I don't know, Keith. You say "what we have today is a mammoth version of one
of the normal sorts of trade cycles that always used to happen throughout
history..." I think it's bigger than that. And quite different. It' a
transition, much like when the world became transformed from an agricultural
base to an industrial one. And we can't really see, as yet, where the
transition is taking us. We can see some of the parts. Globalization, the
ability to produce goods and services anywhere in the world and move them to
market is part of it. The overdependence on credit and leveraging is also part
of it. That large numbers of people don't fit in, the young even if they are
educated for example, is another part. The growing reliance on a declining
natural resource base is yet another. Right now, where the transition will
have taken us when it is completed, if it ever is, is not at all clear. You
are right in saying that Roubini has no idea of what is actually going on. I
don't think anybody does.
Ed
----- Original Message -----
From: Keith Hudson
To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION
Sent: Thursday, August 18, 2011 12:56 AM
Subject: Re: [Futurework] NYTimes.com: Economy Faces a Jolt as Benefit
ChecksRun Out
Ed,
Nouriel Roubini is good at diagnostics. He goes on eloquently, paragraph
after paragraph, in describing what's wrong (pretty well everything, one
infers) but then ends up at the end of his article with as lame a mixture of
platitudes and remedies as any of the current crop of economists and
politicians.
In short, he has no idea of what is actually going on -- or he is in complete
denial about it. He doesn't realize that what we have today is a mammoth
version of one of the normal sorts of trade cycles that always used to happen
throughout history in this region or that caused by over- or under-production,
or surpluses or deficiencies of resources. They all caused grief to this or
that section of the market place and, when foolishness was exposed and debts
were purged, their economies revived soon enough.
In our case we are not suffering from a shortage or over-production of goods,
nor from a shortage or over-production of resources (not yet anyway) but from
an over-production of credit. In the past, credit has always acted like oil in
a machine -- a necessary but relatively minor part of the whole. Today,
private, corporate and public credit and its counterparts (private, corporate
and public debt), amounts to a very large part of the whole 'machinery' because
governments themselves have been credit providers increasingly all through the
past century (by printing money), particularly since crucial decisions in
currency foolishness were taken, such as Bretton Woods (1944) and Nixon
releasing the dollar from the discipline of gold-backing (1971). To continue
the analogy, the real 'mechanical' parts of today's machine (money that is
saved and then invested) can hardly operate because there's too much oil
(credit and debt) sloshing around.
But, essentially, today's impasse is no different from the past. Governmental
foolishness must be acknowledged and credit and debt purged from the system. It
was partly done in the 2008/9 crisis, but evidently not sufficiently so.
There's a lot more to go yet. How long will the present Great Recession last?
Even some politicians and economists are talking in terms of ten years.
Probably more like a lifetime, unless America and the Eurozone agree to China's
proposal to establish a stable world trading currency that can serve as the
discipline to prevent more money-printing by governments.
Keith
At 21:57 17/08/2011, you wrote:
Thanks for posting, Sally. For another gloomy piece on the economy, global
this time, see what Roubini (Doctor Doom) has to say at:
http://www.project-syndicate.org/commentary/roubini41/English
Ed
----- Original Message -----
From: [email protected]
To: [email protected]
Sent: Monday, July 11, 2011 4:25 AM
Subject: [Futurework] NYTimes.com: Economy Faces a Jolt as Benefit
ChecksRun Out
This page was sent to you by: [email protected]
BUSINESS DAY | July 11, 2011
Economy Faces a Jolt as Benefit Checks Run Out
By MOTOKO RICH
About 20 percent of personal income comes from government payments, and
as programs are trimmed, reduced consumer spending could slow the recovery.
Copyright 2011 The New York Times Company | Privacy Policy
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
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