Carney warns about popular disillusion with capitalism

[Blod]

2 hours ago, TheCountOfNowhere said:

"As far as I can see, every since Carnery took over every turn by the BoE has been to pump up prices...whilst pretending to be everyone's friend and promising to sort it out. There was the analogy of Carney or the BoE being an unreliable boyfriend, the analogy should have been a boyfriend hooked on drugs, regularly beating his bint and ultimately robbing her blind and leaving her with nothing.. "

His drug of choice, debt.

I'll listen to Carney when he starts cold turkey with the first interest rate rise. 

[Dorkins]

Are the Establishment finally ready to admit that living standards are falling for most working age people?

[Dorkins]

59 minutes ago, Riedquat said:

Even taking at face value (hah!) he appears to be treating the current system as something that cannot be questioned, fixed, or replaced.

True, he's also accusing people unhappy with the status quo of being anti-free market. It's a clever bit of framing given that he is one of the biggest price fixers on the planet.

[iamnumerate]

2 minutes ago, Dorkins said:

Are the Establishment finally ready to admit that living standards are falling for most working age people?

They probably wouldn't be falling if it weren't for housing costs.   Of course housing costs are pretty important,if we had 50p flat screen TVs but no food then no one would say everything is fine.  Housing of course is not that bad but I am exaggerating to make a point.

[Assume The Opposite]

Sounds like more lip service, similar to May's speech in the City of London. Remember Carney is ex Goldman Sachs.

The banks in the City of London control 97% of the money supply with loans, and therefore control the economy. 

The establishment know we are rightly ******ed off and are probably hoping that a few soundbites will calm the plebs just enough. 

 

 

 

[Democorruptcy]

18 hours ago, Fully Detached said:

Right. So 98% of savers with more than 5k also "own" a house, so it doesn't matter that they aren't getting any money on their savings, because his policies have caused house prices to shoot up uncontrollably, and that's a really good thing.

The bloke's a ******ing ****. 

He said

"Just 2% of households have deposit holdings in excess of £5,000, [they have] few other financial assets, and don't own a home.

"So the vast majority of savers who might have lost some interest income from lower policy rates have stood to gain from increases in asset prices, particularly the recovery in house prices," he added."

I think you have taken his bait. How can he know which saver rents or owns? He could have just divided the number of households by the number of bank accounts with over 5k in. Won't lots of the 98% of households (it's not homeowners) without 5k be people who don't own a house i.e. renters? They don't have 5k savings because of the BoE's HPI pushing them into renting and reduced rates prevent them forming capital.

[winkie]

3 hours ago, Riedquat said:

Even taking at face value (hah!) he appears to be treating the current system as something that cannot be questioned, fixed, or replaced. It's one thing to acknowledge there are issues, try to find solutions, but stick with it in the mean time because no-one's yet come up with anything better, another to take a position of refusing to acknowledge that it's badly flawed and needs replacing. Even if the truth is "me and my mates do well out of it, screw the rest of you" at least try to look like you understand the problem if you feel you must open your mouth. That said it's always possible that as well as that we're dealing with one of those stupid people who think that the lack of a suitable solution to a problem means that there isn't a problem (ever had the "well what's your solution then?" type reply from one of those cretins if you point out an issue?)

My thoughts also......there is a solution, but not one I am prepared to take....was once one for you two for us, now if lucky one for you four for us.

[Fully Detached]

27 minutes ago, Democorruptcy said:

He said

"Just 2% of households have deposit holdings in excess of £5,000, [they have] few other financial assets, and don't own a home.

"So the vast majority of savers who might have lost some interest income from lower policy rates have stood to gain from increases in asset prices, particularly the recovery in house prices," he added."

I think you have taken his bait. How can he know which saver rents or owns? He could have just divided the number of households by the number of bank accounts with over 5k in. Won't lots of the 98% of households (it's not homeowners) without 5k be people who don't own a house i.e. renters? They don't have 5k savings because of the BoE's HPI pushing them into renting and reduced rates prevent them forming capital.

That's why I put "own" in inverted commas

[ebull]

3 hours ago, Blod said:

His drug of choice, debt.

I'll listen to Carney when he starts cold turkey with the first interest rate rise. 

 

1 hour ago, satch said:

Carney .... interest rate rise .... SYSTEM OVERLOAD SYSTEM OVERLOAD DOES NOT COMPUTE DOES NOT COMPUTE SYSTEM OVERLOAD

Never going to happen. Debt is still below what he managed to achieve in Canada so a long way to go yet to achieve the maximum debt target .... see Japan.

