I saw yesterday that Eric Sprott is betting on another significant downturn in the markets and a much higher gold price, because of all the government intervention and consequences of their policies which would probably imply a lot more problems in housing as well: http://www.businessweek.com/news/2009-12-29/sprott-says-s-p-500-to-tumble-below-its-march-low-update2-.html
there's also some interesting stories on his firm's site on these topics: http://www.sprott.com/PreciousMetals.aspx?id=53
As I understand it, “emerging nation status” is a category defined by the WTO. You have posited that China should not be considered an emerging nation because of the size of its GNP, currency exchange policy, etc. My question:
What are the criteria WTO uses to define ‘emerging nation’? If they do not use size of GNP, currency policy, etc. then there would be no legal basis for the US to take action against China. The US would have to essentially withdraw from the WTO vis-à-vis the ‘emerging nation’ agreements.
As I understand it, based on journalist comments on ‘emerging nation’ status, size of GNP and currency policy are not WTO tests for ‘emerging nation’ status. I have seen references to ‘average GNP’ and political tests such as ‘transition from controlled economy to open economy’.
In short, I’m wondering if you think that China should not be considered an emerging economy because it no longer meets WTO test of that status, or are you saying that regardless of WTO test the US should no longer be bound by its WTO agreement and affect policies that are in our national interests?
I am not advocating any position. I am not asking rhetorically. I am just trying to get some clarification about a very interesting subject. Sorry for dovetailing my question with my favorite (controversial) subject ‘philosophy of social science math and reality’. That just confused the main purpose of my comment. “The devil made me do it!”
Thanks for your always prompt, informative and interesting response.
Best
Do you think that Government Treasury bond funds show under Mutual Funds or the residual? I know that at my work the only option form our 401k that didn't get killed in the downturn was the Government Bonds category and so everybody piled in. If those show under residual rather than the other categories then the number might be real, but not replicable. The money has already shifted and there isn't any more. And as stocks recover a little (for no good reason) the flow will go other way. Anybody know what happens to Government Bond funds as money flows out massively? I am not sure. If it were stocks I'd say it'd get killed. But since bonds have a real yield it probably wouldn't be so bad. Maybe it is only inflation that slaughters bond funds.
If someone else sees a finance/mathematics paper that implies something fictional, but they do not have the STEM background to read it, or understand the math contained within, fire it over here and we'll take a look at it and try to decipher to English.
I think we've got a huge problem via the concept of derivatives vs. what they are actually made of...
I don't see how writing a bunch of gobblygook that isn't sound science helps anyone mitigate anything beyond pocketing some nice short term profits.
It would be different if the particular derivative itself was a sound, verifiable model, then one could argue the function of it....but nonsensical functions themselves? How can they defend this?
Because the WTO gives special rules to EEs, whether or not GDP is given per capita or not, is not the issue.
The issue is China will be the 2nd largest, onto becoming the largest economy, the dominant economy, therefore (as if any EE should be given special rules via the WTO to set tariffs legally and so forth is a separate issue) but China should not be given that status.
It's well documented China has done all sorts of mercantile behavior to dominant the globe economically and per capita or not, in a nation-state situation, that's not how GDP works...it's against nation-states, their currency, their relative strength. That's why GDP on a global comparison scale is not presented as per capita, it's not a relevant comparison when dealing with global economics. You are not comparing individuals (as if GDP is distributed equally, a true piece of fiction there), you are comparing domestic economies of nation-states.
Frankly "low cost labor" is an element within trade theory which can literally destroy a 1st world economy, depending. There is an inflection point in trade theory, which show, you can indeed wipe out a 1st world economy through cheap labor, low costs of production. Enabling the "race to the bottom on wages" by making the means of production mobile is a very common criticism on how trade is implemented.
I don't know what this has to do with mathematics here, but EP is a fact based site and facts, reality are found in the details, including mathematics.
It doesn't help to know who wrote the China PNTR, or that the Clinton administration, bought and paid for, pushed it through, if one does not know the details of that trade agreement and why it is so detrimental to the U.S. national and economic interests.
Citigroup was one of the biggest players behind pushing for the China PNTR and this was due to capital, loans, they financed the 3 rivers dam for instance, but there were a host of multinational's who believed in the mythical 1.5 billion consumer market in China and wanted access....also these same companies, often under the lobbyists "U.S. Chamber of Commerce", do know that when one makes the means of production mobile, one can labor arbitrage wages, so that was a part of their motivation as well.
I cannot find the piece now but the chief architect of the PNTR actually apologized to the world on it and said he was wrong, he gave a series of talks, which I wish I could find. I know I posted them on EP.
Finally, I think you're trying to set up a false debate. The point was to use fact, very stone accurate fact, with mathematics on this site. I have seen so many arguments spring up on blogs and even just yesterday, every major TV cable news show claimed we had a 3.6% holiday sales increase, when one just needs to do a little analysis, even the authors of yesterday's report admitted the extra day skewed the results....to know that reporting that figure was not accurate.
So, the point is many people get their facts wrong. From EIs, to never having even read one line of a WTO trade agreement, to never cracking a book to never reading a single stat, to not understanding say a VAT, which has some pretty odd calculations in it, per item...
yet they will go on and on, arguing on something, when they first do not even understand how something works...
or the MSM will report some headline...when it's completely incorrect.
