Yen still overvalued
Re: Re: Yen still overvalued by Peter Dorman 05 March 2002 22:33 UTC Thread Index Let me try another tack here. My understanding has been that Japan has been historically locked into a pattern of development characterized by high savings rates and high investment shares of GDP (the exhilirationist model). Each validates the other, and both are made feasible by a large trade surplus: this prevents the high rate of savings from becoming a Keynesian burden and it generates the induced demand for investment. _ This suggests a psychological or exhilirationist motivation for this kind of accumulation. But let us begin with the real labor constraint Japan faces, and see if Marx's theory which of course begins with the definition of value as SNALT can do real explanatory work as opposed to value free theory which seems to founder on the very persistence of exploitation. At any rate, this labor constraint will motivate a capital intensive pattern of growth--that is strengthen the tendency towards a falling V/C. But--to get back to Marxian basics as recovered by Grossmann--any fall in V/C in the course of accumulation requires that the rate of accumulation must be fast enough to ensure that the ***mass of profit*** rises. So say as a result of the fall in V/C the rate of profit is halved each year. If the amount of profit is to remain the same, then the total capital must double each year. This is the absolute minimum rate of accumulation: the multiplier indicating the growth of total capital must be equal to the divisor indicating the fall in the rate of profit. If the rate of profit tended to fall faster in Japan as a result of greater upward pressure on the value composition of capital--as seems to have indeed been the case--then the higher the minimum rate of accumulation had to be. I shall leave aside here the microfoundations by which the more than this minimum rate of accumulation, as well as a falling V/C, is enforced. But it seems reasonable at first glance to say that especially in the context of Japan's labor short island the very technical progress that first increased each capitalists' profits, next reduced the rate of profit on all of them, and so drove them all--not out of exhiliration but out of brute competitive necessity--to compensate themselves by augmenting their total capital at the maximum rate of accumulation, in order that, in spite of everything, they might increase their amount of profit. This derided Marxian law of the falling rate of profit does seem in fact to have industrialized Japan in short order. In fact the theory explains not only the rapid rate of accumulation but also how and why the system has come to jamb. Now that in Japan the productive powers have been put on new basis, upon the basis of the most advanced mechanization, the falling tendency of the rate of profit has begun to close on their system. Capital has become less and less organic: the organic composition of capital has become unfavorable to the living growth of the system. The once much vaunted rate of capitalisation of surplus value turns out not to have been evidence that consumption meant little to the Japanese ruling class; it was only by a high rate of capitalisation that the mass of profit could be enlarged until the system began to close in on the Japanese bourgeoisie. _ Peter writes: According to this view, Japan is in the midst of a protracted adjustment crisis, which can either be explained by increased competition with other east Asian exporters for the available (i.e. US) markets, or by the maturation thesis, according to which domestic consumption can no longer be constrained and the economy loses its export advantage. In either case, much of the capital stock is revealed as misinvested -- and this on top of the bad bets made during the bubble period. The Japanese system of pooling financial risk supposedly slows down the adjustment process; hence the outside calls for restructuring via write-offs and default. If this is true, the problem shows up in Keynesian fashion (reduced net exports), deflationary pressure (competition with lower-wage producers in the region), and persistent financial fragility. Comments? _ Again Marxian theory does clarify the kind of ruthless adjustment that Japanese capitalism has to undertake since as a result of technical progress, the bottom has dropped out of V/C. In order that every penny be made available to the further accumulation of capital by which as a result of a rising mass of profit the fall in the rate of profit can be beaten off, wages have to be pushed below the value of labor power. Seniority systems have to be destroyed; job protection eviserated; ruthless consolidation of industries carried out (note Chris B's commnents on changing
Re: Yen still overvalued
Those who theorize the possibility of Japanese capitalism being reformed peacefully--despite some painful short-term adjustments--into a mature, high consumption and slow growth society seriously misunderstand the nature of capital and the violence by which it can only move forward as long as the means of production remain predominantly in private hands. I'd say Japan is a mature, high consumption, slow growth society. However, worldwide industrial overcapacity (e.g., in cars), the commodization of most electronic goods with intense competition from China, S. Korea and Taiwan, aggressive bilateral trade and financial policy from the US (which, for example, shut Japan out of the production of processor chips and OSes for pcs and forced financial liberalization on it), and a chronically overly high yen have all caused it to come to grief. Charles Jannuzi
protectionism
