'bob Janjuah On Brewing Popular Anger At The Failure Of Keynesianism'

[R K]

Yep, we should have let RBS fail.

[interestrateripoff]

"Bob blasts the lunatic response of resolving debt problems with more debt"

Now if your going to have this statement at least be truthful that if indeed we do have a debt based monetary system then the only option to resolving a debt crisis is to issue more new debt as money. There is no other alternative.

[Errol]

Even now gold is a bargain. It's going to unimaginable levels in the coming years.

Edit - just hit another all-time high in Euros as well.

Edited June 4, 2010 by Errol

[oracle]

http://www.zerohedge.com/article/bob-janjuah-brewing-popular-anger-failure-keynesianism

'If you are like us, you just can't get enough of Bob. The only economist from RBS whose opinions are worth reading, who will never make any financial pundit lists (especially not ones that have Jim Cramer on them), due to his unpleasant habit of being too "truthy", shares 17 minutes of his latest perspectives in this CNBC Europe interview. Not surprisingly, Bob blasts the lunatic response of resolving debt problems with more debt. This time he also shares some additional political perspectives: “Having elected people who said everything would be all right, ultimately the US and UK had to elect Reagan and Thatcher to get us back on track” and eventually angry voters in the developed world will shift to the far right. Some more US-centric perspectives: “The US mid-terms will be crucial. We will see a shift to the right as the Tea Party movement demands change. "There are 220 million people in middle America who are angry and believe stimulus spending has been wasted on vested interest and the banks that they believe got us into this mess. For all the talk of positive growth in America, those outside of LA and New York are hurting and want cuts in government spending, not more borrowing and spending.”

And just like all other skeptics, Bob sees deflation in the near term...

“Over the next 6 months we will see private sector deflation pushing 10-year yields down to 2 percent. This will see the policymakers mistakenly attempt to kick-start the economy and market with a global quantitative easing program worth between $10 and $15 trillion dollars."

... followed by inflation: his advice is to buy gold, safe, boring megacaps with no debt, and have more Asia-centric exposure.

His conclusion: “We are seeing a repeat of 2007 and 2008 with the inter-bank market in trouble, people are ignoring this."'

there's a vid on the article very good indeed,tried to embed it,not very technical.

uber uber bearish.follws on nicely from hugh hendry's 'panic' comment.

people have,by means of modern media,realised that hair-of-the-dog-o-nomics leaves you with alcoholism.

the PTB want to keep the party going.

the little guy in the street says,"no thanks mate.....had enough"

the PTB keep saying....oh go on,it's just one more short for the road.

...just one more.......it's only wafer thin!

[Timak]

The problem is they all want Austrian economics in the good times (how dare you build up surpluses it is OUR money, give it back to us in tax cuts) and Keynesian economics in recessions (cut spending now? are you mad? stagnation etc etc)

[R K]

There's plenty of global Keynsian surpluses.

They're just in China.

[plummet expert]

The problem is they all want Austrian economics in the good times (how dare you build up surpluses it is OUR money, give it back to us in tax cuts) and Keynesian economics in recessions (cut spending now? are you mad? stagnation etc etc)

Correct. That's why we need Leaders and not focus group followers like Blair with his Brownborrowspendnomics-no more boom and bust 'lie'. - "You cannot spend your way out of recession" (1997 Labour conference speech) . It's the only correct statement he ever made. Sadly the only way out is a crash in the markets and a full scale recession to have all values revisited and brought back to base. It will happen and sooner than some think. The Volatility index has risen 100% in the last 6 weeks. Check it out - it's VXX ticker. It is has been about 3 to 4 times current level in the last 2.5 years. And so it will be again.

[munro]

Correct. That's why we need Leaders and not focus group followers like Blair with his Brownborrowspendnomics-no more boom and bust 'lie'. - "You cannot spend your way out of recession" (1997 Labour conference speech) . It's the only correct statement he ever made. Sadly the only way out is a crash in the markets and a full scale recession to have all values revisited and brought back to base. It will happen and sooner than some think. The Volatility index has risen 100% in the last 6 weeks. Check it out - it's VXX ticker. It is has been about 3 to 4 times current level in the last 2.5 years. And so it will be again.

Did Blair really say that? Because if he did, then he ripped it off from Callaghan - http://www.iwise.com/8HxtM All we've ever had out of Blair is self-aggrandising and self-enriching bullsh!te. As for the odious Cherie, well, they were made for each other.

