tag:blogger.com,1999:blog-7820485130017459619.post2050897049450244831..comments2023-10-24T01:46:47.151-07:00Comments on CynicusEconomicus: Spain: It is worse than is imaginedUnknownnoreply@blogger.comBlogger13125tag:blogger.com,1999:blog-7820485130017459619.post-67098337808977123942012-09-14T01:24:59.140-07:002012-09-14T01:24:59.140-07:00Am very much missing your commentary Cynicus. I gu...Am very much missing your commentary Cynicus. I guess now we're just watching it all play out as you said it would. Everyone else is slowly cottoning on, this from today's Telegraph:<br /><br />'The consequences of this Asian industrialisation present a major challenge to Western economies, even threatening the UK with the risk of becoming a next Greece, Mr McWilliams said on Thursday evening in his inaugural lecture as the Mercers’ School Memorial Gresham Professor of Commerce.'<br /><br />http://www.telegraph.co.uk/finance/economics/9540444/India-will-become-worlds-biggest-economy-in-less-than-40-years.htmlChasHnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-69962474791079417082012-08-23T04:42:28.250-07:002012-08-23T04:42:28.250-07:00Been a long time since you posted.
I hope all is...Been a long time since you posted. <br /><br />I hope all is well with you. <br /><br />I am trying to get my head around whether we are headed for severe inflation and/or deflation. <br /><br />Any thoughts on this?<br /><br />Best <br />LordSidcupnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-73441815704553863492012-08-18T17:31:20.183-07:002012-08-18T17:31:20.183-07:00Dollar collapsed? nope still hasnt...be back next...Dollar collapsed? nope still hasnt...be back next year again.AndyCFCnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-89222966526470538192012-07-13T13:10:40.448-07:002012-07-13T13:10:40.448-07:00Spain receives massive subsidies for the fishing a...Spain receives massive subsidies for the fishing and olive oil industries. Olive oil is being hit, with the price dropping http://www.ft.com/cms/s/0/47ba2bf6-741c-11e0-b788-00144feabdc0.html#axzz20X9wszmR<br />There's also talk of the olive oil subsidies being cut.<br /><br />Funnily enough, the old Greek president complained that before Greece joined the EU, it was a net exporter of food. Once it joined it became a net importer. I believe olive oil was one of the industries hit.<br /><br />Spanish trawlers still get massive EU subsidies, though.<br /><br />Just found this. IT says the EU will take away agricultural subsidies from those going over the 3% deficit limit. http://www.oliveoiltimes.com/olive-oil-business/europe/aid-to-olive-oil-producers/4013Jonpaulhttps://www.blogger.com/profile/10497649728172138041noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-30226498874799118312012-07-09T01:41:56.305-07:002012-07-09T01:41:56.305-07:00Thank you for illustrating my point;
if it had be...Thank you for illustrating my point; <br />if it had been left to the market, Nissan would NEVER have built cars in Tyne & Wear. It only happened beacuse the British government offered huge incentives to build (and later keep) the factory there.<br /><br />MINOR POINTS<br />"Why would someone need a framework to know that he needs a shelter from the weather?" <br />An absolutely irrelevant metaphor. <br /><br />"I take it when you talk about framework you mean burocracy"<br />You 'take it' incorrectly ... Did you take it that CE meant bureaucracy when he wrote framework?LordSidcupnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-18167594741202462362012-07-06T16:41:13.162-07:002012-07-06T16:41:13.162-07:00Why would someone need a framework to know that he...Why would someone need a framework to know that he needs a shelter from the weather? After all, isn`t a home a basic necessity, just like food. We don`t need to be shown we need food. If I decide not to consume all my resources on food and rent, then I can make or pay someone else to increase wealth. I take it when you talk about framework you mean burocracy. We have poor management in this country. In the north-east of England we have one of the best car firms, Nissan. The workers are far more productive than when we had car companies owned by the British. The north created the wealth in Britain. The City of London leverages money up and they have created the financial crisis. Governments and other burocrats allocate resourses to the wrong places. It should be allowed to be left to the market.wuddychunkhttps://www.blogger.com/profile/14149431158253803094noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-55209760391251223772012-06-22T16:50:50.340-07:002012-06-22T16:50:50.340-07:00I was thinking of this exact point on a recent vis...I was thinking of this exact point on a recent visit to the North of England. <br />I saw signs of decline and increasing poverty everywhere. To me it looked like a possible global future; slow economic collapse and erosion of the social fabric.<br /><br />This area (and beyond) saw the birth of the Industrial Revolution, so there are constant reminders that this was once one of the richest, most innovative places on earth.<br /><br />I have never been to Detroit, but I guess that might indicate a possible future for an urban environments post-whatever-it-is-that-is-a-coming. <br /><br />It was around that time, that I read this from CE; <br /><i>"I, on the other hand, believe that wealth is, in the end, created by creating a framework in which individual endeavour creates real wealth. This individual endeavour, whether from a bricklayer or a the CEO of a multinational, is the real source of wealth creation. They make products and services that people want, and can pay for the goods and services as a result of their own individual endeavours. The relative success of these individual endeavours, in aggregate, in terms of productivity, and in relation to other countries, determines the real wealth of a country."</i><br /><br />I never got around to commenting on it, but the above shows a major problem of CE's/EMH/libertarian worldviews. <br /><br />He talks about "a framework in which individual endeavour creates real wealth", but then ignores the framework aspect, which is absolutely crucial, and focuses solely on these heroic individuals. <br />My visit told me that when the framework is as dire as it is in the North of England, there will be very few individuals with sufficient mental/physical/other resources to create wealth for themselves or others. Ayn Randian peans and homilies will not change the fact that much of Britain is a million-miles from being able to create much wealth - and this is a result of both Centre–Left/Right govt. policies over the last decades.<br /><br />Consider the vast framework a builder needs to work profitably and productively; a construction industry, supported by a housing market, recourse to law, sound money, a source of bricks and so on and on ... ignoring the network of activities and systems (created by both companies and government) actually let's these lousy UK govts. off the hook for the creation of a battered UK underclass.LordSidcupnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-31106883472996305542012-06-22T07:37:05.628-07:002012-06-22T07:37:05.628-07:00That phrase chimes with my comment above. Restruct...That phrase chimes with my comment above. Restructuring our economies will mean being poor again, because all the activity of recent decades is based on consumer spending funded by borrowed money and real estate bubbles<br /><br />Look forward to a century of impoverishment for the 99%, while the 1% continue seizing more and more of the wealth. <br /><br />The least they could do is give us peasants religion again as a sop, so we have something to live and hope for amidst our lives of poverty and misery. Jesus loves you!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-50311718002981805082012-06-22T07:21:16.753-07:002012-06-22T07:21:16.753-07:00A fair question.
