Credit Where Credit Is Due

[Errol]

Schiff's latest article

In trying to perpetuate the illusion, the government wants to revive the spending spree that has led us to this disaster. But how can such actions possibly help? How will more debt improve the economy? Wouldn't our circumstances be vastly improved if we paid off some of our debts and replenished our savings? Wouldn't we be in better shape if instead of buying more stuff we concentrated on producing it?

The unpleasant reality is that years of bad monetary and fiscal policy have over encumbered our economy with debt and undermined our industrial capacity. The sooner we can begin to repair the damages, the sooner we can right the ship. If instead we merely administer more of the same, the ship will sink in a sea of inflation.

[The Spaniard]

"Credit is indeed vital to an economy, but it does not constitute an economy within itself."

Succinct and devastatingly accurate.

[Errol]

He'll be made to go on a little walk somewhere. Soon.

[ChadzKhan]

He'll be made to go on a little walk somewhere. Soon.

No that's the British way, in America he will just be linked to Al-Qaida and sent to Guantanamo!

[AwaitingFairPrices]

Schiff's latest article

Wouldn't we be in better shape if instead of buying more stuff we concentrated on producing it?

I agree with most of what Peter says, but statement like this are a great ideology, but totally unworkable in the global mess we live it.

Yes the statement is true in isolation, but if we(and therefore everyone else can do the same) stop buying more stuff and we concentrate on producing it(and everyone can do the same) then we do not end up in a better place as there is no-one to buy all the stuff we(and everyone else) has concentrated on producing. Think Honda...and the necessary complete shutdown in manufacturing that ensues once the demand/supply situation is worked out.

A serious commitement to this policy would lead to economic implosion, deflation and depression of untold magnitude.

We might get that anyway the way things are going, but it would be one sure way to speed up the process.

[Bloo Loo]

I agree with most of what Peter says, but statement like this are a great ideology, but totally unworkable in the global mess we live it.

Yes the statement is true in isolation, but if we(and therefore everyone else can do the same) stop buying more stuff and we concentrate on producing it(and everyone can do the same) then we do not end up in a better place as there is no-one to buy all the stuff we(and everyone else) has concentrated on producing. Think Honda...and the necessary complete shutdown in manufacturing that ensues once the demand/supply situation is worked out.

A serious commitement to this policy would lead to economic implosion, deflation and depression of untold magnitude.

We might get that anyway the way things are going, but it would be one sure way to speed up the process.

exactly correct. the car makers are a case in point. they are concentrating on producing, but no-one wants to buy.

Ok, the car companies have many unhealthy legacies like pensions and other huge debt, but the problem has been brought to a head by the lack of sales.

[LuckyOne]

I agree with most of what Peter says, but statement like this are a great ideology, but totally unworkable in the global mess we live it.

Yes the statement is true in isolation, but if we(and therefore everyone else can do the same) stop buying more stuff and we concentrate on producing it(and everyone can do the same) then we do not end up in a better place as there is no-one to buy all the stuff we(and everyone else) has concentrated on producing. Think Honda...and the necessary complete shutdown in manufacturing that ensues once the demand/supply situation is worked out.

A serious commitement to this policy would lead to economic implosion, deflation and depression of untold magnitude.

We might get that anyway the way things are going, but it would be one sure way to speed up the process.

History might not repeat exactly but it certainly rhymes .... Not sure who siad that but we certainly seem to be dealing with the current depression in the same way that we did in 1929. We are starting to talk about erecting trade barriers, Brown is implying that we should erect barriers to the free flow of capital, Obama is taling about revisiting all the free trade agreements that the US have signed .....

Bernanke might have learned the monetary lessons from the First World Depression. It seems that the populists are doomed to repeat many of the trade policy errors of the First World Depression in the Second World Depression.

[Dr Renter]

I agree with most of what Peter says, but statement like this are a great ideology, but totally unworkable in the global mess we live it.

Yes the statement is true in isolation, but if we(and therefore everyone else can do the same) stop buying more stuff and we concentrate on producing it(and everyone can do the same) then we do not end up in a better place as there is no-one to buy all the stuff we(and everyone else) has concentrated on producing. Think Honda...and the necessary complete shutdown in manufacturing that ensues once the demand/supply situation is worked out.

A serious commitement to this policy would lead to economic implosion, deflation and depression of untold magnitude.

We might get that anyway the way things are going, but it would be one sure way to speed up the process.

I assume he is referring to producing stuff that is needed within your own country, rather than having to import it.

[FLASH_2007]

exactly correct. the car makers are a case in point. they are concentrating on producing, but no-one wants to buy.

Ok, the car companies have many unhealthy legacies like pensions and other huge debt, but the problem has been brought to a head by the lack of sales.

Schiff is correct. The problem with the car companies is they are targetting their products at the wrong customers, western consumers who are broke and don't need to buy any more cars. The people who should be buying the cars are Asians who have the savings but because their currencies are massively undervalued due to pegging them to the dollar to sell us goods they can't but them either. The only option is for the Asians to revalue their currencies and start consuming their fair share of the goods.

[LuckyOne]

I assume he is referring to producing stuff that is needed within your own country, rather than having to import it.

Or even producing stuff that the world needs that you can make better than anyone else and exporting it ......

Not much chance of that happening here is there ??

[Bloo Loo]

Schiff is correct. The problem with the car companies is they are targetting their products at the wrong customers, western consumers who are broke and don't need to buy any more cars. The people who should be buying the cars are Asians who have the savings but because their currencies are massively undervalued due to pegging them to the dollar to sell us goods they can't but them either. The only option is for the Asians to revalue their currencies and start consuming their fair share of the goods.

Asians have car industry already, dontchaknow.

Toyota, Singyong, Nissan, Lexus and so on

[FLASH_2007]

Asians have car industry already, dontchaknow.

Toyota, Singyong, Nissan, Lexus and so on

Yes but i'm the one driving the Lexus not them. Westerners can't afford any more cars, Asians could buy them if they revalued their currency but instead it looks like nobody will buy them.

[Bloo Loo]

Yes but i'm the one driving the Lexus not them. Westerners can't afford any more cars, Asians could buy them if they revalued their currency but instead it looks like nobody will buy them.

Me too, but this is a global recession, so most economies and their individual players are worried about their futures and are holding back.

I bet also your Lexus is considerably better built than anything GM are putting out to.

[FLASH_2007]

I bet also your Lexus is considerably better built than anything GM are putting out to.

Yes GM have a long way to go to keep up with the competition.

[Bloo Loo]

Yes GM have a long way to go to keep up with the competition.

so there is one issue they need to address. quality/price. My Toyota is 5.5 years old, its done 70k and when I clean it, its like new. specially when on a rare occasion it needs new tyres on the front, everything is light and easy again.

Western Companies need to compete with products people want.

If nobody needs any more ships, as they dont, making more wont help anybody, till the recession ends and that will be part helped by the wearing out of currently in use goods.