[The Masked Tulip]

The thread title would be a great name for a pint of real ale.

[aa3]

My feeling is they just haven't done keynsianism on anywhere near the level needed. My estimate was the UK needs 5 years of £450 billion deficits, funded by QE. So far we got 1 year of £175 billion of QE, then stopped. Which is more than anyone imagined except a few people like me.

My estimate for the USA was it needs 5 years of 4.5 trillion deficits funded by mainly by QE. It got 1 year of a 1.75 trillion deficit, with 1.2 trillion of QE.. 900 billion of the QE went to buying mortgage bonds and 300 billion buying national bonds.

So they sort of tried a half assed version then already trying to claim its a failure. Meanwhile the USA and UK went into the whole situation in a lot worse shape than Europe.. but Europe did hardly any QE, and now the EU is looking far weaker than the UK and USA.

[Alan B'Stard MP]

My feeling is they just haven't done keynsianism on anywhere near the level needed. My estimate was the UK needs 5 years of £450 billion deficits, funded by QE. So far we got 1 year of £175 billion of QE, then stopped. Which is more than anyone imagined except a few people like me.

My estimate for the USA was it needs 5 years of 4.5 trillion deficits funded by mainly by QE. It got 1 year of a 1.75 trillion deficit, with 1.2 trillion of QE.. 900 billion of the QE went to buying mortgage bonds and 300 billion buying national bonds.

So they sort of tried a half assed version then already trying to claim its a failure. Meanwhile the USA and UK went into the whole situation in a lot worse shape than Europe.. but Europe did hardly any QE, and now the EU is looking far weaker than the UK and USA.

You're one scary individual. Thank god you're posting on an anonymous internet forum and not running the country........you're not running the country are you?

Edited June 5, 2010 by Alan B'Stard MP

[aa3]

You're one scary individual. Thank god you're posting on an anonymous internet forum and not running the country........you're not running the country are you?

Not yet, just planning to run the whole country.

[OnlyMe]

Not yet, just planning to run the whole country.

You missed out in "i" in run.

[Georgia O'Keeffe]

Not yet, just planning to run the whole country.

let me know when it happens, so i can advise all my relatives to move to baghdad

[aa3]

Basically as we can see from the US jobs report the private sector led recovery is not happening. To me its just funny that they thought the private sector would go on some sort of hiring spree at this point.

If the state doesn't step in with a huge wall of money, who is? Imagine you are the ceo of a company. Your orders are down, average selling price is falling.. you have no choice but to downsize and reduce compensation.

[LJAR]

Basically as we can see from the US jobs report the private sector led recovery is not happening. To me its just funny that they thought the private sector would go on some sort of hiring spree at this point.

If the state doesn't step in with a huge wall of money, who is? Imagine you are the ceo of a company. Your orders are down, average selling price is falling.. you have no choice but to downsize and reduce compensation.

The one thing that inflation does is rob ordinary cash savers to pay those who have massive debts, or those who own assets. What we need is for those with excess debt to go bankrupt and those with savings to use them for investment.

The thing is that the public sector can't build build an economy by borrowing money, because at some point the money has to be paid back (unless we default). Not every company is contracting, some of them are and they should get smaller. Those that are growing will hire more people. That may mean increasing unemployment for a while, that will mean falling wages and falling profits. We may all get poorer, but just increasing the debt that caused the problem will not solve it.

The bigger problem of public pension and benefits and welfare liabilities will not go away even if you have a £1Tn program of QE. So in the long run it will achieve nothing.

[Lone_Twin]

You're one scary individual. Thank god you're posting on an anonymous internet forum and not running the country........you're not running the country are you?

I know we disagree regularly Alan but at least you're sane. This idea that we should stuff the economy with printed worthless money is pure madness.

[aa3]

The one thing that inflation does is rob ordinary cash savers to pay those who have massive debts, or those who own assets. What we need is for those with excess debt to go bankrupt and those with savings to use them for investment.

The thing is that the public sector can't build build an economy by borrowing money, because at some point the money has to be paid back (unless we default). Not every company is contracting, some of them are and they should get smaller. Those that are growing will hire more people. That may mean increasing unemployment for a while, that will mean falling wages and falling profits. We may all get poorer, but just increasing the debt that caused the problem will not solve it.

The bigger problem of public pension and benefits and welfare liabilities will not go away even if you have a £1Tn program of QE. So in the long run it will achieve nothing.