I agree it won't be voluntary cold turkey. Possible [next year? 2018?] is maybe blind panic in response to sustained rises by the Fed.

Since the US is at a very different place economically to anywhere in Europe including the UK having taken at least some of the punishment including at least a partial HPC post 2008, are they now ready to return rates successfully to normal rates of 4-5-6 %.,

This seems to me to be the most important question determining whether we get a HPC due to a new era of [historically] normal interest rates.

[Blod]

34 minutes ago, ebull said:

I agree it won't be voluntary cold turkey. Possible [next year? 2018?] is maybe blind panic in response to sustained rises by the Fed.

Since the US is at a very different place economically to anywhere in Europe including the UK having taken at least some of the punishment including at least a partial HPC post 2008, are they now ready to return rates successfully to normal rates of 4-5-6 %.,

This seems to me to be the most important question determining whether we get a HPC due to a new era of [historically] normal interest rates.

Yes, it's going to be panicked. My guess is he's going to retire/leave and let the next governor take the hit. You can imagine how whoever it is will be vilified and derided as the economy by then will collapse.   

[NuBrit]

Everyone's favourite former PM is also banging the drum.

http://www.zerohedge.com/news/2016-12-06/tony-blair-warns-perilous-times-fragile-western-democracies

[billybong]

^

Quote

Per the ......., in speaking to a group of business leaders at the No Labels conference, Blair noted being startled by the number of people "longing" for an authoritarian leader saying "it's amazing how many people you will find who will reference a style
of leadership of (Russian) President Putin in a positive way."

No - that's just more bare faced lies.

Just anyone who will keep a promise and do what they say.

Edited December 6, 2016 by billybong

[wonderpup]

Quote

What's missing from his speech is debt.

It's worse than that- debt is also missing from the economic models he and every other central bank uses to decide policy. Missing in the sense that debt is seen as a zero sum game between lenders and borrowers and so need not be regarded as having a significant role in macro economic decision making- and the same applies to banks and money, also viewed as mere 'intermediary' factors that can be ignored in the grand scheme of macro economic thinking.

So in a sense Carney is himself a symptom of a deeper malaise, which is the utter failure of current economic theory to actualy understand how the real economy works.

It wasn't just the global economy that failed in 2008, it was the intellectual foundations of the Economics profession. But despite this catastrophic failure nothing has really changed- the same theories are being taught, many of the same people are in post and almost no one lost their job or were even asked to explain- with the notable exception of the Queen who asked the LSE why the crisis had not been forseen.

Their reply?

"In summary, Your Majesty," they conclude, "the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole."

So the crisis was caused by "Systemic risk???" You could not make this sh*t up- the people who were supposed to be the most systemically aware were apparently so focused on the detail they missed the big picture-  that is the explination they gave for the failure an entire historical discipline that had for decades claimed to be engaging in rigorous scientific study while in reality was involved in an epic orgy of naval gazing in which the notion of empirical research was nowhere to be seen.

 Carney is therefore worse than useless- he is positively dangerous becase he is armed with a toolkit designed to service and repair an economy that exists only in the textbooks of the profession and nowhere else- an imaginary realm in which the most improbable ideas are piled atop each other to reach dizzying hights of absurdity like the ever popular 'theory of Ricardian equivalence'

Quote

The Ricardian equivalence proposition (also known as the Ricardo–De Viti–Barro equivalence theorem[1]) is an economic hypothesis holding that consumers are forward looking and so internalize the government's budget constraint when making their consumption decisions.

In english this translates into the idea that  if you find out that the govenment is planning to increase deficit spending in the future you then work out that this may translate into higher taxes for you in that future and as a result you will spend less money today.

There's nothing wrong with the logic here- In a society composed of Star Trek Vulcans this idea might have some validity. The problem is that in the real world people do not base their decison to buy a new fridge on the future bond issuance policies of the Treasury- that never actually happens except in the wacky world of economic theory.

And it gets worse;

Quote

 

In 1974, Robert J. Barro provided some theoretical foundation for Ricardo's hesitant speculation[4] (apparently in ignorance of Ricardo's earlier notion and De Viti's subsequent extensions).[1][5][6] Barro's model assumed the following:

 families act as infinitely lived dynasties because of intergenerational altruism[7]

 

In english this translates into the idea that not only are people basing their decisions to either save or consume in the present on the future of goverment funding polices but they are also factoring into this decision the long term impact on their family as a dynastic continuity extending into an infinite future.

WTF??? Who actually thinks like this? Well according to economic theory we all think like this.