Jim D wrote: It's interesting that a foreign-tradefinance expert like PK never mentions that a lot of the steel industry's problems recently have been due to the steep appreciation of the dollar (relative to its biggest trading partners) since 1995. __ Yet this raises the question: if the high dollar has cost jobs, should protectionism be adopted? I wonder whether Jim agrees with Krugman's criticism of protectionism? As Eisner pointed out, protectionism on behalf of US based textiles or steel may limit the supply of dollars abroad and raise the value of the dollar, which could say tip the balance in favor of Airbus over Boeing. The high dollar may be a problem but I think Krugman is correct that tariffs and indiscriminate usage of import surge and anti dumping clauses are not a good response to it. I also think Krugman is correct that trade nationalism, strong among the left, put that rather unlovely dude in office, but then Doug and Max already know I warned long ago that not vociferously and analytically critiquing the post Seattle trade nationalism was a huge political mistake. It's too bad leftists don't fight trade nationalism--are we to defend our capitalists against others as they all jostle in deciding whose excess capacity is to be eliminated? I have recalled a book by Michael Billig, Banal Nationalism; I think it will make for very good reading. rb
Re: Re: Yen still overvalued
Those who theorize the possibility of Japanese capitalism being reformed peacefully--despite some painful short-term adjustments--into a mature, high consumption and slow growth society seriously misunderstand the nature of capital and the violence by which it can only move forward as long as the means of production remain predominantly in private hands. I'd say Japan is a mature, high consumption, slow growth society. However, worldwide industrial overcapacity (e.g., in cars), the commodization of most electronic goods with intense competition from China, S. Korea and Taiwan, aggressive bilateral trade and financial policy from the US (which, for example, shut Japan out of the production of processor chips and OSes for pcs and forced financial liberalization on it), and a chronically overly high yen have all caused it to come to grief. Charles Jannuzi Charles (J), I don't think you are suggesting that if Japanese capitalism were to protect itself from world competition--in particular dumping by other Asian capitals overburdened with excess capacity--and allow for the home market to expand by increasing direct and social wages, such a national quasi socialist system could settle--after some adjustments--into equilibrium? Is there a Japanese Oswald Moseley for the 21st century? Rakesh
Re: Re: Re: Re: Re: Re: Marx vs. Roemer
I believe that it is a disservice to Marx to make him out to be an academic economist trying to work via theorems. Obviously he wasn't an academic. Maybe you are responding with the prickliness of an unorthodox economist to thwe word in ana instititional context where the expexctation is that econokics is supposed to be mathemaetical. I happen to agree with Leontiff that Marx is, whatever else he is, a great mathemaetical economist. But my favorite economists are not mathematical: they are Marx, Keynes, Hayek, Coase--people who had visions, not jsut technical ability. Anyway, Michael, I'm a philosopher, I'm used to dealing with vagueness and fuzziness and arguments taht work at odd angles, so try me out. My institutional context or was different. I am not one who says that all argument has to be deductive and mathemaetical. What I meant by a theorem is that the point you stated about SV is supposed to be something that is shown based on other stuff somehow, by whatever deveious an obscure bits of dialectical reasoning, though of course Hegel fans think that this stuff is all rational and necessary, in fact, are theorems in what they take to be the relevant sense. That is by the way, the point si that I was talking about value at more fundamental level than SV, After all, for value to be surplus, you need a notion of what it is that is surplus. Also, Marx was not really trying to show where profits come from, but to show the perverse consequences of the social relations of value. Sure he was trying to show where profits come from. ARe you telling me that the existence and inevitability of exploitation under capitalsim was not the prime concern of Marx's critique of political economy? I mean really! jks _ Chat with friends online, try MSN Messenger: http://messenger.msn.com
RedGlobe updated
Dear Comrades, RedGlobe has been updated with quite many articles since our last mailing. Please note that articles can be commented and that a posting feature is available for registered users. If your computer stores interesting photos and images, you might make them world available with the Gallery module. The URL to RedGlobe is http://www.redglobe.info Please note also the few featured articles we have published recently (more will be available hopefully soon). Featured articles contain longer statements about special issues or interviews. We also would like to inform you, that Placerouge, where RedGlobe is hosted, offers webspace for free for sites of the radical left. The hosting includes PHP, CGI (running in every directory) full FTP-access. Request can be made by using the link at our pages. Comradely Paulchen -- http://www.placerouge.info freehosting for radical left sites. No adds, no banners, no costs Martin's ICQ 127495375
China to overtake Japan as top customer Intel
The Times of India SATURDAY, MARCH 02, 2002 China to overtake Japan as top customer: Intel REUTERS TOKYO: Intel, the world's top computer chip maker, said on Friday that China was set to overtake Japan as its largest Asian customer within two years. The Chinese market has been very strong in growth, which I anticipate will continue, Chief Executive Craig Barrett told reporters on a visit to Tokyo. Probably this year or next China will surpass Japan as our largest customer. Japan accounted for seven per cent of Intel's October-December sales of $6.9 billion while the rest of the Asia-Pacific region made up 35 per cent. Intel has said Asia would increasingly become its biggest source of growth as the region catches up with the rest of the world in computing demand. China is well on the way to becoming a huge consumer market with its entry into the World Trade Organisation while Japan has been mired in an economic slump for a decade. Barrett said that Intel would continue to develop new technologies, although capital investment would be pared back to about $5.5 billion this year, compared to $7.5 billion in 2001. This year's budget, he said, would mainly go towards equipment for its 0.13-micron manufacturing process and 300-millimeter wafers. Copyright © 2001 Times Internet Limited. All rights reserved.