Ya but its got to be like 99% of companies cutting back. I understand if some companies were contracting but others growing, to let the market work itself out, and then let the growing companies drive the recovery. But if nearly every company is contracting there is no driver.

We also have a system where the other side of savings is debt. So if we allow the debt to be defaulted on, we also have to let the savings vanish. Imagine if they had let RBS fail, and only insured the 90% of the first £35,000 pounds. And the rest vanished. Savers would have gotten their head taken off, but it would have cleared the system of this debt.

Part of the problem is we have savers who want a return on investment, but a government guaruntee that their investment cannot be lost.

[babesagainstmachines]

Ya but its got to be like 99% of companies cutting back. I understand if some companies were contracting but others growing, to let the market work itself out, and then let the growing companies drive the recovery. But if nearly every company is contracting there is no driver.

We also have a system where the other side of savings is debt. So if we allow the debt to be defaulted on, we also have to let the savings vanish. Imagine if they had let RBS fail, and only insured the 90% of the first £35,000 pounds. And the rest vanished. Savers would have gotten their head taken off, but it would have cleared the system of this debt.

Part of the problem is we have savers who want a return on investment, but a government guaruntee that their investment cannot be lost.

I'm intrigued to know who you think should get the stimulus cash in your New Zimbabwe

[R K]

Ya but its got to be like 99% of companies cutting back. I understand if some companies were contracting but others growing, to let the market work itself out, and then let the growing companies drive the recovery. But if nearly every company is contracting there is no driver.

We also have a system where the other side of savings is debt. So if we allow the debt to be defaulted on, we also have to let the savings vanish. Imagine if they had let RBS fail, and only insured the 90% of the first £35,000 pounds. And the rest vanished. Savers would have gotten their head taken off, but it would have cleared the system of this debt.

Part of the problem is we have savers who want a return on investment, but a government guaruntee that their investment cannot be lost.

I can't remember the precise figures, perhaps you have them, but I think something like 98% of savers would have been protected 100%. You could probably extend that to include private individuals with larger amounts for specific purposes for a little more.

In other words 98% of people would not have lost anything. 1 or 2% would have lost nearly everything.

I seem to recall it was at that point Richard Branson threated Lord Myners to save the banking system.

i.e. The 'poor' 98% have been forced to save the 'rich' 2%.

What probably should have happened is the rich 2% lost all their assets and then the poor 98% competed for them.

But as we know the governments work for the 2% rather than the 98%.

[Ash4781]

Brown did his best to spread the word!

[wonderpup]

I can't remember the precise figures, perhaps you have them, but I think something like 98% of savers would have been protected 100%. You could probably extend that to include private individuals with larger amounts for specific purposes for a little more.

In other words 98% of people would not have lost anything. 1 or 2% would have lost nearly everything.

I seem to recall it was at that point Richard Branson threated Lord Myners to save the banking system.

i.e. The 'poor' 98% have been forced to save the 'rich' 2%.

What probably should have happened is the rich 2% lost all their assets and then the poor 98% competed for them.

But as we know the governments work for the 2% rather than the 98%

The problem being that the the 2% have done such a good job extracting the wealth in the previous two decades- in part by loading more debt on to the rest of us- that the 98% can't afford to bail them out anyway.

In trying to preserve a handful of wealthy individuals they will bring down the whole thing.

[Northwest Smith]

I can't remember the precise figures, perhaps you have them, but I think something like 98% of savers would have been protected 100%. You could probably extend that to include private individuals with larger amounts for specific purposes for a little more.

At least the savers would have to think about who they are lending their money to. Northern Rock was high risk low return but people still gave them their money and expected it back for some reason.

[stormymonday_2011]

Well there may be 'Popular Anger' but I doubt that is directed at Keynesianism since I expect that 99% of people don't have a clue what it is including many financial pundits.

Edited June 5, 2010 by realcrookswearsuits

[aa3]

I'm intrigued to know who you think should get the stimulus cash in your New Zimbabwe

I argue it should be given to each citizen equally. A dividend for being a citizen, which I think would also foster a real spirit of 'we are in this together' for the nation. Instead of every man for himself.

£450 billion / the number of adults in Britain is nearing £10,000 pounds each. Even the £175 billion in QE last year would have been £3,800 pounds per adult citizen. Which would have been a cracking stimulus.

Of course we gave it to the rich and a few public sector stipend people.