John Vertegaal wrote: > Fair enough, but this doesn't respond to Shane's opening remark. > Do you agree with Dean Baker's idea of a _loss_ in $6T in housing and $8T in > stock wealth? And how would that square with Shane's comment?
I don't think it was Baker who talked about the "loss of wealth" in those terms, at least in this thread. He might have at some point, but I'm not going to do the search. the question therefore is in reference to the anonymous comment that >>> We have just seen $10 trillion of value evaporate. << and Shane's reply: >"evaporate?" That "value" obviously never existed in reality, only on paper.< I would agree with Shane: the high stock prices and the house prices in (say) August 2008 were totally on paper, a matter of promises and expectations. (Fictitious capital got way beyond the real thing.) If a significant of the people involved in these markets were to simultaneously try to realize the paper value, they wouldn't be able to. In fact, that's part of what has happened, part of the turning point in these markets. > Was the economy in equilibrium before the crash or not? the economy has never ever been in equilibrium. Maybe some individual markets, but not he economy as a whole. It's always changing, as part of a constant interplay of equilibrating (homeostatic) and disequilibrating forces. (The latter include Minsky's story of how "normal" and seemingly-stable growth of finance can and does undermine itself, becoming increasingly fragile. Marx had a similar story for the "real" economy, but he never developed it completely.) -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