So to the degree that Carney's skill set is a product of this kind of nonsensical thinking it's hardly surprising that he does not have a clue what is going on in the real world- because the real world is not his domain of expertise.

[wonderpup]

Quote

Per the ......., in speaking to a group of business leaders at the No Labels conference, Blair noted being startled by the number of people "longing" for an authoritarian leader saying "it's amazing how many people you will find who will reference a style
of leadership of (Russian) President Putin in a positive way."

The same Tony Blair who has made it his mission to prevent the democratic outcome of the Brexit referendum? Tony Blair is to Democracy what Leprosy is to skin care.

[GeordieAndy]

Usually when those at the top start sneaking in some home truths amongst their spin there's something afoot... 

Edited December 6, 2016 by GeordieAndy
clarity

[TheCountOfNowhere]

3 hours ago, Democorruptcy said:

He said

"Just 2% of households have deposit holdings in excess of £5,000, [they have] few other financial assets, and don't own a home.

"So the vast majority of savers who might have lost some interest income from lower policy rates have stood to gain from increases in asset prices, particularly the recovery in house prices," he added."

I think you have taken his bait. How can he know which saver rents or owns? He could have just divided the number of households by the number of bank accounts with over 5k in. Won't lots of the 98% of households (it's not homeowners) without 5k be people who don't own a house i.e. renters? They don't have 5k savings because of the BoE's HPI pushing them into renting and reduced rates prevent them forming capital.

So cash can become worthless just because poor people dont have any.

 

Arrest therse thieving c***s

[stormymonday_2011]

4 hours ago, Democorruptcy said:

He said

"Just 2% of households have deposit holdings in excess of £5,000, [they have] few other financial assets, and don't own a home.

"So the vast majority of savers who might have lost some interest income from lower policy rates have stood to gain from increases in asset prices, particularly the recovery in house prices," he added."

I think you have taken his bait. How can he know which saver rents or owns? He could have just divided the number of households by the number of bank accounts with over 5k in. Won't lots of the 98% of households (it's not homeowners) without 5k be people who don't own a house i.e. renters? They don't have 5k savings because of the BoE's HPI pushing them into renting and reduced rates prevent them forming capital.

Quite.

What does he f*cking expect from a financial system that is specifically designed to load people with eye watering loads of debt and to stop them accumulating capital

Its the equivalent of  Carney saying that the system he helped create and promote is terrible and that wont someone think of the children

Queue crocodile tears all round from central bankers

Edited December 6, 2016 by stormymonday_2011

[darkmarket]

59 minutes ago, wonderpup said:

In english this translates into the idea that not only are people basing their decisions to either save or consume in the present on the future of goverment funding polices but they are also factoring into this decision the long term impact on their family as a dynastic continuity extending into an infinite future.

That's an interesting point, it was raised recently in a discussion of the Republican spending plans in the US, but it's equally valid here (added emphasis):

"Sager, an economist for the Bureau of Labor Statistics, speaks in surprisingly plain English. He’s added to that 1998 paper, he says, “by relaxing the assumption that people are infinitely lived.” Economists call this a “life cycle” approach, and it produces a dramatically different result. Rather than hold debt, his life cycle analysis suggests governments should hold savings. For the U.S., that’s a swing on the order of $20 trillion."

https://www.bloomberg.com/news/articles/2016-11-17/how-the-white-house-could-justify-a-debt-driven-keynesian-stimulus

The argument that issues of national economy are too important not to be debated is valid, but you might expect more humility given the relatively primitive stage economics has reached. Recently Haldane touched on this, when he admitted the failure of macroeconomics to assume individual agency:

"What makes these models interesting is that these agents are heterogeneous and interactive. In other words, these models relax one of the key assumptions of the standard model – a single, representative agent. For social systems, this does not sound too implausible."

http://www.bankofengland.co.uk/publications/Pages/speeches/2016/937.aspx

You don't need to be Jung to incorporate these assumptions in your thought. Notwithstanding these models rely on the availability of modern computational power, these are hardly cutting-edge breakthroughs. But there's too much pride to admit that they've always been working off grossly over-simplified models and the results are, predictably, grossly inaccurate.

To come back to debt, their models don't distinguish between that of a small business made fragile by it in the face of rate rises and a bank whose scale causes it to use that debt as a sword of damocles over government. Carney delivered nothing but on-message political platitudes because that's the limit of his capability.

[Little Frank]

3 hours ago, ebull said:

 

I agree it won't be voluntary cold turkey. Possible [next year? 2018?] is maybe blind panic in response to sustained rises by the Fed.

