George And Wolf

[Ponzi]

It's easy why,

[sharpe]

It's easy why,

This is spot on - though difficult to think of the target market for this video.

Was Keynes saying what the establishment wanted to hear?

[R K]

There seems to be a sheep like behaviour to these things.

Everybody sucked up securitisation as the panacea to glow ball risk.

Only 12 months ago Gordon had saved the world and the G20 were promoting joint stimulus and slapping each other on the back.

Today (post Bilderberger) they're all trying to outdo each other's fiscal austerity budgets.

One can't help but wonder if it wouldn't be wise for at least 1 or 2 of these countries to wait a year or two and see what happens to the others.

If the Greek, Irish, Spanish austerity 'works' then let's try some of that.

But the way these people all bend with the wind together like a flock of starlings is deeply worrying. It has proved to be a bad idea in the past, so there's no reason why it should suddenly become a good idea for the future.

[Injin]

There seems to be a sheep like behaviour to these things.

Everybody sucked up securitisation as the panacea to glow ball risk.

Only 12 months ago Gordon had saved the world and the G20 were promoting joint stimulus and slapping each other on the back.

Today (post Bilderberger) they're all trying to outdo each other's fiscal austerity budgets.

One can't help but wonder if it wouldn't be wise for at least 1 or 2 of these countries to wait a year or two and see what happens to the others.

If the Greek, Irish, Spanish austerity 'works' then let's try some of that.

But the way these people all bend with the wind together like a flock of starlings is deeply worrying. It has proved to be a bad idea in the past, so there's no reason why it should suddenly become a good idea for the future.

From a politicians point of view, ideas and words are stuff you incant like a spell.

Make the right mouth noises and people give you stuff and do what you want. They are trying the same tactic in the economic field, a world of growing crops and moving things around the globe. We might as well have druids praying to the moon.

[Tired of Waiting]

Ta da! The magic wand. "If you are going to slow down debt financed consumption then at least generate inflation so people can keep themselves busy speculating"

"We must spend spend spend no matter what. Who cares if we haven't got the money."

"If you don't keep ruining us we will vote Brown back in and we will never forgive you"

"But let's just do it tomorrow hey, not today"

"Spend spend spend!"

"Let people spend and enjoy themselves, anything else would be cruel!"

I am astonished by those recent attacks on Western governments by a handful of Keynesian economists. They are often visceral, sometimes personal, usually no better than doom mongerers. Let us not forget that these are the guys that advised us straight into this crisis to begin with.

Now for the TFH bit:

I've noticed that Wolf and Krugman are two of those extremely virulent critics of western governments that promote austerity. Both use a language and a tone of voice that is way above their pay grade. Weren't they both at this year's Bildeberg?

Good post.

( Actually "pseudo"Keynesian, as the man advocated counter-cyclical measures: budget surpluses during good times, and deficits during bad times. You can't do just the deficit part. )

I think Wolf's main underlining disagreement with the new government+Mervyn is here:

"If it is believable that monetary policy will work, on its own, even in today’s circumstances, well and good. But I, for one, doubt it."

Yes, the new government did talk to Mervyn King, and he confirmed that interest rates will be kept this low for longer, thanks to the faster deficit reduction. I am with the government here, and believe that this lower rate will be a more effective, sustainable support for the recovery, despite reduced gov. spending, than higher gov. spending + higher interest rates.

Let's see.

.

Edited June 12, 2010 by Tired of Waiting

[easy2012]

Russia had a real world problem which meant they couldn't.

She didn't have a problem about printing Ruble. If you read about the episode, it was plain just plain crazy because Russian MP were on holiday, dislike

the Yelstin appointed Government and simply refused to authorise the government to raise its debt limit. if US congress behaves in this way, US

would have been busted several times over (US keep increasing the debt ceiling every year).

[Si1]

Ken Clarke and Vince Cable seem hellbent on expanding and promoting business - maybe they ARE heeding the same sentiment as Wolf?

[_w_]

the Austerity is to pay for the printing.

I don;t think anyone can pay for the printing.

The 'Austerity' which is 'austerity' in name only is to avoid a breakdown in confidence and a run on the currency while they print and spend.

[_w_]

It's easy why,

Brilliant

[_w_]

She didn't have a problem about printing Ruble. If you read about the episode, it was plain just plain crazy because Russian MP were on holiday, dislike

the Yelstin appointed Government and simply refused to authorise the government to raise its debt limit. if US congress behaves in this way, US

would have been busted several times over (US keep increasing the debt ceiling every year).

Have you got a link to a good piece about it? I wrongly assumed their debt was foreign currency denominated, I'd like to understand exactly how they ended up defaulting.

[wonderpup]

The reality is that demand can only be restored by restoring the purchasing power of the bottom sectors of society, and that includes the chavs and chinese foxonn workers, and by a better balancing of purchasing power between east/west, north/south

Isn't the ongoing effort worldwide designed in part to prevent this? Bailing out the banks, suppressing strikes in china ect. The aim seems to be to maintain the current arrangement where most the wealth is in the hands of a small number of people.

In that sense the more they succeed the more they fail as demand is further squeezed out by 'austerity'.

They seem to have overlooked the first principle of the parasite- do not kill the host.

[easy2012]

Have you got a link to a good piece about it? I wrongly assumed their debt was foreign currency denominated, I'd like to understand exactly how they ended up defaulting.

_w_ : Apologise for this, I read this from the book When the Genius fail few yeras back (p141) but as I dig the book out, I am afraid I got some of the facts mixed up. I thought the default was domestic (and you thought it was external), actualy it was BOTH and was triggered by the Duma rejecting IMF reforms and then go on holiday.

Another account of the event:

http://revolution.allbest.ru/languages/00093223_0.html

A online event was here: http://www.pbs.org/wgbh/pages/frontline/shows/crash/etc/russia.html

[Injin]

She didn't have a problem about printing Ruble. If you read about the episode, it was plain just plain crazy because Russian MP were on holiday, dislike

the Yelstin appointed Government and simply refused to authorise the government to raise its debt limit. if US congress behaves in this way, US

would have been busted several times over (US keep increasing the debt ceiling every year).

That's what I said - the russians could have printed but a real world problem (no MP's available to vote due to them being scattered all over the place on holiday) stopped them doing so.

[_w_]

_w_ : Apologise for this, I read this from the book When the Genius fail few yeras back (p141) but as I dig the book out, I am afraid I got some of the facts mixed up. I thought the default was domestic (and you thought it was external), actualy it was BOTH and was triggered by the Duma rejecting IMF reforms and then go on holiday.

Another account of the event:

http://revolution.al...00093223_0.html

A online event was here: http://www.pbs.org/w...etc/russia.html

Thanks for that, it gives me a good place to start.

From what I read the debts were rubble denominated but the CB couldn't print because of the currency peg and perhaps more importantly all rubble debts were covered by dollar forward contracts issued by Russian banks. It sounds like should the CB print, the rubble would collapse thus busting the oligarchs' banks or it didn't and the government had to default. Something bad was going to happen either way.

It's complicated and all information is probably not available. From what I know of the Russians I am sure they would have readily made their govt default for the sake of some extra money (via shorts) in the markets or for saving their skin on those forward contracts. Either way it's interesting and worthy of further study.

Thanks for the links.