tag:blogger.com,1999:blog-7820485130017459619.post8322293787327143815..comments2023-10-24T01:46:47.151-07:00Comments on CynicusEconomicus: Eyes are starting to open and see the world as it isUnknownnoreply@blogger.comBlogger22125tag:blogger.com,1999:blog-7820485130017459619.post-67718035694189358042010-03-06T11:30:28.588-08:002010-03-06T11:30:28.588-08:00The first quote below I found on a blog, which I t...The first quote below I found on a blog, which I then posted on another blog, the second quote is a reply:<br /><br />"It’s astounding that people can’t grasp the simple concept that wealth (as opposed to money) does not grow on trees. We, individuals and governments, have consumed more than we produced, for a long time, or in simple terms we spent more than we earned. Now we, individuals and governments, must earn more than we spend, for a long time. Yes, that will cause a depression. It can’t be avoided because the consumption has already occurred and payment is due. <br /><br />Our previous debt-bubble-fueled-overconsumption will be paid for, either by those who consumed, those who provided the goods, those who provided the credit, or the taxpayers. No matter which group pays, that group will consume less because they are paying for prior consumption. It doesn’t avoid anything if the government stimulates using more borrowed or printed money, just shifts the burden from one group to another. Creating future tax burdens by running large govt deficits just shifts the blame down the road a bit. Creating inflation is a tax on savers, which subsequently reduces their ability to consume. Defaulting on debt will be ruinous to creditors.<br /><br />The “mother of all depressions” is still coming. We’re just rearranging the deck chairs and deciding who gets first dibs on the lifeboats."<br /><br />Anon<br /><br />addenda<br /><br />"When an entity/ enterprise / person goes bankrupt, the wealth that was formerly "owned" is now reassigned and actually used productively by someone who wants it, needs it and knows how to use it. It doesn't somehow disappear, "poof!". But when a trick like QE attempts to artificially prevent an undercapitalized asset (e.g., Brit Real Estate) from being appropriately reallocated, the result is zombie assets, lying around doing nothing. The expression "moral hazard" does no justice to this situation: "economic suicide" is better. This is the Japanese story from the 90s. Every pound spent on deluding Northern Rock's accountants is a pound taken out of a teacher's pay-cheque."<br /><br />Anon<br /><br />Death to Bubble AddictsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-77742061488754757632010-03-05T01:04:00.552-08:002010-03-05T01:04:00.552-08:00Brown is right - if you can issue your own currenc...Brown is right - if you can issue your own currency deficits don't really hurt at all - in fact they are necessary to balance the system according to modern monetary theory.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-6515876296353049612010-02-27T21:15:33.963-08:002010-02-27T21:15:33.963-08:00I recommend this interview with Professor William ...I recommend this interview with Professor William K. Black on the Financial Crisis. He shows how this crisis is very much like the US Savings and Loans disaster in 1980s (itself the result of financial deregulation) as well being largely the result of outright fraud ("liar loans"):<br /><br /><a href="http://neweconomicperspectives.blogspot.com/" rel="nofollow">William K. Black</a>Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-34366615305632528952010-02-25T16:11:30.386-08:002010-02-25T16:11:30.386-08:00Here is a fascinating article on China's econo...Here is a fascinating article on China's economy:<br /><br /><a href="http://www.newleftreview.org/?page=article&view=2809" rel="nofollow">The PRC’s Dilemma in the Global Crisis</a>. <br /><br />A sample:<br /><br /><i>In an attempt to initiate a rebalancing of China’s development .... Hu Jintao and his ‘populist’ allies had tried from 2005 to fuel domestic consumption by boosting the disposable income of peasants and urban workers. The first wave of such initiatives included the abolition of agricultural taxes and a rise in government procurement prices for agricultural products. Though these measures to raise rural living standards were no more than a small step in the right direction, their effect was instantaneous. Slightly improved conditions in the rural-agricultural sector slowed the flow of migration to the cities, and a sudden labour shortage and wage hike in the coastal export-processing zones ensued, inducing many economists to declare that the Lewisian Turning Point—at which rural surplus labour has been exhausted—had finally arrived.</i><br /><br /><br />This article shows that the low manufacturing wages in China have more to do with the government's rural policy than the undervalued currency, and how a balancing of development by investing more in rural areas will rise urban manfacturing wages.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-38648184293033310202010-02-24T11:15:44.281-08:002010-02-24T11:15:44.281-08:00Hi Cynicus
