This crisis makes me hate even more politicians.
I bet today will be EV-
The whole notion of money = debt makes me depressive ...
A prophet... and a blind retard ...
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Boblion
France8043 Posts
This crisis makes me hate even more politicians. I bet today will be EV- The whole notion of money = debt makes me depressive ... A prophet... and a blind retard ... | ||
shmay
United States1091 Posts
On October 15 2008 12:55 mensrea wrote: 2. I hope those fan-boys who have been ga-ga over the "genius" of Alan Greenspan have finally woken up to the reality of his ideology driven incompetence - something many professional economists of reasonable merit have known for over a decade. Can you explain this in more detail? 3. I forgot to mention one more way to a faster economic recovery (apart from the direct re-capitalization of the major banks I had previously advocated and which the US government is now taking steps to implement - see point #1 above) - war. I've always said that the US is a country whose social and economic well-being is dependent on its involvement in a foreign (god forbid it should happen on US soil!) military campaign at least once every decade. Let's see, when was the last one ... whoops, looks like it's almost that time of the decade again. You advocate war... for economic reasons? How does war help the economy? Would that make you a proponent of Bush and McCain? Just trying to find out where you're coming from. | ||
a-game
Canada5085 Posts
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Choros
Australia530 Posts
2. I hope those fan-boys who have been ga-ga over the "genius" of Alan Greenspan have finally woken up to the reality of his ideology driven incompetence - something many professional economists of reasonable merit have known for over a decade. Can you explain this in more detail? I think I can. Basically what he did was directed monetary policy in other words change interest rates. He basically kept interest rates too low for too long. This basically meant that at the time the economy looked like it was doing well, and everyone was praising his performance, but it encouraged debt to grow out of control creating a lot of problems. Some may also accuse him of being inflationary in his policies. 3. I forgot to mention one more way to a faster economic recovery (apart from the direct re-capitalization of the major banks I had previously advocated and which the US government is now taking steps to implement - see point #1 above) - war. I've always said that the US is a country whose social and economic well-being is dependent on its involvement in a foreign (god forbid it should happen on US soil!) military campaign at least once every decade. Let's see, when was the last one ... whoops, looks like it's almost that time of the decade again. You advocate war... for economic reasons? How does war help the economy? Would that make you a proponent of Bush and McCain? Just trying to find out where you're coming from. I will point out that although traditionally war is economically beneficial the United States has been pouring money into war with no economic benefit whatsoever because of the privatisation of war spending is remarkable inefficient and wasteful, its basically carted off as corporate profits. This is not hiring many people etc as you traditionally have. | ||
Choros
Australia530 Posts
It is looking like we wont even have a recovery though. | ||
Choros
Australia530 Posts
You comment about Government and this is a factor I feel is very important. In Australia at least it may have been different in other nations but Government here advocated damaging policies underfunding services despite having sufficient funds avaliable to supply sufficiently, along with mass privatisation etc your general free market ideologues who have caused such damage in the United States along with others had there way with the Australian economy causing various problems. Bush and the neocons are *not* free market proponents.. they espouse "small government" rhetoric and yet the state has more power than ever. Well this is wrong, now this is something which you hear often arguing for a small government move int he future. The reason this is wrong is that although government spending and the deficit have increased where has this money gone? Defense spending, and massive corporate tax cuts. Heath care, education and welfare (etc) has experienced decreased funding in real terms. This is the impact of a small government philosophy we are feeling today. At the same time total free market trends toward income inequality and a degradation of the system at its very foundations the poor and middle class, this undermines your economy such to render it unsustainable at any reasonable level. Sure there will be income inequality.. people were not created equal, do not have the same abilities, intellect, talent, etc, and this will be reflected in their income. However I disagree that laissez-faire degrades itself so as to be unsustainable. There will always be income inequality its just a matter of too much, as you agree. South Korea is an example of great increases in GDP whilst maintaining reasonable income equality. Statistics like inflation among others are symptoms the key is to look for the cause. This is the understanding we do not have, this is the understanding which has been taken from us as a consequence of a political system which institutionalise incompetence, something all of us in the west could agree on. The cause of inflation is the Federal Reserve pumping giant amounts of cash into the economy through money printing and borrowing from foreign governments. Although the Austrian Business Cycle theory was solidified decades ago, it explains the causes and symptoms of this current crisis well. Using monetary policy as the primary tool of management makes it auto decrease rates to stimulate economy during busts this overtime creates an ever increasing level of debt. The last time we relied upon monetary policy to run our economy was in the 1920's. At the time there was a decade of sustained