The Lee-Tseung Lead Out Theory

[critic]

Dear Devil:

I do not think McCain or Obama really understand the role of the Government as a coordinator and creator of meaningful economic activities.  They are surrounded by stupid advisors trained by the Wall Street Gang.

The way I understand the McCain/Obama approach is:
(1)   Lower taxes so that the average American can help to spend the way out from this mess.  There are some variations in the actual method.
(2)   The Government will earn less but can print more money.  The deficit and national debt will increase but money is created in thin air in any case.
(3)   Continue to trust the Wall Street Gang.  Give them more money so that they can continue to loan to other business entities.
(4)   Buy up property with Government funds so that the real estate prices will stabilize.
(5)   The now government owned properties will disappear from the market.  They may be rented out at low rates so that the Government does not need to maintain them.  Some of the renters may even be previous home-owners.
(6)   When the property market stabilizes in a couple of years, turn some of the renters into home-owners again.

The British variation is to actually invest into the Banks.  The money pumped in will be regarded as investment and not ‘free loan’.  The Banks will have no choice but to accept Government supervision.  The Government is effectively a shareholder (may even be a major one).

How can Tseung or you improve on the above?

[chrisC]

Dear Devil:

....

How can Tseung or you improve on the above?

Please spare us more torture! PLEASE TAKE YOUR MEDICATION!

cheers
chrisC

[critic]

Comparing the two 'loss of trust' cases.

China had its milk powder contaminated with melamine.  The scandal was revealed from one manufacturer.  Soon it was found in many products from different manufacturers including the most prestigious.  It was found not only in milk powders but also in eggs etc.

Apparently, there was a wrong belief that melamine was harmless and would increase the protein content of many products.  Thus it was added indiscriminately.

When the scandal broke, citizens lost confidence in Chinese food products.

This example is similar to the USA financial crisis.  The use of derivative and worthless financial papers was regarded as normal â€" so long as investors trust the USA financial institutions, the game can go on.

When the scandal broke and a few important institutions collapsed, the confidence vaporized.  Derivatives and Financial Papers were treated with disgust.  Banks no longer trust each other.  They are reluctant to part with their cash.  The credit system no longer functioned.

How can we get that trust back?  How can the Chinese Food Products regain their customers?

[ltseung888]

China had its milk powder contaminated with melamine. 

(1)   The Government sent its own inspectors to the factories to check for melamine in the production chain.
(2)   The new checked products have Government certification labels.
(3)   All old products before a certain date were taken off the shelf and destroyed.
(4)   Allowed some manufactures to collapse. 
(5)   Some practice such as buying and collecting milk from individual farmers were discontinued to ensure quality.
(6)   Rescue the remaining manufacturers with Government injection of capital.  There was purchase of the best testing instruments.  There were great improvement in the quality control process.  Weak links in the production chain were improved.
(7)   Restore Customer confidence with promotions â€" milk was cheaper than bottled water for some periods.

Imported milk powder enjoyed great sales but the China milk industry is expected to survive and prosper again.  The demand is there.

Can the USA learn anything from this and apply it to the financial crisis?

[utilitarian]

China had its milk powder contaminated with melamine. 

(1)   The Government sent its own inspectors to the factories to check for melamine in the production chain.
(2)   The new checked products have Government certification labels.
(3)   All old products before a certain date were taken off the shelf and destroyed.
(4)   Allowed some manufactures to collapse. 
(5)   Some practice such as buying and collecting milk from individual farmers were discontinued to ensure quality.
(6)   Rescue the remaining manufacturers with Government injection of capital.  There was purchase of the best testing instruments.  There were great improvement in the quality control process.  Weak links in the production chain were improved.
(7)   Restore Customer confidence with promotions â€" milk was cheaper than bottled water for some periods.

Imported milk powder enjoyed great sales but the China milk industry is expected to survive and prosper again.  The demand is there.

Can the USA learn anything from this and apply it to the financial crisis?

That all sounds great except for the fact that the Chinese have a very poor record of actually fixing these things.  Over a decade ago a drug ingredient from China killed dozens of Haitian children.  10 years later, this happened again in Panama.  The ingredient - diethylene glycol.  Finally, more recently, Chinese toothpaste containing diethylene glycol was found in the US and other counties.  Thousands of tubes have been recalled.

So tell us again how this 7 step method is supposed to work?

Source: http://www.nytimes.com/2007/06/17/health/17poison.html?_r=2&oref=slogin&oref=slogin