Japan
G'day Matt and Japan watchers, Another couple of contextualising articles - the first pointing to the preparing-31/3-positions thingy and the second featuring the ever-worrying (ergo generally compelling) Charles Roach, as he pursues the Kenichi Ohmae line Sabri and Charles J. have been discussing (and, it seems, that poor JP Morgan Chase must've missed). Cheers, Rob. Japan sacrifices exports for short-term stock gains THE AGE March 7 2002 15:55 | Last Updated: March 7 2002 17:01 The yen surged to its highest levels against the dollar in nearly three months on Thursday, as investors became increasingly convinced the government has opted for a short-term boost to the stock market at the expense of support for exports. The Japanese currency hit an 11-week high of Y126.40 against the dollar in late European trade after the equity benchmark Nikkei 225 average closed at a seven-month high of 11,648.34. The index has risen more than 20 per cent in the last month, helped by stringent restrictions on short-selling of equities introduced on Wednesday. The yen's rise on Thursday was its biggest one-day move since October 1998. While the government prefers a weak yen to help stem deflation and boo st the income of the country's exporters, it desperately needs sharp gains in the stock market as companies head towards the March 31 year-end. In the near term the priority of policymakers is to strengthen the stock market so they probably won't say anything to damage the market's psychology, said Hiromichi Shirakawa, economist at UBS Warburg. Said Mitul Kotecha, global head of FX strategy at Credit Agricole Indosuez: The authorities may even welcome some yen appreciation if it gives further confidence to investors and helps prevent foreign fund outflows. Under the new stock market rules, short-selling, or the sale of borrowed stock in the hope of buying it back at a lower price, is only allowed when the price is rising. Last week, the market regulator penalised foreign securities houses for breaching previous short-selling regulations. Japanese stocks hit 18-year lows in February, prompting fears that the slump in asset prices would threaten the capital base of Japanese banks already struggling under the weight of risky and non-performing loans. The banks' position has been further weakened by the introduction of mark-to-market accounting rules that require institutions to record assets at market value rather than the price paid. Equities are key to banks' balance sheets, and if we had maintained the levels seen before this rally, it would have implied massive problems for the banking sector's year-end accounts, said Mr Kotecha. Analysts largely attributed the yen's recent strength to foreign funds' reaction to the Nikkei's gains. There's no question funds are underweight in Japanese assets at the moment compared with their benchmarks, so even if foreign investors only returned to neutral, dollar-yen has to go down said Tony Norfield, global head of FX strategy at ABN Amro. The Nikkei has gained about 10 per cent since the beginning of the year, while other benchmark indices, such as the UK FTSE and the US SP 500, are broadly flat. But analysts say that the stock market rally may well fizzle out as the new financial year begins. Sentiment for Japanese equities could also reverse quickly, especially given that recent recommendations to raise Japanese equity exposure are aimed at a short-term horizon, said Credit Agricole Indosuez, the investment bank. This seems to be based upon the view that the government will step up the implementation of its stock-buying fund before the end of the fiscal year to improve the picture of banks' balance sheets. The yen has risen by more than Y6 in the past week and yen-bulls were encouraged on Thursday by lukewarm comments by Japanese officials. The authorities had welcomed the depreciation of the yen which began in November, given that it could boost exporters' earnings, but fell short of threatening intervention on Thursday when the currency broke below the key level of Y130 to the dollar. But Haruhiko Kuroda, vice-finance minister for international affairs, merely said the government was monitoring the situation closely. It looks like the authorities massaged the exchange rate to higher levels to allow exporters selling dollars to gain ahead of year-end, and now that's happened, they may not mind a small move lower again, said Mr Norfield. A 10 per cent increase in the yen's value against the dollar could push down Japan's gross domestic product by 0.3 per cent, according to UBS Warburg. Analysts believe the authorities' apparent pre-occupation with the stock market could make for further strengthening in the yen in the short-term. The authorities are likely to get more aggressive if the rate heads back towards Y125 and they'll probably verbally intervene at that level, but their track record is against them buying dollars above Y120, noted Mr Norfield. The
Re: Re: Re: Re: Re: Re: Re: Marx vs. Roemer
The existence and inevitability of exploitation under capitalsim was important to Marx, but the explanation of profits was not a central concern. You cannot prove that agriculture [Physiocrats], ownership of capital [Smith] or surplus capital is the source of profits. Justin Schwartz wrote: Sure he [Marx] was trying to show where profits come from. are you telling me that the existence and inevitability of exploitation under capitalsim was not the prime concern of Marx's critique of political economy? I mean really! jks _ Chat with friends online, try MSN Messenger: http://messenger.msn.com -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: : Marx vs. Roemer