growth, there was much congratulations and people believing that the business cycle has been rendered obsolete and we had solved economics. The same things we have experienced over the last decade and for much the same reason. The success of monetary policy is illusionary this would appear to be a lesson we need to learn twice and I believe the most important cause of all this. Friedman actually argued against the system we have today and I agree with his comments, something I only recently discovered. Keynesian solved the problems of his day, Friedman in turn solved the problem's of his. We have failed to realise the need for continued adaption. What problem did Keynes solve (asking genuinely, I haven't studied him in entirety)? Keynes was basically doing his thing during the great depression. He discovered that increased government spending on nation building projects and just in general stimulated 'Aggregate demand' which in turn increases employment raises incomes etc. He argued the governments and economic management should focus completely on maintaining aggregate demand. This allowed countries to recover from the great depression and contributed to the strong economic growth in the post war period. Having a large public sector which has multiple enterprises who generate profits as a normal company would can theoretically (and in practice in places like Singapore and to an extent China) generate enough revenues for Government that you have welfare state expenditure levels along with lox taxes to boot. That is what I call having your cake and eating it too. And this is a terrible element of economists I may regard as Friedmanite going around mass pritatising all our assets even though the public say no. The problem with gov spending is that the money has to come from somewhere (the private sector); this is of course taken through taxes which will necessarily result in deadweight loss. Government can not spend more efficiently than the private sector. The government can spend more efficiently that the private sector can. You have waste generate as private firms horde revenues out of fear as it happening now but this is not important. The Public sector is more efficient some times because it can provide services which the private sector cannot provide effectively thus generating positive externalities which is the extra efficiency i'm talking about. Education is an example, it creates higher quality labor at the bottom and middle end of the scale where it is most important to improve it and also creates jobs and stimulate demand. Thus is improves labor force productivity and flexibility enabling the private sector to further increase their efficiency. The public sector also has strategic direction far broader and on a far more important level in the long term (and medium). Soldiers in an army can win only through that strategic guidance at the highest levels, if soldiers only did what was best for themselves the war cannot be won. Some soldiers or money must be used in a way which may appear 'wasteful', but it serves a greater purpose.The public sector thus generates incredible 'efficiency' by doing things like expansive infrastructure upgrades and building renewable energy plants etc. The argument that I make is that the public sector should compete in the open market and try to generate revenue, it should do this by hiring good CEO's etc instructing them to operate as a private firm but ensuring it is not monopolistic, sometimes your businesses will fail sometimes they will succeed. Thus you can have welfare state levels of expenditures and the benefits that entails without infringing and diminishing the private sector, rather assisting it and also capturing some of its wealth for Government use in 'strategic ways' which increase the total efficiency of your economy. I am convinced this can be achieved if you aspire to it and have a little bit of luck. | ||
ahrara_
Afghanistan1715 Posts
On October 16 2008 14:54 shmay wrote: Show nested quote + On October 15 2008 12:55 mensrea wrote: 2. I hope those fan-boys who have been ga-ga over the "genius" of Alan Greenspan have finally woken up to the reality of his ideology driven incompetence - something many professional economists of reasonable merit have known for over a decade. Can you explain this in more detail? Show nested quote + 3. I forgot to mention one more way to a faster economic recovery (apart from the direct re-capitalization of the major banks I had previously advocated and which the US government is now taking steps to implement - see point #1 above) - war. I've always said that the US is a country whose social and economic well-being is dependent on its involvement in a foreign (god forbid it should happen on US soil!) military campaign at least once every decade. Let's see, when was the last one ... whoops, looks like it's almost that time of the decade again. You advocate war... for economic reasons? How does war help the economy? Would that make you a proponent of Bush and McCain? Just trying to find out where you're coming from. I'm pretty sure he's not saying we should start a war. Just that it means we might?? | ||
Choros
Australia530 Posts
On October 17 2008 10:11 ahrara_ wrote: Show nested quote + On October 16 2008 14:54 shmay wrote: On October 15 2008 12:55 mensrea wrote: 2. I hope those fan-boys who have been ga-ga over the "genius" of Alan Greenspan have finally woken up to the reality of his ideology driven incompetence - something many professional economists of reasonable merit have known for over a decade. Can you explain this in more detail? 