I think we are in the process o...A fair question. <br /><br />I think we are in the process of trying to actively structure the economy right now. Massive interventions to ensure that certain aspects of the economy are maintained at their status quo. <br /><br />Restructuring of another kind is what is being demanded economically speaking as one poster above pointed to. And we are throwing tonnes of new money at it to prevent that from taking hold.<br /><br />This is leading to waves of deflation but, as each new round of QE is forced upon policymakers, who, in their short term need to retain votes cannot, by any means, allow GDP to fall.ronanpeterhttps://www.blogger.com/profile/13375024006869462385noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-15525469513452992182012-06-21T22:55:41.699-07:002012-06-21T22:55:41.699-07:00Perhaps CE could explain to us what he means be re...Perhaps CE could explain to us what he means be restructuring the economy. I have noticed that CE throws around this magic phrase quite a lot in his posts whithout revealing its real meaning and practical steps to apply this meaning in practice.<br />I have read all of CEs posts but have not found a single one where the phantom solution of restructuring the economy is explained in concrete, practical steps.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-26634092761383610962012-06-21T15:09:59.107-07:002012-06-21T15:09:59.107-07:00I'm not sure I wholly agree that the position ...I'm not sure I wholly agree that the position of bondholders was affected adversely by the latest "bail-out". <br /><br />Taking the position at its simplest, the bondholders were facing the risk of simply not being repaid. All sorts of interesting questions could arise about their ability to enforce their claim for repayment against Spanish nationalised assets but the reality is that, as in any insolvency, it is creditors who lose and have to draw a line under their losses. Perhaps they would have been able to recover 50% or more of their "investment", perhaps they would not. <br /><br />As things stand time has been bought for Spain to improve its position and increase the creditors' chance of substantial repayment. I doubt that it will happen because the structure of the Spanish economy does not produce sufficient wealth to allow it to happen. <br /><br />The figures given in the first passage you cite appear to me to be incomplete. The example given was of Spain owing 100bn in bail-out cash and another 200bn on maturing bonds and having 150bn with which to make repayments. This misses one point, namely, how much would it have had for repayment had it not received the 100bn bail-out? The answer cluld be 50bn, in which case the bondholders are in exactly the same position they would have been in without the bail-out; or the answer could be more but without the benefit (such as it is) of the bail-out cash helping to stabilise the economy and increase the chance of future prosperity. <br /><br />When the idiot Brown decided to bail-out the UK banks I wrote that the better option was to let losses lie where they fell and rebuild from a position that reflected the reality of the economy rather than pretending a problem caused by making too many bad loans could be solved by making more bad loans. I stand by that argument today.TheFatBigothttps://www.blogger.com/profile/17255526385076528633noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-21820200600681262942012-06-21T04:58:05.266-07:002012-06-21T04:58:05.266-07:0030 years ago Spain's economy was highly based ...30 years ago Spain's economy was highly based on agriculture and fishing, ergo it was a poor country. <br /><br />But thanks to a few decades of borrowing and real estate bubbles, Spain because "rich", skyrocketing standards of living, overtaking other countries (remember the fanfare over Spain overtaking Italy in GDP a few years ago?), and getting its former politicians into supranational bodies. <br /><br />We now know that meteoric rise was a house of cards based on 'a funny view of wealth'...<br /><br />So what happens now? Does Spain go back to being poor again, an agricultural, fishing nation? <br /><br />On a wider scale, does the entire world go back to being poorer? Will we see 50% unemployment, as there's an implosion of the industries that arose to absorb reckless consumer borrowing? <br /><br />We've seen a massive period of growth. Now it appears time for a massive period of impoverishment - but I'm struggling to visualise how that will happen in practice. Or maybe I'm struggling because I'm terrified and my brain will run away screaming as soon as I seriously attempt to do soAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-61373003654513025642012-06-20T12:56:48.055-07:002012-06-20T12:56:48.055-07:00Hi Cynicus. Thanks for continuing to post, even w...Hi Cynicus. Thanks for continuing to post, even when extremely busy.<br />If the Spanish bailout puts the Spanish government in an untenable position, it would make sense for the government to turn the offer down, and seek to negotiate a direct EU/ECB bail-out for the Spanish banks instead. If that can't be obtained, each bank would then have to fend for itself. Presumably, most would fail, because their problem is not just lack of liquidity but insolvency. Would this be a disaster for the rest of the Spanish economy, or just for investors in and creditors of the banks, and holders of CDSs based on loans to Spanish banks?Anonymousnoreply@blogger.com