I never said that he was not using theory. Ian Murray wrote: - Original Message - From: Michael Perelman [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Friday, March 08, 2002 8:55 PM Subject: [PEN-L:23729] Re: Re: Re: Re: Re: Marx vs. Roemer I believe that it is a disservice to Marx to make him out to be an academic economist trying to work via theorems. Also, Marx was not really trying to show where profits come from, but to show the perverse consequences of the social relations of value. === Ok, so if Marx wasn't using theorems as he understood them, wasn't doing theory, wasn't engaged in creating a representation of capitalism a la Hegel, Ricardo, Locke, Smith, Carey, Leibniz, winding back to Aristotle in order to make normative claims and back them up with hypotheses etc. then what was he doing when claiming social relationships manifest perversity? Ian -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: redefining efficiency
This is an interesting way to think of the CAFE mileage standards -- as a form of protectionism. Steel, automobiles, sugar. What else is on the list? Gene Coyle Charles Jannuzi wrote: How is it that the government spent all that money on technologies to save gasoline and protect the environment and now is hesitating to impose a seemingly modest fuel-efficiency standard? The answers are multiple, but a chief one is the cost. Putting the kind of lightweight materials and other innovations used in the prototypes into a mass-produced car is estimated to add $7,000 to $10,000 to the cost of a family sedan, said Bob Culver, executive director of the U.S. Council for Automotive Research, the Big Three-government research collaboration. We were pretty much there, Culver said of the technology. The big problem is, they weren't cost-effective. If they went to a much more efficient fleet requirement, Toyota, Honda and Mitsubishi would put Ford and GM out of business. All three of these companies make the leanest of gasoline engines, and Toyota and Honda have hybrid cars that are already on the highways. It may be that fuel cell cars are not practical in a long, long time, but just think how much fuel could be saved and how much pollution reduced if hybrid cars started replacing the gas guzzlers now. A strict requirement would change the rules of the game and we can't have that. Charles Jannuzi
Re: Re: Re: Re: RE: Re: Re: Re: Yen still overvalued
Peter, The case of Slovenia is, I would suggest, somewhat unique. Since the economy was already a (managed) market economy, it was not necessary to establish the institutions of markets, with the exception of the capital market where the existing capital market had been replaced by a 'subordinated and capitive-to-the- enterprises' banking system. The process of changing the 'social relations of production' after the hiccup of the ideologically right- wing DEMOS coalition, went surprisingly smoothly, in part because the change from 'socialist self-management' to private ownership largely proceeded through worker ownership/buyout supplemented by state fund ownership. Our research indicates that there was no major change during the process in the relations between labour and management and, indeed, many of the managers remained the same as those in place under the old system. The institution of co-determination at the workplace, corporatism at the national economic level, and the development of a strong and comprehensive union movement and system of collective bargaining did not provide for any 'revolutionary' change in the balance of social power though it did initiate a process where there will be a gradual transfer of economic power from labour to (private) capital. Also, the slow rate of deregulation and the refusal of the economic policy makers to accept the IMF-Washington consensus policies that they were being pressured to adopt, allowed for a skilled transition from integration with Yugoslavia and, to a lesser extent, central and eastern Europe, to fairly close integration with the EU though still only as an associated member. I fear the real collapse and crunch will come if Slovenia is accepted into the EU and ECU as they are campaigning for. One should note also, that Slovenia's problem after independence was not a collapse of their currency (the Tolar), but rather the reverse, a rapid overvaluation of the Tolar caused by huge inflows of foreign capital. Slovenia only weathered that storm by in effect regulating the inflow of foreign exchange and sterilizing it so as not to inflate the domestic money supply. Paul Phillips, Economics, University of Manitoba Peter Dorman wrote: In this context I'm referring to the specific problem of changing over the installed capital stock. There is another restructuring problem in the CEE, which is more social (i.e. social relations of production) and has to do with disseminating a management system capable of competing with W. Europe. Again, this is not about what should take place in a better world -- simply adapting to the dictates of the existing capitalist context, under the (possibly false) assumption that countries smaller than the US have little leeway on these questions. Peter [EMAIL PROTECTED] wrote: Peter, What are you suggesting here? What kind of restructuring are you referring to? As someone who has spent the last 10 years studying and publishing on the Slovenian transition process, I'm mystified at what you are referring to. Paul Phillips, Economics, Universityof Manitoba 2. Except for Slovenia (where there was arguably not too much restructuring to perform), it hasn't been completed yet.