3. I forgot to mention one more way to a faster economic recovery (apart from the direct re-capitalization of the major banks I had previously advocated and which the US government is now taking steps to implement - see point #1 above) - war. I've always said that the US is a country whose social and economic well-being is dependent on its involvement in a foreign (god forbid it should happen on US soil!) military campaign at least once every decade. Let's see, when was the last one ... whoops, looks like it's almost that time of the decade again. You advocate war... for economic reasons? How does war help the economy? Would that make you a proponent of Bush and McCain? Just trying to find out where you're coming from. I'm pretty sure he's not saying we should start a war. Just that it means we might?? This is something which is in my opinion a real prospect under a McCain presidency. He will probably be the most hawkish president (if elected) in a century (taken from this academic who has done psychoanalysis based of his book and his rhetoric etc its really quite interesting). McCain is a military man not an economist, war is a traditional economic remedy, i.e war is good for business. Should the economy continue to deteriorate war would become oh so tempting for them not only because they think its good for the economy but because it is a good distraction. The Falkland's war happened basically because the Argentine economy was royally fucked and Thatcher in Britain was doing appallingly in the polls. The Argentinians started the war and people stopped calling for their leaders to be thrown out and rallied around the flag, the same was true in Britain. To the victor goes the spoils the Argentine leaders lost their power and Thatcher won the election. I don't think this would happen now because the army would just say no. | ||
fight_or_flight
United States3988 Posts
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a-game
Canada5085 Posts
The next log being thrown onto the fire? Emerging markets. http://www.nytimes.com/2008/10/27/opinion/27krugman.html?hp + Show Spoiler + The Widening Gyre By PAUL KRUGMAN Economic data rarely inspire poetic thoughts. But as I was contemplating the latest set of numbers, I realized that I had William Butler Yeats running through my head: “Turning and turning in the widening gyre / The falcon cannot hear the falconer; / Things fall apart; the center cannot hold.” The widening gyre, in this case, would be the feedback loops (so much for poetry) causing the financial crisis to spin ever further out of control. The hapless falconer would, I guess, be Henry Paulson, the Treasury secretary. And the gyre continues to widen in new and scary ways. Even as Mr. Paulson and his counterparts in other countries moved to rescue the banks, fresh disasters mounted on other fronts. Some of these disasters were more or less anticipated. Economists have wondered for some time why hedge funds weren’t suffering more amid the financial carnage. They need wonder no longer: investors are pulling their money out of these funds, forcing fund managers to raise cash with fire sales of stocks and other assets. The really shocking thing, however, is the way the crisis is spreading to emerging markets — countries like Russia, Korea and Brazil. These countries were at the core of the last global financial crisis, in the late 1990s (which seemed like a big deal at the time, but was a day at the beach compared with what we’re going through now). They responded to that experience by building up huge war chests of dollars and euros, which were supposed to protect them in the event of any future emergency. And not long ago everyone was talking about “decoupling,” the supposed ability of emerging market economies to keep growing even if the United States fell into recession. “Decoupling is no myth,” The Economist assured its readers back in March. “Indeed, it may yet save the world economy.” That was then. Now the emerging markets are in big trouble. In fact, says Stephen Jen, the chief currency economist at Morgan Stanley, the “hard landing” in emerging markets may become the “second epicenter” of the global crisis. (U.S. financial markets were the first.) What happened? In the 1990s, emerging market governments were vulnerable because they had made a habit of borrowing abroad; when the inflow of dollars dried up, they were pushed to the brink. Since then they have been careful to borrow mainly in domestic markets, while building up lots of dollar reserves. But all their caution was undone by the private sector’s obliviousness to risk. In Russia, for example, banks and corporations rushed to borrow abroad, because dollar interest rates were lower than ruble rates. So while the Russian government was accumulating an impressive hoard of foreign exchange, Russian corporations and banks were running up equally impressive foreign debts. Now their credit lines have been cut off, and they’re in desperate straits. Needless to say, the existing troubles in the banking system, plus the new troubles at hedge funds and in emerging markets, are all mutually reinforcing. Bad news begets bad news, and the circle of pain just keeps getting wider. Meanwhile, U.S. policy makers are still balking when it comes to doing what’s necessary to contain the crisis. It was good news when Mr. Paulson finally agreed to funnel capital into the banking system in return for partial ownership. But last week Joe Nocera of The Times pointed out a key weakness in the U.S. Treasury’s bank rescue plan: it contains no safeguards against the possibility that banks will simply sit on the money. “Unlike the British government, which is mandating lending requirements in return for capital injections, our government seems afraid to do anything except plead.” And sure enough, the banks seem to be hoarding the cash. There’s also bizarre stuff going on with regard to the mortgage market. I thought that the whole point of the federal takeover of Fannie Mae and Freddie Mac, the lending agencies, was to remove fears about their solvency and thereby lower mortgage rates. But top officials have made a point of denying that Fannie and Freddie debt is backed by the “full faith and credit” of the U.S. government — and as a result, markets are still treating the agencies’ debt as a risky asset, driving mortgage rates up at a time when they should be going down. What’s happening, I suspect, is that the Bush administration’s anti-government ideology still stands in the way of effective action. Events have forced Mr. Paulson into a partial nationalization of the financial system — but he refuses to use the power that comes with ownership. Whatever the reasons for the continuing weakness of policy, the situation is manifestly not coming under control. Things continue to fall apart. | ||