This looks like its going to be the tr...Hi Cynicus<br /><br />This looks like its going to be the trendy solution, you'll note Brown recently said deficits don't matter:<br /><br />FT (Martin Wolf) - 24/2/10:<br /><br />"I can envisage two ways by which the world might grow out of its debt overhangs without such a collapse: a surge in private and public investment in the deficit countries or a surge in demand from the emerging countries. Under the former, higher future income would make today’s borrowing sustainable. Under the latter, the savings generated by the deleveraging private sectors of deficit countries would flow naturally into increased investment in emerging countries.<br /><br />Yet exploiting such opportunities would involve radical rethinking. In countries like the UK and US, there would be high fiscal deficits over an extended period, but also a matching willingness to promote investment. Meanwhile, high-income countries would have to engage urgently with emerging countries, to discuss reforms to global finance aimed at facilitating a sustained net flow of funds from the former to the latter."<br /><br />Death to Bubble AddictsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-3044911648665154132010-02-24T06:20:12.993-08:002010-02-24T06:20:12.993-08:00"I don't see there being much mileage in ..."I don't see there being much mileage in trying to explain the monetary system to people - it's so counter-intuative that they'll assume you're a)mistaken and/or b) crazy."<br /><br />xxxxxxxxxxxxxxxxxxxx<br /><br />You are 100% right. When u mention to many people that, the money system is rotten/corrupt, they dismiss u as a crank.<br /><br />If u analyse UK's monetary statistics, u will find that:<br /><br />- in 1963, 21% of money stock was issued DEBT FREE.<br /><br />- 1997, the debt free money was only 3.6%.<br /><br />To all readers and especially the author of this blog, I would recommend one book that might help complete the loop. It is this:<br /><br />The World's Wasted Wealth by J.W. Smith.http://www.amazon.co.uk/Worlds-Wasted-Wealth-Save-Environment/dp/0962442321<br /><br />It is very cheap @ amazon:Mwarang'ethehttps://www.blogger.com/profile/17751879277752081774noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-82633507919624644812010-02-23T11:40:07.652-08:002010-02-23T11:40:07.652-08:00Lemming,
I've been interested/concerned about...Lemming,<br /><br />I've been interested/concerned about the whole "<a href="www.moneyasdebt.net/" rel="nofollow">Money as Debt</a>" phenomenon after first coming across it a couple of years ago (it's amazing what you <i>don't</i> get taught in school isn't it!?)<br /><br />Since then though I've sort of come to the conclusion that it's one of those things that can't really be dealt with until it "really" becomes a problem - and by which time it's too late (like one of those really bad cancers that don't show so many symptoms while devouring your insides). <br /><br />I don't see there being much mileage in trying to explain the monetary system to people - it's so counter-intuative that they'll assume you're a)mistaken and/or b) crazy. <br /><br />Besides, I probably learned most about the evils of credit cards by going broke using them; I suspect the same principle applies en masse.<br /><br />Still gobsmacked to see that Guppy piece in a mainstream paper though!<br /><br />T.<br /><br /><br />PS. Lord Keynes - I'm awaiting your second post re inflation before posting my response.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-56802395933899593052010-02-22T12:19:32.045-08:002010-02-22T12:19:32.045-08:00Cynicus, if there is more inflation in Western ec...Cynicus, if there is more inflation in Western economies, why do developing countries register higher on measurements of inflation , with Pakistan and Venezuela leading the world in economic inflation (in 2007)? We know salaries are rising fast in developing countries, but we also know that salaries are starting from a much lower base. Is that the answer or is there more to it?<br /><br />http://thecentrist.org/wp-content/uploads/2009/05/world-inflation-rate-2007.pngAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-54987010013009122322010-02-22T11:53:26.166-08:002010-02-22T11:53:26.166-08:00Hi,