Re: Re: Re: Re: Re: Re: Re: Marx vs. Roemer
After all, for value to be surplus, you need a notion of what it is that is surplus. Justin, the surplus concept has to be thought through. It would be very helpful if we could do this on the list. I think one of the ironies of economic thought here is that while Marx criticized Ricardo for ultimately reducing capital and the surplus to money value terms--Ricardo only cares (Marx noted) about net revenue, whether an employer makes the same 10% of $2000 on an advance of $20,000 whether that advance employs 100 or 1000 workers; Ricardo cares little about gross revenue, the volume of production and consumption in terms of use value and hence according to Marx denies the importance of life itself, Ricardian political economy thereby reaching with such abstraction the peak of its infamy; the neo Ricardians on the other hand treat the surplus only in physical terms--as a collection of the various use values not needed for replacement/reproduction. It seems to me that the neo Ricardian surplus is thus more like the physiocratic one than the Ricardian conception of net revenue which according to Marx ultimately loses all touch--as if it were as abstract as the Hegelian dialectic--with the process of production and the quality of consumption in technical and quantitative use value terms. For Marx, the surplus however has two aspects--a value form and a physical form; the surplus is both a monetary expression of unpaid labor time and a collection of more or less use values. For Marx, the surplus in the latter form has great indirect insignificance for the accumulation process. Unlike the Physiocrats, Ricardo and the neo Ricardians, Marx does not treat the surplus in either value or use value terms; he grasps both aspects of the surplus in his theory of accumulation. His ability to do is based on his key discovery of the dual aspects of labor. Here is an example of Marx's ability to understand the surplus in both its aspects: ...the development of labour productivity contributes to an increase in the existing capital value, since it increases the mass and diversity of use values in which the same exchange value is represented, and which form the material substratum, the objective elements of this capital, the substantial objects of which constant capital consists directly and variable capital at least indirectly. The same capital and the same labour produce more things that can be transformed into capital, quite apart from the exchange value. These things can serve to absorb additional labour, and thus additional surplus labour also, and can in this way form additional capital. The mass of labour that capital can command does not depend on the its value but rather on the mass of raw and ancillary materials, of machinery and elements of fixed capital, and of means of subsistence, out of which it is composed, whatever their value may be. SINCE THE MASS OF LABOUR APPLIED THUS GROWS, AND THE MASS OF SURPLUS LABOUR WITH IT, THE VALUE OF THE CAPITAL REPRODUCED AND THE SURPLUS VALUE NEWLY ADDED TO IT GROWS AS WELL. Capital 3, p. 356-7. vintage
Re: Japan
Rob's articles on Japan are interesting with respect to our earlier discussion about the danger of a flight from the dollar -- whether it would threaten the U.S. financial structure. Here we have a description of a rush to the Yen, which should have a similar but smaller effect. It is too soon to tell what will happen. What you think? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: FW: Bell-curve racism for nations
michael perelman wrote: Sabri, please be more respectful of Dr. Rushton. He will probably win the Nobel Prize or even imortatlity, I believe, for having discovered the inverse relation between IQ and penis size. I know this is a joke, Michael, but the bourgeois science thinks Rushton is a fraud and an embarrassment. Before Hitler, racist science got plenty of respect, but it doesn't really anymore. The Bell Curve, despite its popularity, isn't mainstream science - though it might be the hidden underside of liberal bourgeois tolerance (as Zizek said of the relations among Laibach, nationalism, and fascism). Racism doesn't have much scientific prestige - except maybe in some economic models, where the entry of black workers is treated as a decline in labor force quality. It's trickier to deal with bourgeois ideology than it used to be. And the staff of the IMF is more diverse than most First World left organizations. Doug
Re: Dervis on Turkey
Since most of us do not know much about Turkey, is Dervis telling anything like the truth? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Re: FW: Bell-curve racism for nations
michael perelman wrote: Sabri, please be more respectful of Dr. Rushton. He will probably win the Nobel Prize or even imortatlity, I believe, for having discovered the inverse relation between IQ and penis size. I know this is a joke, Michael, but the bourgeois science thinks Rushton is a fraud and an embarrassment. Before Hitler, racist science got plenty of respect, but it doesn't really anymore. Cultural differences are made the explanans but the question of the persistence of cultural differences is left unasked, allowing racial assumptions to fill in the gap. Blacks have 1/10th the wealth of whites (defining wealth to include stocks, bonds, homes, cars, jewlery, etc; this is not wealth defined in Marxian terms). Why? At the very least, a racial world view could remain entrenched behind the curtain as economists reason from the assumption that those individuals who remain miserable proletarians as opposed to joining the wealthy have a very steep present time preference, i.e., lack of fortitude and foresight to forgo present consumption. For those who content themselves with the assumption that persistent cultural differences explain individual variance in time preference and thus the non random distribution of wealth across ethno-racial groups, all Rushton does is force them to their own implicit conclusion that such persistent cultural difference is most plausibly explained by probable heritable group differences. That's exactly where D'Souza ended up despite his attempt at a purely cultural theory of racial inequality. I suggest that the hostile reaction to Rushton is merely the return of the repressed. Rakesh
Re: Re: Re: Re: Re: Re: Re: Re: Marx vs. Roemer