ish0wstopper
Korea (South)342 Posts
i was just reading this article and i was wondering, where exactly is all this national debt coming from? is it from the iraq + afghanistan wars, along with the bailout money or what? and how can it be repaid when obama is going for a middle class tax cut? it doesnt seem like repealing the bush tax cuts will be enough | ||
gchan
United States654 Posts
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ish0wstopper
Korea (South)342 Posts
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fight_or_flight
United States3988 Posts
On January 12 2009 16:37 gchan wrote: We've always had debt, but its been particularly exacerbated by $700B bailout, $350B stimulus package, $100-200B bailing out AIG/Citi/Bear Stearns/Lehman's/etc, $600B proposed budget (this is about what the budget is normally), and Obama's proposed rebuilding projects ($400B). Obama has also said he isn't going to immediately undo bush's tax cuts and is in fact probably going to cut taxes himself (which is probably a good idea). Thing is about debt for a country that is as reputable and stable as the US is that we can accumulate a ton of it without the massive inflation/payback skepticism that comes with such large debt. Because of this, we really only have to worry about making our interest payments. For example, if you buy a 5% T-bill, you'll expect to get back $1050 a year from now. The US government really only has to worry about paying out that $50 in interest because they can re-issue more bonds to cover up the $1000. On the books, this creates a largely exaggerated sense of national debt because the $1000 is added to our debt, but really, the only important factor is paying the $50 interest now. In an unending time scheme that we live in, paying the debt in the future doesn't really matter so long as you can grow and make interest payments now. Its a lot more than that! + Show Spoiler + | ||
gchan
United States654 Posts
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fight_or_flight
United States3988 Posts
http://www.ft.com/cms/s/0/bb8ec7c0-ebb7-11dd-8838-0000779fd2ac.html?nclick_check=1 iceland's government also collapsed today | ||
Choros
Australia530 Posts
Regulations were cut to sustain the unsustainable for longer. In 2007 private debt got so high that it could increase no longer and people noticed all the 'junk' on the books leading to a crisis in confidence but most importantly this artificial expansionary force sustaining the economy vanished effectively placing the economy into free fall. In January 08 the first round of stimulus was carried out and this helped stem the tide, though at that time the recession was continuing to accelerate. By June the fiscal stimulus money was all but spent and ofcourse the situation continued to deteriorate. It is not at all surprising that the economic statistics continue to show bad results but the truth is that the problems are worse than even the statistics show because of things like under employment which are not factored in. Economic crisis > Financial crisis not Financial crisis > Economic crisis. The level of economic decline is evidence of this. Don't worry about public sector debt at the moment, people say America has the most debt in its history and its all terrible but by relative measure in 1950 America had twice the amount of public debt than it has today and this turned out not to be an issue even though people at the time were crying the sky is falling in. In my opinion the economy can be saved but forget the financial sector you must carry out minimum $1 Trillion real stimulus this year alone going into the economy and another round next year as well. Obama said he will do this but my guess is that they will not do enough because there constantly are these Republicans pushing them to do less. | ||
KissBlade
United States5718 Posts
I could be missing something but I just don't see how Obama is going to be pulling miracles out of his ass. As long as he doesn't tank things further, I'm fine with him. (I have a job and it lets me live somewhat comfortably. =P) | ||
Jibba
United States22883 Posts
Credit cards are next to burst and unfortunately they're probably going to have to nationalize more companies. Of course ultra-right wing people like gwho/crabapple would rather see an showcase of survival of the fittest and watch the banks go under but that simply cannot happen. Watch what happens to capitalism and the modern economy when we're no longer operating with credit. Oh, and you're all fucked if the car companies go under. The myth is that it'll only affect American car companies, but it'll cause costs and prices to go up for Toyota/Honda/Hyundai as well, and it'll increase costs of essentially all businesses involving transportation, as well as slow research of "green" technology to a crawl. | ||
fight_or_flight
United States3988 Posts
On January 27 2009 13:32 KissBlade wrote: I don't really see this stimulus plan as a good idea either. I mean, there's really only three areas he can turn to for revenue right? A) Taxes, 1 TRILLION dollars worth? Forget that. Especially since he promised tax cuts? B) Borrow from foreign lenders. Unlikely, everyone else is tanking just as bad. C) The most likely option, print more of it. Which devalues the dollar, which screws it up for everyone living here AND screws over foreign investors who invested in the dollar. You're right, the stimulus isn't a good plan. However, it is the best plan. At least trucks will still on the road delivering food, even if that food costs a lot. I could be missing something but I just don't see how Obama is going to be pulling miracles out of his ass. As long as he doesn't tank things further, I'm fine with him. (I have a job and it lets me live somewhat comfortably. =P) You know what they say, when your neighbor loses his job, it is a recession. When you lose your job it is a depression. | ||
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