Since the US is at a very different place economically to anywhere in Europe including the UK having taken at least some of the punishment including at least a partial HPC post 2008, are they now ready to return rates successfully to normal rates of 4-5-6 %.,

This seems to me to be the most important question determining whether we get a HPC due to a new era of [historically] normal interest rates.

US housing market corrected as they worked off their inventory overhang, plus banks weren't in the mess UK banks (RBS) are still in, despite improved cap ratios. 

When you talk about 'normal' rates of 4-5-6%, which would be an outlier, you have to put it in context of where wage inflation would be at that point. Much higher wage inflation > higher, not lower, house prices. Which is why house prices counterintuitively rise when rates rise and fall when rates fall

Don't forget FED & BoE can also tighten monetary policy by using their b/sheet to effectively reverse QE. i.e. they can sell assets as well as raise rates. 

[zugzwang]

1 hour ago, wonderpup said:

It's worse than that- debt is also missing from the economic models he and every other central bank uses to decide policy. Missing in the sense that debt is seen as a zero sum game between lenders and borrowers and so need not be regarded as having a significant role in macro economic decision making- and the same applies to banks and money, also viewed as mere 'intermediary' factors that can be ignored in the grand scheme of macro economic thinking.

So in a sense Carney is himself a symptom of a deeper malaise, which is the utter failure of current economic theory to actualy understand how the real economy works.

It wasn't just the global economy that failed in 2008, it was the intellectual foundations of the Economics profession. But despite this catastrophic failure nothing has really changed- the same theories are being taught, many of the same people are in post and almost no one lost their job or were even asked to explain- with the notable exception of the Queen who asked the LSE why the crisis had not been forseen.

Their reply?

"In summary, Your Majesty," they conclude, "the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole."

So the crisis was caused by "Systemic risk???" You could not make this sh*t up- the people who were supposed to be the most systemically aware were apparently so focused on the detail they missed the big picture-  that is the explination they gave for the failure an entire historical discipline that had for decades claimed to be engaging in rigorous scientific study while in reality was involved in an epic orgy of naval gazing in which the notion of empirical research was nowhere to be seen.

 Carney is therefore worse than useless- he is positively dangerous becase he is armed with a toolkit designed to service and repair an economy that exists only in the textbooks of the profession and nowhere else- an imaginary realm in which the most improbable ideas are piled atop each other to reach dizzying hights of absurdity like the ever popular 'theory of Ricardian equivalence'

In english this translates into the idea that  if you find out that the govenment is planning to increase deficit spending in the future you then work out that this may translate into higher taxes for you in that future and as a result you will spend less money today.

There's nothing wrong with the logic here- In a society composed of Star Trek Vulcans this idea might have some validity. The problem is that in the real world people do not base their decison to buy a new fridge on the future bond issuance policies of the Treasury- that never actually happens except in the wacky world of economic theory.

And it gets worse;

In english this translates into the idea that not only are people basing their decisions to either save or consume in the present on the future of goverment funding polices but they are also factoring into this decision the long term impact on their family as a dynastic continuity extending into an infinite future.

WTF??? Who actually thinks like this? Well according to economic theory we all think like this.

So to the degree that Carney's skill set is a product of this kind of nonsensical thinking it's hardly surprising that he does not have a clue what is going on in the real world- because the real world is not his domain of expertise.

Mirowski identifies the wholesale adoption of energetics (pre-atomic physics) by Walras and Jevons in the 1870s as the root cause of the malaise. Shortcomings of such an approach include ignorance of the Second Law of Thermodynamics and the production of entropy; a belief in the perfect reversibility of events and the support that lends to notions of time-independent evolution and static equilibrium; a belief in the perfect and reversible convertibility of all physical phenomena which in the economic sphere implies the transformability of all goods through trade, hence the redundancy of money and banks as intermediaries. The energetics school in physics was ultimately overcome by the superior ideas of Boltzmann, Ehrenfest and Einstein. No comparable genius emerged in the field of economics.

[macfarlan]

19 hours ago, wonderpup said:

Globalisation had nothing to do with free markets- NAFTA-for example- was over a 1000 pages of legal definitons and rules- and the late unlamented TTIP was so 'free trade' that it's details were a closely guarded secret untill they got leaked. There was nothing about Globalisation that 'just happened'- it was designed to do exactly what it did.

So all the stuff that Carney is now presenting as the unfortunate and unforseen consequnces of Globalisation were in reality it's primary objectives. The loss of union bargaining power as jobs went overseas, the creation of a 'precariat' workforce who were cheap to employ and easy to fire- the ease with which capital can flow around the world- all this was intentional and could only have happened if the Elites chose to let it happen.

