Tuesday, Oct 27, 2009

It is better to be roughly right than precisely wrong

FT: How mistaken ideas helped to bring the economy down

How did the world economy fall into such a deep hole?
This is not the first time in recent decades the world economy has had to be guided through a post-bubble collapse

Posted by devo @ 09:42 PM (1693 views)
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1. paul said...

"The big points of the book are four: first, asset markets are only “imperfectly efficient”; second, it is possible to value markets; third, huge positive deviations from fair value – bubbles – are economically devastating, particularly if associated with credit surges and underpricing of liquidity; and, finally, central banks should try to prick such bubbles."

Meanwhile, the Bank of England's latest MPC member says:

""There is no evidence from relevant periods of UK or other major economies' economic history that QE will result in high or sustained inflation,"

While house prices are rising on the back of the wall of money created directly from QE.

Does anyone else get the impression that our esteemed economists in Threadneedle Street are simply making it up as they go along?

Wednesday, October 28, 2009 08:01AM Report Comment

2. estrader said...

Our esteemed economist’s thinking is no better than that of the general public. They only understand rising prices and that is all they want. The general public didn’t understand the term “short selling” until it was improperly blamed as the reason for the banking crisis. The general public only wants to buy and for the value of whatever they buy to just keep going up.

Wednesday, October 28, 2009 08:22AM Report Comment

3. crunchy said...

2. estrader said..."The general public didn’t understand the term “short selling” until it was improperly blamed as the reason for the banking crisis."

Are you sure? http://www.youtube.com/watch?v=OqZUbe9KIMs

To this day we still do not know which group did this. Undisclosed? Classified? WTF.

I think you will find that the public were told it was subprime, code for them, the pre bailout guilty majority.

Wednesday, October 28, 2009 08:49AM Report Comment

4. crunchy said...


Wednesday, October 28, 2009 09:01AM Report Comment

5. crunchy said...

Now fast forward back to the real world http://news.aol.co.uk/brown-ready-to-back-blairs-eu/article/2009102723132362867311

JPMorgan guy done good!

Wednesday, October 28, 2009 09:31AM Report Comment

6. chrisa said...

@ 1 'Does anyone else get the impression that our esteemed economists in Threadneedle Street are simply making it up as they go along?'

The more worrying scenario being that they are not making it up, are not incompetent, and never have been, and have set out deliberately to trash the system from within. Possibly to coincide with/enable the rise of China to be the worlds economic and military superpower and the potential election of what many regard as a repulsive war criminal as EU president.

Wednesday, October 28, 2009 10:52AM Report Comment

7. crunchy said...

6. chrisa

If you have not seen it already, Fall of the Republic may be of interest to you. http://www.youtube.com/watch?v=F8LPNRI_6T8

Wednesday, October 28, 2009 11:16AM Report Comment

8. chrisa said...

Thanks Crunchy. I have noted that we think on similar lines.

Interesting comment section in the Telegraph yesterday (Mary Riddell) regarding Blair as proposed EU president. One comment regarding the Tories 1997 campaign featuring Blair with devils horns (actually I remember this as a poster of him with demon eyes) but maybe there were other posters too. Another comment regarding the school of thought that the Antichrist will come out of the EU and link with the RC Church.

Interesting to see two such comments.

Wednesday, October 28, 2009 11:36AM Report Comment

9. icarus said...

Policy responses? IMF advice? What a joke. The only thing that's happening is the gradual trashing of the £ and $ to keep the debt monster at bay and to prop up the banks. Central banks are there to solve the classic problem caused by banks' creating money by issuing loans, but not creating the interest with which to repay them. The Fed and its brothers see to it that the banks are paid back by inflating the money supply to pay the interest, thereby stealth-taxing the people. In normal times the money supply is inflated by making more loans, which add to the debt and interest burden the inflated money supply was meant to relieve. A Ponzi scheme. Liquidation of bad loans and bankruptcies as a means to reduce land values and rents to a level at which the real economy can thrive without paying out tribute can't happen under this regime.

IMF? Its $500 bn stimulus for poor countries was designed purely to enable them to stay current on their loans so that western banks could keep those loans as assets on their books (the poor countries are less likely to default on IMF loans than on other bank loans) so that they can make more Ponzi loans.

And what's that $300 bn of SDRs issued by the IMF? The beginning of a new international currency to replace the dollar's function in international trade? But would that mean that the US was just another debtor nation in thrall to the IMF/central bankers?

Wednesday, October 28, 2009 12:34PM Report Comment

10. Ndg said...

Forget $'s & £'s. Ethics is what is at stake here. Moral ethics. Important to many. But not everyone. It was no accident and anyone with moral ethics will remain completely blind to the reasons for this well-engineered finacial coup-de grace. For a while.

Wednesday, October 28, 2009 01:01PM Report Comment

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