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Countries Could Go Bankrupt

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I went to the Hay on Wye Festival yesterday. One of the talks there was by Niall Ferguson who gave a pretty gloomy, but entertaining talk on the economic future:

Major western countries could go bankrupt in the wake of the current financial crisis, one of Britain's most celebrated historians has warned, predicting riots in major cities by the end of the year. According to the Harvard professor Niall Ferguson, the economists charged with navigating the credit crisis are ill-qualified to analyse the current situation – since they lack the overview of historians such as himself.

He was particularly scathing about the role of economists in fomenting and not seeing the current crisis:

He also attacked economists' claims to understand the crisis. "There are economic professors in American universities who think they are the masters of the universe – but they didn't have any historical knowledge. I have never believed that markets are self-correcting. No historian could."

And:

The Glaswegian academic also noted that "the Scots have played a less than glorious role in financial history". Aside from the prime minister and former chancellor Gordon Brown, he also adumbrated the role of the "excessively leveraged" Bank of Scotland and John Law, the 18th-century economist who caused the French economy to collapse in 1719-20 as a result of the so-called Mississippi Bubble.

The full article, worth a read, can be found at:

http://www.guardian.co.uk/books/2009/may/2...-niall-ferguson

One prediction, not in the article, that Ferguson made, was that he expects Britain's triple A credit rating to be downgraded to an AA.

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I went to the Hay on Wye Festival yesterday. One of the talks there was by Niall Ferguson who gave a pretty gloomy, but entertaining talk on the economic future:

He was particularly scathing about the role of economists in fomenting and not seeing the current crisis:

And:

The full article, worth a read, can be found at:

http://www.guardian.co.uk/books/2009/may/2...-niall-ferguson

One prediction, not in the article, that Ferguson made, was that he expects Britain's triple A credit rating to be downgraded to an AA.

David Starkey was on This Week recently saying something very similar, i.e. that historians are now seeing very different patterns to economists. He was also suggesting that the trends he was seeing are similar to those that have led to civil unrest in the past.

On another (more cheery) note, what a lovely word "adumbrated" is!

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Fortunately our great leader is an historian. What luck!

Edited by Red Kharma

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Guest absolutezero

Economists like to pretend that economics is a science. It isn't.

Chemistry and physics are real sciences.

Economics is no more of a science than reading tea leaves.

The words of an economist should be trusted no more than those of a Labour politician.

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Yes, a good article.

I liked his metaphor for the battle between inflation and deflation. It sort of reflects the debate on the subject that has raged on HPC over the last year or two. I'm with Niall on this one: I don't know which side will win - even having read pages and pages of argument and counter-argument here.

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There's a reason behind Ferguson's criticism of economists.

On April 30 he participated in a symposium on the economic crisis and alongside him were former senator Bill Bradley, Paul Krugman, Nouriel Roubini, George Soros, and Robin Wells.

Ferguson dared to criticise the public spending policies that are currently being pursued and in a later round-table exchange he was booed by the audience when he suggested that the U.S. was going down the Soviet route. Since then the liberal economics establishment has attacked him fiercely. He's being painted as a right-wing kook who fundamentally doesn't understand how to deal with such a crisis.

It's very difficult at the moment for non-economists to publicly express any criticism of either Obama or established economics dogma and not be ridiculed for it.

Debate excerpts

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He's right, economists almost always have no historical awareness.

It's why they are useless in black swan territory

But don't get carried away by the recent output from these two celebrity historians; exponents of the only true science; hindsight.

Ferguson's programme on the Ascent of Money exhibited a lack of theoretical context explaining the nature of money itself and the underlying weakness of fiat money systems. On the Moral Maze Sarkey was generally an uncritical adherent of free market/liberal economics.

I have both an Economics and Economic History background so apologies for the lapse into bitchiness.

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Economists like to pretend that economics is a science. It isn't.

Chemistry and physics are real sciences.

Economics is no more of a science than reading tea leaves.

The words of an economist should be trusted no more than those of a Labour politician.

Teachers like to pretend that teaching is a profession. It isn't.

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You get riots in major cities every year, the prediction of AA for the UK is bold though.

Not really, Japan was downgraded to AA some years back.

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Guest absolutezero
Teachers like to pretend that teaching is a profession. It isn't.

Sadly, it was a number of years ago. <_<

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But don't get carried away by the recent output from these two celebrity historians; exponents of the only true science; hindsight.

Ferguson's programme on the Ascent of Money exhibited a lack of theoretical context explaining the nature of money itself and the underlying weakness of fiat money systems. On the Moral Maze Sarkey was generally an uncritical adherent of free market/liberal economics.

I have both an Economics and Economic History background so apologies for the lapse into bitchiness.

No one should be under the illusion that Ferguson was not another bamboozled groupie of the "Washington Consensus" etc.

A welcome, powerful voice but not one free from 20-20 hindsight and an adapted position to fit the facts. It's frightening that even one so learned largely fell for "it"; Roubini he aint.

Witness the hurried re-edit of the TV tie-in to the Ascent of Money book reviewed below that toned down the bullishness:

Instead of an inquiring history, what we are left with is a reverential panorama of neoliberal capitalism. Above all, there is little investigation of the losers in the zero-sum game of money's ascent. The only possible cloud Ferguson spies on the future horizon of finance is democratic accountability, with its 'rules and regulations [that] can make previously good traits suddenly disadvantageous'. Quite where the Bear Stearns bail out and bank nationalisation fit into the picture is unclear.

http://www.guardian.co.uk/books/2008/nov/0...-niall-ferguson

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Fortunately our great leader is an historian. What luck!

Indeed his PhD was on the history of the labour party in scotland in the period to 1939, so he did extensive work on the causes of the crash of 1929 and how it impacted on the UK. On no, sorry, my mistake, it was the labour party in scotland until 1929, so he didn't study the crash, and has absolutely no idea about how to deal with it.

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But don't get carried away by the recent output from these two celebrity historians; exponents of the only true science; hindsight.

Oh don't worry, I'm not a Ferguson fan. His point about the lack of historical awareness is very well made though (and applies to most people of course, not just most economists).

(edit for spelling)

Edited by mym

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What's the Hay-On-Wye festival like, 1929Crash? I always had the impression it was crowded, snobby, and difficult to get into - but am I completely wrong?

It may be crowded but it's not snobby. You have a choice of authors and topics. Over the years, I've heard excellent talks from comedy writers like Galton and Simpson, the late Miles Kington (author of Parler Franglais) as well as contributions from historians like Andrew Roberts and Simon Sebag Montefiore, who depite his grandiloquent name, is an excellent speaker and historian, and spoke for an hour without notes on the subject of Young Stalin.

I had the privilege a few years back of hearing the Russian journalist Anna Politkovskaya, later murdered by Putin's crowd. I've been to science talks from folk like the Astronomer Royal, Martin Rees, and yesterday there was a fascinating presentation by Michio Kaku whose new book is called "The Physics of Impossibility", dealing with teleportaion, fusion power, invisibility and travel to the stars. And then there's the politicians - Jimmy Carter last year, and Paddy Ashdown on a number of occasions.

And Hay is a lovely town, especially if you like books. Loads of bookshops.

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