Really enjoy reading your blog - no doubt you...Hi,<br /><br />Really enjoy reading your blog - no doubt you would of seen this. India as well as China. <br /><br />http://www.telegraph.co.uk/finance/economics/7287206/UK-businesses-blinkered-on-state-of-the-economy-after-the-recession.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-6080105036978688912010-02-22T07:07:36.761-08:002010-02-22T07:07:36.761-08:00An interesting link on The Register that looks at ...An interesting link on The Register that looks at the 'Decline in Manufacturing':<br /><br />http://www.theregister.co.uk/2010/02/22/manufacturing_figures/Fellbladenoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-22212325045124316102010-02-22T05:03:08.374-08:002010-02-22T05:03:08.374-08:00CE, I am fascinated that your analysis of the flaw...CE, I am fascinated that your analysis of the flawed GDP measure is universally unknown - or ignored - by economists, investors and politicians. Why do you think that is? Do they know something you don't, or can they not cope with the implication that there is no easily-digestible 'index' that can tell you the health of an economy? <br /><br />What do you make of this article?<br /><br />http://www.telegraph.co.uk/comment/personal-view/7273332/Darius-Guppy-our-world-balances-on-a-sea-of-debt.html<br /><br />The author seems to have had the same revelation I had a few years ago, although my excitement was completely snuffed out by the matter-of-factness with which the subject was treated in comments on this blog - as though everyone knew something I didn't... At the time, the idea that there could never be enough money in the world to pay off the debts plus interest so that perpetual growth, rather than a 'nice-to-have', was essential to prevent total collapse of the economy seemed like quite an important idea, but no one on these pages seemed in the slightest bit interested. Is that really the case?Lemmingnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-47764701362008201052010-02-19T19:52:38.310-08:002010-02-19T19:52:38.310-08:00Here's an outstanding interview with James K. ...Here's an outstanding interview with James K. Galbraith:<br /><br /><a href="http://www.newdeal20.org/?p=7981" rel="nofollow">“There is No Return to Self-Sustaining Growth”: An Interview with James K. Galbraith</a>.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-82995438189854710962010-02-18T20:38:53.126-08:002010-02-18T20:38:53.126-08:00Interesting article here, which discusses whether ...Interesting article <a href="http://www.globalresearch.ca/index.php?context=va&aid=17704" rel="nofollow">here</a>, which discusses whether China could, rather than increase the value of the RMB, actually devalue it.Anonymoushttps://www.blogger.com/profile/11979607671826391515noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-9408415702545940902010-02-18T06:33:01.557-08:002010-02-18T06:33:01.557-08:00You seem like a smart guy, and can see the wood fr...You seem like a smart guy, and can see the wood from the trees.<br /><br />Here is an interesting transposition, if i may:<br /><br />UK north sea oil peaks in 1999, coincidentally financial deregulation kicks in and speculative bubbles kick the can down the road. If UK has been accumulating debt from the date of north sea oil peaking, then wouldn't a worldwide peak in oil production cause a retraction of credit and the numerous implosions that would result? Substitute money, for energy from crude oil and you get the real picture.<br /><br />Its too late now, but if we turned over 1/6th of our land mass to hemp biofuel production, we could have offset theis decline and at least maintained what we have, but as this particular plant is considered a grave threat to humanity despite its history, we have one hemp processor in the uk, when we should have one for every postcode.<br /><br />I thak god i have had a chance to prepare for whats coming, and if its any help, nettles are the complete superfood, grow in 3 months in any soil, and propogate with little interference from man. Learn how to start a fire and have some wood nearby and you can purify any water in the country, so you might not have sky sports, but you'll be alive.<br /><br />Don't fight the wave, surf it and let it take you somewhere good.<br /><br />PeaceAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-73360022455295928792010-02-17T18:37:33.158-08:002010-02-17T18:37:33.158-08:00There is excellent commentary here on Greece:
Eur...There is excellent commentary here on Greece:<br /><br /><a href="http://bilbo.economicoutlook.net/blog/?p=8093" rel="nofollow">Europe – bailout or exit?</a> <br /><br /><b>Phil Jones interview</b><br />I have just seen this remarkable interview with Phil Jones by the BBC, where he admits that for the past 15 years there has been no ‘statistically significant’ warming:<br /><br /><a href="http://news.bbc.co.uk/2/hi/science/nature/8511670.stm" rel="nofollow">Q&A: Professor Phil Jones</a>Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-90440282537020333192010-02-17T14:47:35.907-08:002010-02-17T14:47:35.907-08:00I was talking to a long term sales friend.