The existence and inevitability of exploitation under capitalsim was important to Marx, but the explanation of profits was not a central concern. You cannot prove that agriculture [Physiocrats], ownership of capital [Smith] or surplus capital is the source of profits. This strikes me as just wierd, Michael: the explanation of profits is the obverse of the explanation of exploitation, they're the same question viewed from different sides. And as to the issue not being important to him from the capitalist side, recall the discussions of frugality and risk easrly on in part I of CI as away of settily up the transition to the focus on production, and the Trinity Formula discussion in CIII, just for starters. I don't know what you mean by yr second sentence, are you restating Marx's results (?) which I largely agree with; I just think that you can explain some profits by normal bourgeois means (buying low and selling high) or monopoly advantages, as in MArx's discussion of differential rent--which leads me to thing that even he doesn't accept thestrict version of the LTV, nut only uses it as an idealization. jks _ MSN Photos is the easiest way to share and print your photos: http://photos.msn.com/support/worldwide.aspx
Serving the World
World Bank sets up accounting back-office in India http://www.ciol.com/images/reuters.gif The World Bank is setting up a major accounting office for its global operations. The centre would handle payroll processing, accounts, travel management, trust funds accounting and country office accounts. Reuters Sunday, March 10, 2002 lt;scriptgt; lt;/scriptgt; CHENNAI: The World Bank, following a trail blazed by a host of other multinational firms, is setting up a major accounting office for its global operations here, a bank official said on Saturday. Ravinder Paul Bhatia, who heads the Washington-based lender's new back-office operation, told Reuters by electronic-mail the centre would handle payroll processing, accounts, travel management, trust funds accounting and country office accounts. Bhatia said the information technology centre, manned by a team of about 100 employees, would also provide help desk support on the Bank's budget policies and processes. The World Bank facility, spread over 27,000 sq ft (2,500 sq metre), is due to be formally opened on March 15. It joins a growing number of similar India-based manpower and technology intensive back-offices. Last month, Dutch banking group ABN AMRO NV set up a global support centre for its trade and advisory business unit in Madras. Several U.S. companies, including Ford and the financial services arm of General Electric, have already set up major accounting or support back-office operations in India, tapping the abundant supply of skilled computer technicians and English speaking graduates at substantially lower salaries. Bhatia said the World Bank intended to consolidate the newly set up back-office operation before eyeing further expansions. He however declined to give details on the investments made for setting up the centre. The centre will support accounting operations across the Bank's offices in about 150 countries and is expected to process trust fund transactions valued at between one to two billion dollars a year. (C) Reuters Ltd. xxx Anthony P. D'Costa, Associate Professor Comparative International Development University of WashingtonCampus Box 358436 1900 Commerce Street Tacoma, WA 98402, USA Phone: (253) 692-4462 Fax : (253) 692-5718 xxx
Re: Re: Dervis on Turkey
As a follow-up to Michael's question, I'd like to know the specifics of Turkey's economic program, and its results so far. If there is somewhere on the web I should check this out, please provide urls. Many thanks, Alan At 3/9/2002, you wrote: Since most of us do not know much about Turkey, is Dervis telling anything like the truth? -- Michael Perelman _ Do You Yahoo!? Get your free yahoo.com address at http://mail.yahoo.com
The Incomplete Recession
http://64.29.208.119/guest.htm Guest Commentary, by Rob Parenteau The unanticipated consequences of an incomplete recession March 8, 2002 Rob Parenteau is a global strategist for Dresdner RCM. There can be no question the recent recession was different this time in composition and character. Although the conventional toolbox of leading indicators - from new orders, to the ISM survey, to the yield curve slope, to the productivity reacceleration, to earnings revisions upgrades - is near universally pointing to an emerging economic recovery in the US, there are reasons to believe that because the recession was odd, any recovery will be even odder still. In many ways, the recession process is incomplete. For example, consumer cyclical spending growth never fell negative, housing prices never corrected, equity market multiples never fell below long term averages, the trade deficit never returned to balance, and perhaps most important of all, private sector balance sheets never got cleaned up. All of these departures from normal business cycle recessions are in fact intimately related - they are all expressions of continued financial imbalances in the US economy - but it cannot be the objective of this piece to once again work through these interrelated dynamics. Rather, simple logic tells us if we can identify ways in which this recession has differed from past episodes, perhaps we can gain some clues as to how this recovery will also differ. Consumer implications We did not see the normal cessation of household deficit spending during the recession, and so we achieved no net pay down of private sector debt during the recession. Deficit spending occurs when the income (or revenues or receipts) of a sector is less than current and capital expenditures. This is a crucial difference between the latest recession and prior postwar recessions. In fact, with the preliminary Q4 real GDP release, the financing gap in the US consumer sector hit a new wide for this cycle, and is near a new wide for the past half century. The last time we hit this wide a financing gap was in the early '50s. That one was closed by a breath taking collapse in household expenditures as a share of GDP from 74% to 67%. A similar decline from 77% to 70% of GDP today would, given the higher private debt loads, be an invitation to a full scale debt deflation in the US. This becomes an especially important development when one realizes nearly all of the business cycle recoveries of the past half-century have been led by consumer cyclical spending (that is, consumer durables and residential investment spending). It is widely unrecognized that we are already back near the peak rates of change (10-12%) of consumer cyclical spending that we have seen in the '90s recoveries. We never got negative y/y comparisons in the growth rate of consumer cyclical spending, as we always have in the past half-century of recessions. That means not only is the consumer cyclical spring not coiled very tightly, it has already been to a great extent sprung by the response to the post 9/11 discounting. It appears that the credit cycle, at least the nonbank credit cycle, is