The Economics Discussion Thread

Slartibartfast wrote: This is from a New York Times interview with Jamie Galbraith: Do you find it odd that so few economists foresaw the current credit disaster? Some did. The person with the most serious claim for seeing it coming is Dean Baker, the Washington economist. I saw it coming in general terms. But there are at least 15,000 professional economists in this country, and you’re saying only two or three of them foresaw the mortgage crisis? Ten or 12 would be closer than two or three.

This fellow does not suffer from excessive personal modesty... there were plenty of people seeing it coming in general terms.

debrewguy wrote: Once more, I say - give the bailouts to the citizen, let him vote with that money as to who (corporation-wise) should survive and who should be left to die.

How do you envision this giveaway to the citizen? Could it be so that easy money would be spent foolishly?

IVNORD wrote: kibble_alex wrote: and if we are not careful with the bank bailouts, we may be in a rare deflation state. I know the situation with banks in England in general. Just curious what you mean by the corelation of the bailout and deflation.

Well look at it this way. If the British Govt. bail out all our banks, or even just some of the major banks, then its balance will be intensely cut (billions are required to bail out the bank of Scotland alone). This will shortly lead to higher taxation, we will all be skint, meaning that the price of living will have to come down to stop us meeting the same fate as Zimbabwe.

The Doctor wrote: IVNORD wrote: debrewguy wrote: Once more, I say - give the bailouts to the citizen, let him vote with that money as to who (corporation-wise) should survive and who should be left to die. How do you envision this giveaway to the citizen? Could it be so that easy money would be spent foolishly?     And of course if we give away easy money to large, multinational corporations they will spend it in the best interests of America and its economy.

I've never said that. But it's easier to control spending habits of a few corporations than 300M people

IVNORD wrote: The Doctor wrote: IVNORD wrote: debrewguy wrote: Once more, I say - give the bailouts to the citizen, let him vote with that money as to who (corporation-wise) should survive and who should be left to die. How do you envision this giveaway to the citizen? Could it be so that easy money would be spent foolishly?     And of course if we give away easy money to large, multinational corporations they will spend it in the best interests of America and its economy.  I've never said that. But it's easier to control spending habits of a few corporations than 300M people

The Doctor wrote: Yeah.  The US does a great job of controlling corporations.

It doesn't but it should.

IVNORD wrote: The Doctor wrote: Yeah.  The US does a great job of controlling corporations.  It doesn't but it should.

IVNORD wrote: kibble_alex wrote: IVNORD wrote: kibble_alex wrote: and if we are not careful with the bank bailouts, we may be in a rare deflation state. I know the situation with banks in England in general. Just curious what you mean by the corelation of the bailout and deflation. Well look at it this way. If the British Govt. bail out all our banks, or even just some of the major banks, then its balance will be intensely cut (billions are required to bail out the bank of Scotland alone). This will shortly lead to higher taxation, we will all be skint, meaning that the price of living will have to come down to stop us meeting the same fate as Zimbabwe. They not necessarily would raise taxes. The Bank of England has immense power to print money. If anything, it would bring inflation. Deflation is a product of overproduction and a shrinking monetary base. While the former has been the cause of the present deflationary trends, the latter is a surreal dream as the monetary base is expanding rather than shrinking. So the deflationary trend will be a transient feature ot the world economy and a terrific inflation will ensue and stay with us for some time. The 70's and early 80's are a good example of that

Personally, I think it could be either. You have convinced me, but I will stick with my guns on this one. Britain will be a poor nation by the time this issue is over. We are already deep in recession at the moment, and I think most of us have experienced it first hand. I'm now completely out of pocket and now loaning off my parents, who are almost out of pocket. You are right about the Bank of England being powerful, but I still think deflation would be a possibility.

By the way, just to reflect on the status of the BOE, I'd like to highlight the fact that we are all living on a lie, and that the promise on all the notes is actually bullsh*t. The BOE haven't actually got enough gold to handout to everyone; only an estimated 7% of the population will be entitled to their share of what is promised on the notes. Don't you all find that pretty scary?

Man, I wanted to make some really good points, but IVNORD already made most of them. The only thing I can think to add is that the best possible solution would be for the "Big 3" to declare bankruptcy and then restructure their companies from the bottom floor up to the top executives. Will some people lose their jobs over this? Unfortunately, yes, but I would prefer that to those companies going out of business and ALL the employees losing their jobs as well as all the retirees seeing their pensions flushed down the toilet. However, the companies have basically said that they'll refuse to declare bankruptcy so it looks like they probably won't survive. Also, the big 3 pay their employees, on average, about $63/hr (that's counting benefits and all), whereas Toyota, in their U.S. factories, pays an average of $48/hr with benefits. And retirees of the American auto industries make about 90-95% of the employees wages in their pensions/ Unfortunately this came about because, as IVNORD mentioned, of stupid labor laws that take away competitive wages, something that is absolutely essential in a free market economy. In spite of my long rambling, I guess what I'm trying to say is that we can't trust the government to fix this problem (because when does the gov't ever fix anything?). Instead, the auto companies are going to have to fix it themselves, and from the looks of things it probably won't happen.

DavetheSlave wrote: Did any of you guys read Alvin Toffler's books - very very interesting although they are dated now!!!! He basically stated that future wars would be fought on many fronts - one of the main ones being the Economic front. I think that there's much more to the Economic problem today than meets the eye. I was horrified when I saw some figures relating to the amount of investment the Middle East and the East have in the USA and in Western countries. They could literally cripple world economies overnight!

They really are dated. Most wars are fought for economic reasons since day 1. And why does it horrify you that lots of foreign money is invested in the US? Would it be counterproductive for them to cripple the world economies and lose their investment?