Ed,
We are both agreed, I think, that the world economy is passing
through a major transition phase. The following item "Is the World
facing fundamental changes?" on
http://www.bbc.co.uk/news/business-14583201 will be of interest.
Keith
At 14:05 18/08/2011, you wrote:
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: <mailto:[email protected]>Keith Hudson
To: <mailto:[email protected]>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>http://www.project-syndicate.org/commentary/roubini41/English
Ed
----- Original Message -----
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To: <mailto:[email protected]>[email protected]
Sent: Monday, July 11, 2011 4:25 AM
Subject: [Futurework] NYTimes.com: Economy Faces a Jolt as Benefit
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