different this time around for reason Doug Noland has frequently highlighted. Households face a soft budget constraint - one not unlike that faced by enterprises in formerly communist nations before their fall. Consequently, it becomes imperative to understand the tripwires that exist for nonbank lenders to consumers, both in terms of their perceptions of consumer credit risks, and the perceptions of the final investors in the liabilities of nonbank consumer credit card companies themselves. To be very clear about this, banks are not the financial channel we need to be watching for any disruption of the credit needed to fuel consumer deficit spending. Banks have been vigilant and are, according to Fed survey data, still wary of making new loans. Dissecting the money stock data, which mostly covers bank liabilities, is unlikely to help very much in getting us an answer to whether consumer finance is going to keep growing. Corporate sector implications The Wall Street response to the recent back up in corporate bond yields has been nearly universal. Like all of the responses to each tech stock sell off along the way, the widely chanted mantra greeting corporate bond yield back ups has been to get on the train before it leaves the station. The nub of the argument is as follows: we always see one last flushing of credit concerns and one last wave of bankruptcies as the concluding chapter of recessions and the ushering in of business cycle recovery dynamics. It is argued this typical transition phase traps the bears who would deny a recovery even if it hit them over the head, and begins the crucial wealth transfer to the bulls to get the ball rolling in a self-feeding, cumulative fashion. This is fair enough as it stands, but not good enough in the current cycle. The uncanny
FW: Reply to Islamic State Discussion
Friends, This is a post to WSN from someone I was planning to meet when I was in Turkey but we couldn't get together because of some "technical difficulties". Hopefully next time. His English is not perfect, but hey, neither is mine. Isuspect that with "revaluations" below he means "revolutions" but he may also mean "changes". I once tried to give you a brief historical account of the establishment of a "repressive" state in Turkey. His briefsummary below complements my summary with a particular emphasis on modernism, nation building and the religion. Sabri ++ I want to give an example from Turkey, actually Turkish state as an example. Here is a country whose 99% of citizens are Muslim. When the state was established in 1923 by an dictatorial government following a sovereignty war, government started to do some "modernizing revaluations" on people's life, such as using several versions of hats and clotheswhich separately represents persons religion or social status or ethnicity was abolished and people forced to wear retype suits. All traditional musical instruments was collected and replaced by piano. And much more. This was the modernization of a state and the creation of a nation. Because modernization in Islam was not occurred as happened to Christianity in Europe, also state had to rewrite Islam with its own terms. Turkish government was created a new Islam and all past institutions was abolished, because a transformation from Islam based Ottoman to a new Turkey would require this. Of course this is not a case study privatefor Turkey, this is the reformation process happened in Europeinthe 15th century. Butdifference in the process was, in turkey and many other Islamic countries, externally created by themodernist dictatorialgovernmentsby pressure. So, this modernization became a suffering process, suffering and pressure in the name of a future with "human rights" and a "modern developed society". Not ended yet. Education as an ideological apparatus of state played a very important role in this process: creating "enlightened and modern Turkish people", this was achieved. Most of the people who claims themselves as progressive people still advocating inhumanity and fascist policies against any kind of Islamic movement., whatever it is. In a country like Turkey, supporting their opposition, not required to support their ideology or maybe you can oppose it, becomes a requirement for a progressive person. This is a real politic choose. Same policy must be valid in the current situation, against war on terrorism. PS: If it is needed to notice, I do not mean supporting terrorism ofS11. by
FW: Reply to Islamic State Discussion Reformatted
I don't know whether other listers are as 'allergic' to MIME or HTML formatting I am, but just in case others are, I thought I would make this interesting post available in plaintext. cbc Original Message Subject: [PEN-L:23754] FW: Reply to Islamic State Discussion Date: Sat, 09 Mar 2002 19:53:12 -0800 From: Sabri Oncu [EMAIL PROTECTED] Friends, This is a post to WSN from someone I was planning to meet when I was in Turkey but we couldn't get together because of some technical difficulties. Hopefully next time. His English is not perfect, but hey, neither is mine. I suspect that with revaluations below he means revolutions but he may also mean changes. I once tried to give you a brief historical account of the establishment of a repressive state in Turkey. His brief summary below complements my summary with a particular emphasis on modernism, nation building and the religion. Sabri ++ I want to give an example from Turkey, actually Turkish state as an example. Here is a country whose 99% of citizens are Muslim. When the state was established in 1923 by an dictatorial government following a sovereignty war, government started to do some modernizing revaluations on people's life, such as using several versions of hats and clothes which separately represents persons religion or social status or ethnicity was abolished and people forced to wear retype suits. All traditional musical instruments was collected and replaced by piano. And much more. This was the modernization of a state and the creation of a nation. Because modernization in Islam was not occurred as happened to Christianity in Europe, also state had to rewrite Islam with its own terms. Turkish government was created a new Islam and all past institutions was abolished, because a transformation from Islam based Ottoman to a new Turkey would require this. Of course this is not a case study private for Turkey, this is the reformation process happened in Europe in the 15th century. But difference in the process was, in turkey and many other Islamic countries, externally created by the modernist dictatorial governments by pressure. So, this modernization became a suffering process, suffering and pressure in the name of a future with human rights and a modern developed society. Not ended yet. Education as an ideological apparatus of state played a very important role in this process: creating enlightened and modern Turkish people, this was achieved. Most of the people who claims themselves as progressive people still advocating inhumanity and fascist policies against any kind of Islamic movement., whatever it is. In a country like Turkey, supporting their opposition, not required to support their ideology or maybe you can oppose it, becomes a requirement for a progressive person. This is a real politic choose. Same policy must be valid in the current situation, against war on terrorism. PS: If it is needed to notice, I do not mean supporting terrorism of S11. by