He got ...I was talking to a long term sales friend.<br />He got me thinking.<br />His point was.<br />When he started his sales job late 1970s,everything was brought CASH.<br />Over the years the larger items were brought with credit eg over 2 to 4 years,with the smaller items still brought cash.As time has moved on more items are brought with credit,but there has been a change.The larger items are now on contract hire or lease.The ownership being with a finance company.<br />Now it got me thinking,what if credit dryed up!!<br />How many years would it take to save up out of profits to buy large capital items,the kit would be worn out befor a replacement could be brought from saveings.<br />This situation has arisen since the doller divorced from gold in early 1970s.<br />How can we ever get out of this credit trap??honest johnnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-89970325833627552212010-02-17T01:02:39.434-08:002010-02-17T01:02:39.434-08:00Hello Cynicus,
Further to your Note 2. I've j...Hello Cynicus,<br /><br />Further to your Note 2. I've just finished Ruppert's 'Confronting Collapse'. Somewhere in there he makes an interesting point:<br /><br />... if we take China's present demand for oil as a constant (at least), then their demand effectively precludes any possibility of a significant recovery in the West, because any such significant extra demand causes the price of oil to rise to a level which effectively snuffs out that nascent recovery.<br /><br />The corollary of this analysis is that there has to be demand destruction somewhere and I guess this makes economic conflict with China inevitable. A struggle for which the Western economies have all hallmarks of being badly adapted.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-60660621649554555012010-02-16T16:50:52.864-08:002010-02-16T16:50:52.864-08:00I am not that old. I turned 39 today. I can rememb...I am not that old. I turned 39 today. I can remember as a child in the 1970s that ordinary people could not afford many things brand new. People had old cars, bought second hand electrical goods, wore second hand clothing. I had no new clothes until the age of 16 if I recall correctly. And I did not grow up in a poor area or family. Thats just the way it was. Similarly people did not buy houses until they were well established in careers, often married with children. Only the very well off could afford new stuff.<br /><br />Somewhere in my lifetime it appears the nation became so wealthy people straight out of college could afford to buy new cars, houses, fancy electrical good, the whole nine yards. And a few years ago I began to question how this was. Given that a nation's wealth is determined by what it can produce, I asked myself where this wealth was generated. In my town we had a large manufacturing plant that closed in 1985. The jobs lost there were replaced by ones in financial services companies. And again I asked myself if lending people money to buy houses, cars and goods was as reliable a wealth generator as turning steel into things people all over the world wanted to buy.<br /><br />But it seemed to work, and for a good 15 years I thought the service economy was a long term reality. It took the property bubble of 2005 onwards to drop the scales from my eyes. I could see what my friends were doing. Borrowing ever larger sums to buy houses, which went up in value, so they borrowed more against them, and spent it. On man I know bought his house 20 years ago, but had a mortgage equal to its current value. Every time the price went up - kerching! Another fistful of 'fun money' courtesy of the housing market.<br /><br />And so I realised the growth since about 1999-2001 was not real, it was based on an illusion. That we could all continue to sell our houses for more and more and extract the increases in value and spend it.<br /><br />As CE says, the true level of wealth in many economies is considerably lower than that indicated by GDP. And over the next few years those nations will be forced to face that reality. Economic gravity can be defied for only so long.sobersnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-37205497146936387352010-02-16T16:12:52.609-08:002010-02-16T16:12:52.609-08:00Excellent summation of where we're at.Excellent summation of where we're at.Steve Tierneyhttp://www.stevetierney.org/blognoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-32518989340664709552010-02-16T14:04:19.470-08:002010-02-16T14:04:19.470-08:00Hi Cynicus,
I think you'll enjoy this excelle...Hi Cynicus,<br /><br />I think you'll enjoy this excellent piece of analysis by a Greek banker on his country and why the bondholdes keep getting bailed out in this Credit Crunch:<br /><br />http://www.businessinsider.com/greece-its-our-debt-but-its-your-problem-2010-2<br /><br />Regards<br /><br />Death to Bubble AddictsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-46362654097689941382010-02-16T04:34:34.312-08:002010-02-16T04:34:34.312-08:00How does this affect your prediction?
http://nbys...How does this affect your prediction?<br /><br />http://nbyslog.blogspot.com/2010/02/yuan-revaluation-now-certainty.htmlmichaeldenhttps://www.blogger.com/profile/16460398673002738829noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-33146295764909858842010-02-15T15:23:33.291-08:002010-02-15T15:23:33.291-08:00Today While shopping for wood,was told China is sp...Today While shopping for wood,was told China is spending billions of $$<br />on wood,price riseing fast,getting to expensive for uk consumers.<br />Seems they are still spending there $$s on tangible assets.honest johnnoreply@blogger.com