What does everyone have against guerillas? I just don't like terrorists
but certainly support the people of Chiapas. Bush has successfully
clouded the issue by defining guerillas as terrorists and anyone who is
the enemy of Citicorp [aka the IMF] is a terrorist by his definition.
Bill Ward
On Tue, 23 Jul 2002 10:45:29 -0700 Harry Pollard
<[EMAIL PROTECTED]> writes:
> Keith (and Karen),
>
> Some points to chew over.
>
> 1. We cannot protect ourselves from guerilla attack without so
> constricting
> our freedoms that the guerrillas will have won anyway.
>
> 2. Bush (and congress) cannot keep spending money the way they are
> without
> seriously damaging (the somewhat unfounded) confidence in the dollar
> as a
> stable reserve currency.
>
> 3. Things that happen in the stock market have little or no effect
> on the
> economy.
>
> I am reminded of the story of the young economist in the thirties
> who,
> after graduating, took the bus home to his father who ran a
> successful
> hamburger restaurant - Ed's Hamburgers.
>
> Some 300 miles away from his father, the young man saw a roadside
> billboard
> "Ed's Hamburgers - the best in the West".
>
> About 250 miles to go and there were several billboards filled with
> lavish
> praise for Ed's Hamburgers. This continued all the way home, where
> the
> billboards sprouted everywhere.
>
> The young man had a hard job getting into the restaurant. There was
> a line
> waiting to get in who didn't take kindly to the pushy young man
> getting
> ahead in the line.
>
> Next morning at breakfast, the son explained economics to his
> father. "The
> cost of all those signs will bankrupt you dad. You should cut
> expenses and
> take them down. Don't you know there's a depression?"
>
> So, the father took down all the expensive billboards and the young
> economist was right. There was a depression, and father went broke.
>
> It's an old story and makes the point.
>
> If producers believe the experts, who know little, or the pundits
> who know
> less, or the politicians who know nothing, and begin to cut back
> production
> - there could be a problem.
>
> For almost 50 years, I have been teaching that stock market antics
> don't
> cause depression. In 1987, stock prices fell by almost one third
> ("the
> worst since the Great Depression") so what happened to the economy?
>
> Nothing.
>
> When the economy is crumbling around the edges and people realize
> they own
> a factory where half the machines are idle and lay-offs have
> decimated the
> work force, they will want to sell. Trouble is that when lots of
> people
> have factories in similar condition and they all want to sell,
> prices begin
> to drop - perhaps precipitously.
>
> The economic collapse precedes the stock market collapse.
>
> Sorry to bring it back, Keith, but we are in the middle of a
> "collectible"
> psychology. The reason you have, and hang on to an empty Rosalie
> beer can
> (present price $10,300) is because you think it might increase.
> There is no
> income attached to the beer can, but you don't care. The price is
> everything.
>
> This led to my comment about price/earnings ratios which have
> reached
> extraordinary levels. I referred to the analysts' bleating about
> this.
> "Investors" didn't seem to care about earnings as they bid prices
> higher.
>
> This is on all fours with the owners of the beer cans (there appear
> to be 3
> Rosalies in mint condition. Now say someone found in his attic a
> crate of
> mint condition Rosalies and took them down to the local collectible
> store
> where he sold them for $5 a can.
>
> What would you do as a collector? The magic that provided you with a
>
> $10,300 can has disappeared with a pop. You have a $5 beer can.
>
> Let me repeat how I first came across a Rosalie beer can. One was
> sold at
> auction for $4,000. Before the lucky bidder left the room, he was
> offered
> $10,000. He refused. That was more than 20 years ago. Over these
> decades
> the beer can has only just risen to $10,300.
>
> He should have made the deal, but he didn't. If you think about why
> he
> didn't take it, also why the $10,000 was offered, you'll get a grasp
> of the
> collectible market.
>
> It's a market without the price mechanism control that makes the
> free
> market so effective.
>
> I talked about this with regard to the land market, which is a
> collectible
> market. Wow, look at those housing prices soar! It seems impossible
> for the
> modern neo-classical economist to divide the two components of
> housing -
> the building and the land.
>
> The house price drops every year as with all products that get
> older. The
> land price rises every year because it's a collectible. It also
> suffers the
> possibility of an "inexplicable" crash - as with the stock market
> and the
> Rosalie beer can.
>
> Even the London Economist seems filled with people unacquainted with
> real
> life. A recent issue cover story pointed out that "real estate" all
> over
> the world is holding up the world's economies.
>
> Our economic well-being rests sturdily on a beer can!
>
> Harry
> _____________________________________
>
> Keith wrote:
>
> >The London and NY SE share prices both dropped steeply yesterday
> as if on
> >cue after reading my FW posting of yesterday! Last night the
> business
> >editor of BBC TV was saying that the LSE traders were totally
> flummoxed by
> >what is going on and in a state of panic at times. They've never
> >experienced anything like it. He said that few of them can remember
> the
> >last time there was a recession (1972 onwards). Those traders who
> can
> >remember have long retired to their country houses.
> >
> >My two reactions to that were:
> >
> >1. I can't remember much about everyday life in those days either!
> More
> >specifically, the recession finished off my environmental magazine,
> >"Towards Survival". I'd built it up over about three years and it
> had
> >several thousand subscribers in 14 countries, but I was still
> subsidising
> >it out of my full-time salary in industry and when paper and
> mailing costs
> >went up four times within about 18 months this was beyond my
> financial
> >abilities to keep going.
> >
> >It was this event that launched me into politics and I joined the
> Liberal
> >Party. Because of my reputation in the environmental movement I
> went to the
> >top pretty quickly. Within a year I was on the Midland Executive,
> and a
> >year later was on the National Executive. There I found myself
> sitting with
> >highly-ambitious young and middle-aged men of about my own age, and
> there I
> >discovered the fact that few of them were really interested in
> ideas and
> >policies that might be good for the country but rather in their own
> >careers. As well as feeling naive within this world of practical
> politics,
> >I felt something akin to disgust and after about four meetings I
> resigned
> >from the NE and the Party.
> >
> >2. My second reaction was to look up charts of share prices over a
> long
> >period. The US S&P 500 going back to the 1870s and adjusted for
> inflation
> >shows that the average Price/Earnings ratio of share has been about
> 12
> >(rather than the 14 or 15 that's usually mentioned). It's now
> around 35. In
> >the '70s recession the P/E was averaging about 8 for almost a
> decade. It's
> >a shock to realise this.
> >
> >I cannot see how there's any way of avoiding a recession. There's
> been the
> >most absurd stock market phenomenon of one bubble followed by
> second one
> >since the late 80s. Share tipsters, mutual funds and so on have had
> a
> >wonderful time for the last 10/12 years and have managed to
> persuade scores
> >of millions of ordinary people to "invest" in shares during this
> mad
> >episode -- appealing, of course, to the natural greed of most of
> us. If
> >this large number now decide that it's time to stop consuming so
> much and
> >try and repay their credit card debts then the deflation which is
> already
> >apparent in both producer and consumer prices will intensify and
> >unemployment will surely mount. In the coming year or two,
> America's Fed
> >and the Bank of England might find themselves pushing their
> interest rates
> >down to almost zero (as now in Japan) in a vain attempt to get the
> economy
> >moving.
> >
> >Keith Hudson
>
>
> ******************************
> Harry Pollard
> Henry George School of LA
> Box 655
> Tujunga CA 91042
> [EMAIL PROTECTED]
> Tel: (818) 352-4141
> Fax: (818) 353-2242
> *******************************
>
>
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