All that's happened now is that the losers in this game have started to work out who it was that shafted them and are choosing to use the tiny scrap of power they still possess-their vote- to strike out at their percived  enemies among the ruling elite.

And you can sense the frustration and anxiety among that elite as they feel their ability to control the narrative slipping away. At the moment it seems that whatever question is put to an electorate in the West, the answer that get's returned is always the same: F*ck off. The issue almost doesn't matter anymore, every election seems to be turning into a referendum on the Elite themselves.

But there is something that those frantically trying to undo the outcomes of these protest votes might want to consider; might it be that what Brexit and Trump ect actually represent are not some abberation of democracy that must somehow be 'fixed' and undone, but are in fact simply democracy doing exactly what it is supposed to do, which is to channel popular discontent into a safe and rational expressive form.

Before the Nick Cleggs of this world decide it's a good idea to throw sand into this channel in an attempt to block it they might want to consider the longer term implications of doing so- because if you take away from people the means to express their pain peacefully this will not alleviate their pain, it will simply redirect that pain into other channels of expression that may not be as peaceful.

Extremists are not born, they are made- and it's self righteous elites that often supply the raw materials.

If those at the top actually do want to try and deal with the issues that things like Brexit and the Election of Trump seem to raise then they can start by respecting these expressions of discontent rather than trying to undermine or reverse them.

If the Elite response to a protest vote is to demand a recount or a second vote then they send a powerful subliminal message to the people who cast those protest votes-'Voting doesn't change anything.'

Not a message people who call themselves democrats really should be signing up to I would have thought.

You're right about the objectives of globalisation, but what makes you think the current situation isnt also 'part of the plan'?

Secondly, the western world appears to be handing power to just another bunch of special interests but this time theyre more right wing. Right wing poilitics isnt caring politics, so why will those left behind be served better by right wing corporate interests?

Also, what has changed exactly? Lots of people decided long ago that voting makes no difference, especially with our 1st past the post system. Thats one of the reasons why Brexit was such a gamble by Cameron - every vote counted and lots of people realised that. We still have first past the post system, so back to normal at next election.

If you Brexit will deliver satisfaction to all those those 'left behind by globalisation' then I'm afraid you're bound to be dissappointed.

21 hours ago, Mikhail Liebenstein said:

 

Sound like we should have an experimental TV show -"Fed up with Capitalism, try.............................."

Communism 

Fascism

Protectionism

Feudalism

 

Each week contestants trying living under a different system of social organisation.

 

I'd watch that, it sounds great!

[t1234]

I have sympathy for those here that say free markets wouldn't have produced this system just like having sympathy for communists that say communism shouldn't produce stalin. Its happened so move on and accept it, people always corrupt any perfect system. Deregulation has caused this mess so what we need to resolve it is not more of the same deregulation and 'free markets' its massive market intervention to rebalance the economy. High taxation for the wealthy and corporations and massive import duties should they try and relocate. But just like we have heard from uk government they said will build houses in the last 20 years, nothing will be done in the economy as there are too many vested interests in finance and wealth as there are in real estate. 

[steve99]

On 06/12/2016 at 9:44 AM, Mikhail Liebenstein said:

 

Sound like we should have an experimental TV show -"Fed up with Capitalism, try.............................."

Communism 

Fascism

Protectionism

Feudalism

 

Each week contestants trying living under a different system of social organisation.

 

Or proper socialism?

We already have a mix of your original list.

[steve99]

47 minutes ago, t1234 said:

I have sympathy for those here that say free markets wouldn't have produced this system just like having sympathy for communists that say communism shouldn't produce stalin. Its happened so move on and accept it, people always corrupt any perfect system. Deregulation has caused this mess so what we need to resolve it is not more of the same deregulation and 'free markets' its massive market intervention to rebalance the economy. High taxation for the wealthy and corporations and massive import duties should they try and relocate. But just like we have heard from uk government they said will build houses in the last 20 years, nothing will be done in the economy as there are too many vested interests in finance and wealth as there are in real estate. 

Under the last 35 years of financial  deregulation as per free thinking neo liberalism, the swing to capital has been massive, hence your assertion is correct, both re corruption and rebalancing via taxing the parasite class.

[steve99]

12 hours ago, Dorkins said:

Are the Establishment finally ready to admit that living standards are falling for most working age people?

Not really, they are panicking re  more Brexit and Trump events. Poverty, struggle and perma debt was always the aim. Fear of living under a bridge keeps people obedient. The balance to neo liberalism was unions but Reagan/Thatcher made that their first priority.