still the banks sell off the cars at ridiculously low prices and expect the balance to be paid by the original buyer. It is disgusting to see how the banks treat their customers. The banks should sell the car to cover the balance of the whole loan. Furthermore since they pulled back the car they should not ask any further payments from the car owner. Many abuse their position and sell their cars to friends and relatives at extremely low prices and expect the loan to be still serviced by the owner. Once a car is pulled back the bank should not ask for anymore payments from the owner. If they sell off the car at a profit they should reimburse the owner with the excess amount. I explained this to Prime Minister Tun Dr. Mahathir during the 1997 Asian Financial Crisis and to President Barack Obama during the 2008 Great Recession. Please refer to my article.
2. Don't' let the banks repossess properties.
Do you remember how many people were left homeless during the Great Recession of 2008? They were squatting in the streets and in the parks with nowhere to go. The banks didn't care. You can't pay because you have lost your job was not the bank's problem. They evicted you and auctioned off your home but that failed too as no one else had money to buy your home. So the banks kept reducing the prices until your home was worthless and left you with massive unpaid bank loans. It was the banks that made the properties worthless by auctioning during a recession when there was no demand. The banks were stupid, weren't they? Don't believe any bankers advise as they only think of themselves. I explained this to President Barrack Obama.
What the banks should do during an economic crisis is to give common folks like me, who have lost their jobs, up to two years to find another job and in order to restart loan payments. In the meantime, these non-performing loans should be charged a reasonable amount of interest that is not compounded as the economic crisis or loss of jobs is no fault of the borrower. They should be allowed to just repay the interest or the fine for non-payments or allowed delayed payment until they get a job or sell the house for upto two years. This will prevent a collapse in the car market and the property market.
3. Some corporations can be bailed out.
They always run to help the rich, don't they? Sure this is a corona virus created problem so it will be ok to help the tourism industry, restaurants & hotels and other affected industries but most importantly the underlying small businesses that support these industries.
I tell you nobody wants a loan during tough times as they will not have sufficient income to pay it back with interest. Worst still banks won't lend out money during difficult times. If you think it is right, give them a two year interest free loans and after two years they have to pay back with interest. You could give these companies the loans directly and later, if they do not pay back the loans, transfer the loans to the banks to do the collections but that you have to sort out among yourselves.
Do you think that companies who spent their cash reserves on other things should be rewarded with such loans?
I don't think reducing income tax will help anyone.
4. Workers and the self-employed need to be looked after.
Demand comes from people so look after the people first. If people have lost their jobs then look at providing them with last drawn pay or average pay for the last few months so that they can sustain their daily lives and families for 3 to 6 months. After that if the corona virus is eradicated, the economy will recover and there is no need to continue making payments to people. Why? Because you need to keep Demand going.
5. No layoffs or retrenchments.
Inform businesses not to lay off their staff because people need jobs, to pay off loans and feed their families. This is because layoffs causes a spiraling downward trend in Demand until every business is affected. Lets say company A laysoff its staff. As the staff were consuming company B's products the loss of income by the laidoof staff results in no sales to company B. So company B laysoff its staff resulting in more products not being purchased by their laidoff staff. This causes other companies sales to drop resulting in more layoffs in other companies. It just sprials out of control. However in the tourism industry you should make some salary payments to the workers who have been laid off as mentioned in item 4 above.
6. Look after the health of the people.
Health care is very expensive in America as a result a lot of people exercise, take health supplements and watch what they eat. Then the virus comes along and destroys all that. Was it worth it? Was it worth having an expensive health care system which is compounded by even more expensive health insurance schemes? It looks like it is cheaper to die in America then to live in America, right?
Republishing my letters to President Obama
I will republish the letters I wrote to President Barack Obama that were read by the FED & others in the American government & CNBC so that you can read them too. My computer and backups were stolen December 2011 so I lost a lot of work and many of my letters to President Obama. My suspicion was that it was someone powerful who did it as when the police came to investigate they refused to check for fingerprints or anything else. They just noted that my computer was stolen and then disappeared. Last year I requested the US Embassy to see if they could get copies of all my letters to President Obama but I have not heard from them. Give me some time and I will publish what I have not lost so that you can read them too.
My letters to the Prime Minister during the 1997 Asian Financial Crisis.
During the 2008 Great Recession I explained that money is like water. It has flow properties. Where ever money flows there is prosperity.
2 Chronicles 7:14 "if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land."
- Dr. Peter Achutha, 23 March 2020