Re: The Incomplete Recession
G'day Michael, I think the 'incomplete recession' argument is pretty convincing, myself. The recent upturn in capital investment is not just a response to depleting inventories; it must also be an expression of faith in continued consumer demand. With consumer debt amounting to 73% of GDP (see more below), personal bankruptcies occurring amidst an almost zero base interest rate, and a whipped-up confidence that may yet (rather previously) raise that rate - well, we could easily be looking at a suddenly drooping capacity utilisation and a debt deflation trough, no? I mean, if that stuff was a real enough concern a quarter ago, it's still real, right? Hasn't a goodly portion of productive capital got to be swept away yet? I'd also appreciate pen-pals' views as to why (a) indebted US consumers have maintained their lust for gadgets and credit cards while (b) Japanese consumers, who apparently have packets of cash under their mattresses (coz ain't the government considering removing guarantees on a lot of bank deposits? I missed the guts of that, but assume some Japanese banks are going to have to sell Wall St stocks over the next three weeks to replenish their reserve ratio if they're to avoid a consequent run), have maintained a polite disinterest in the lure of The Gadget (is it just a culturally generated caution in light of these revolutionarily new non-lifetime-employment-ensuring times?) Cheers, Rob. Positive Economic Commentary The Danger Of Runaway Household Debt Or Why The Fed's Options Are Limited February 19, 2002 Back in the mid 1980s when the federal government was running large deficits, concern developed that the US might be flirting with the possibility of runaway Treasury debt. If the government has to borrow to pay the interest on its outstanding debt and the average interest on government debt is higher than the nominal GDP growth rate, then the conditions for runaway government debt are ripe. Why? Unless debt is being retired, the growth rate in government debt outstanding will be, at a minimum, equal to the average interest rate on debt outstanding. This is nothing more than the eighth wonder of the world - compound interest. If the interest rate on debt outstanding is higher than the nominal GDP growth rate, then government debt will be a growing proportion of nominal GDP. If the government is borrowing above and beyond its debt-servicing requirements, then the debt-to-GDP ratio will increase all the more. For whatever reason, we stopped worrying about runaway US Treasury debt - especially in early 2001, when Fed Chairman Greenspan told us we needed to start worrying about the implosion of government debt. Don't quit your day job, Alan. Is there a possibility that household debt could be on a runaway course? Chart 1 shows that between about 1965 and 1985, household liabilities were relatively constant compared with disposable personal income. But since 1985, household liabilities have been increasing relative to disposable personal income, breaching the 100% threshold in 1999. And, interestingly enough, Chart 2 shows that since about 1980, the bank prime loan rate has almost always been above the growth rate of disposable personal income. In contrast, prior to 1980, the bank prime loan rate was mostly below the growth rate of disposable personal income. (I am using the bank prime loan rate as a proxy for the average interest rate on outstanding household debt.) Chart 3 shows that households have been net borrowers practically since time immemorial. But have they been borrowing to pay the interest on their outstanding debt? Chart 4 strongly suggests that they have. Disposable personal income can be used to purchase consumer items, houses (residential investment), and to acquire financial assets (financial saving). If the sum of these uses is greater than disposable personal income, then households are running a primary deficit, or they are borrowing to effect these purchases. Plotted in Chart 4 is disposable personal income minus the sum of its uses. Because the data points in Chart 4 are negative, this suggests that households have been continually running a primary deficit. There is one additional use of disposable income - to pay interest on outstanding debt. If households are running a primary deficit and they have interest payments to make, then they also are likely to be borrowing to pay the interest on their outstanding debt. (The only way under these circumstances households could avoid borrowing to pay the interest on their debt is if they were realizing sufficiently large capital gains.) Unless households radically rein in their spending, they are going to keep borrowing in order to service the interest on their debt outstanding. Unless the interest rate falls below the growth in their disposable personal income, households' debt will continue to rise relative to their disposable income. As household debt continues to rise relative to income, one would
Re: The Incomplete Recession
Someone (Jim D.?) posted a Business Week article a few days ago that said that the Japanese initially kept consuming when their stock market first fell, but after a while ... [EMAIL PROTECTED] wrote: I'd also appreciate pen-pals' views as to why (a) indebted US consumers have maintained their lust for gadgets and credit cards while (b) Japanese consumers, who apparently have packets of cash under their mattresses (coz ain't the government considering removing guarantees on a lot of bank deposits? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: The Incomplet Recession
I see the hair-shirt left-wing gloomster crowd is at it again wringing their hands in ghoulish glee at the misery that will befall the working class and lead lickety-split to the final conflict. When will you guys ever learn that rotten and corrupt as it is, capitalism provides the best damn goo-gahs on earth. I'm kidding, of course. Just wanted to save Doug the trouble of his usual rant. Tom Walker 604 255 4812
