Jim Devine wrote:
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.
I'm not asking for any searches. It would just be nice to know your
definition of wealth, so we could perhaps clear the matter up.
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.)
Do you know of a theory, Marxian or otherwise, able to approach
(calculate) the size of the "real thing"; so as to make a distinction as
to what is what? Or is it an "I know it when I see it" 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.
Agree
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.)
Nothing to disagree with here either.
John V
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