I believe many transactions should remain 'vanilla' Gruff and be very transparent. There are many moves towards this that involve auctions to supply goods and services. Rajan's paper really points to forever 'discounting cashflow' to do more with capital being flogged to more and more 'efficiency'. Whilst one can see that banking the proceeds of the day overnight to gain interest is a good thing, the way we are now transacting over and over appears madness and also ends up crooked. Governments are heavily involved and banks make big profits betting with entitlements buying government stock gives them. My suspicion is it's a Ponzi scheme with a legal money printing press. Over here, we are cutting the public sector and hoping old rules on private sector growth 'happen'.My guess is that is a long gone set of rules. Jobs have either been public sector or part-time for many years now. Risk management in all this relies on a massive spreadsheet (Gaussian copula) that can't work because the cheating that makes money is excluded. Almost no services I use these days require staff like they did, and none of the industries I worked in has come back or been replaced. What has sprung up is all kinds of financial service I don't need. My guess is economics is in real need of a radical purge and a back to basics phase so that it connects more directly with what we do. This won't happen. Social unrest and war are the usual change agents.
On 14 July, 18:47, gruff <[email protected]> wrote: > archy, here's an interesting paper I found this morning. I've not > read the whole thing but much of it may support your perspective. > > Has Financial Development Made the World Riskier? > Raghuram G. > Rajanhttp://www.kansascityfed.org/publicat/sympos/2005/pdf/rajan2005.pdf > > PS -- I'm not sure transparency would work to make the market safer or > would rather simply ruin the marketplace. > > On Jul 14, 8:27 am, archytas <[email protected]> wrote: > > > > > Like the changes that have gone before, capitalism’s latest > > transformation will alter the relationship between markets and > > governments and between politics and economics. It is the ability to > > adapt that secures capitalism’s survival. Version 4.0 will be as > > different from the recent free-market fundamentalism as Reaganomics > > was from the New Deal. Capitalism’s evolution over the past 200 years > > is linked particularly to the changing role of government. The managed > > economies of Capitalism 2.0 were based on a fundamental faith in > > governments’ ability to solve economic problems. Version 3.0, after > > the 1970s, romanticised markets and distrusted government. Within each > > of these broad categories,there were mini-shifts, Capitalism 2.1, 2.2, > > etc. > > What I would like to see is much more openness, though there are clear > > problems with this in terms of handing over manufacturing expertise > > and capacity to potential loonies, and weapons technology to > > terrorists. Deep inside what is going on are old habits, like trying > > to force maximum production out of people who serve masters and so > > on. There is no need for this now.