That's the point of EP, one must get their baseline facts right and in Econ, that usually does involve at least addition and subtraction.
It's not an either/or proposition on EP, it's just saying one has to get their facts right and another idea is to get people firmly grounded in what the actual facts are, even so they can determine some of facts for themselves.
The general assumption is that we look after our own interest thus creating less risk via derivation.
Building ways to hedge the risk via the derivation of an asset, is the prevalent view at decision making level, educational institutions and government policy level.
The missing link here is, those who can create the risk reduction are the same ones creating higher risks, and able to cover-up using rating agencies as clown in the financial farce. The wheel of fortune continues.......
Professor Shiller(Case-Shiller index) will argue, derivatives will reduce risk if well placed in the asset risk time value.
The problem of CDO CDS's we are dealing is as much faulty quantification, faulty derivation, and dishonest valuation from the parties who are trusted to operate as self-regulated entities, as it is faulty acceptance of the present financial fallacies instilled in people.
The rating agencies allowed their profits to surpass their chartered mandate. At this point we are better off without chartered rating agencies.
It is my view, self-interest prevailed with the purchase of optimism from products that could have had added cushion if the dishonest ways in which the system operates will no always fail in the backs of tax payers to "bail out" the incompetents.
Keep up the cover up at the tune of mambo jambo!!!
I'll just start with a thanks for the work (and which I have cited) that midtowng and others at the Economic Populist have done.
That said, that $528 billion of US govt. debt was bought by the household sector in 2009 does not seem to be that amazing to me considering that Private Wealth (as pointed out in the post) was $37 trillion. No doubt that value rose in 2007, fell in 2008 and rose in 2009, still it is more than enough to cover a $528 billion purchase when other asset classes were in doubt or falling. Most of that wealth was owned by the top 10%, who are not likely to have suffered as much as the rest of us.
In 2009, the savings rate rose dramatically, and capital investment fell, so increasing government deficit spending is not that far from the mark if we didn't want another great depression. Color me not fearful ... for now.
Still, the cost of the bailouts of wall street and the wealthy are going to be with us for quite some time. From their perspective, we gave them free money for which they have the pleasure of charging us interest. We all know our perspective.
Wow, I had not realized that the situation was quite this bad, and you outlined it in perfectly rational form. It kind of seems like there isn't really much that could be done in the way of remedying the current situation, aside from trying to avoid making it worse. The next couple decades will surely unfold to be tough times for all of us as a result of the past year.
GDP is not, as I understand it, the differentiating characteristic of emerging markets. Among other things, per capita income is a significant differentiator. Given the size of the Chinese population, it will necessarily have a very large GDP but that number tells us nothing about the income or standard of living of the average Chinaperson.
Also, I should think the ability to compete in the international markets would be a factor. I’m not sure there are many if any Chinese industries that could compete with American and European capital and technology intensive industries e.g. aerospace, information technology, etc. Emerging countries compete in low cost labor intensive industries like toys and clothes but low cost labor means low standard of living.
More important to my mind, your often raised issue of China’s market and currency statue again brings me back (with no small trepidation) to the issue of math and people economic analysis. It seems to me that math describes WHAT the US situation is vis-à-vis China, but it does not explain WHY. WHY being understood in this context as an explanation of WHO the people are who negotiate our treaties, foreign policies, international currency exchanges, etc. You say there is something wrong with PNTR. But, PNTR is not an act of nature. Someone signs on the proverbial dotted line so to speak. Some people obviously think that all the various agreements that determine our economic relationship with China are in someone’s advantage. Unless and until we know who those people are and what benefit they derive from the China relationship, we do not know the cause of the relationship. If we do not know the cause we cannot make a change. Social change comes from pressure put on the people who are responsible for the situation to be changed. Real people ‘flesh and blood’ people who end up with real money in their bank accounts, not abstractions like the FED or Treasury or the Administration, etc.
This does not mean that I am against or afraid of math. Indeed, I think I have enough statistics education to understand its limitations as a basis for scientific explanations of social phenomena. R square is an invaluable tool for formulating explanatory hypotheses. But, if the terms of the hypothesis do not include real people, then further analysis will only yield another R square – on ad infinitum. Seems to me. What do you think?
Best
I just finished paying off my social work degree and my term paper, earned nearly a decade ago. I would be so much further ahead if I had never gone to college. 4 more years of work, saving for retirement, not accruing student loans that took me 9 years to pay off (making double and triple payments). I wish my parents had pushed me towards a vocational program instead of a university. I've told my teenager that she should either choose a lucrative degree in a high demand field (pharmacy or nursing) or bypass college and head straight for job training.
Much of financial theory assumes rational investors and efficient market hypothesis and other crazy assumption like everybody can borrow money at risk-free rate. Modern portfolio theory - CAPM - Security Market Line and basic normal distribution assumptions have been shaken to their core.
I could be wrong but I believe that just before Brad Sester ‘went off the air' so to speak and stopped blogging, he wrote something to the effect that Treasury was not dependent on foreign investors because Households were buying so much. I could not understand how that could be, given that Households were having trouble coming up with the rent. But, then again I never did understand Brad Sester, he is out of my league.
But, the above section on the “Phantom” category is making me think I understood more than I thought. If anyone remembers Sester’s comments on the subject or knows how to find them it would be interesting to review them in the context of Midtowng’s discussion.
for some reason, which is strange because I'm highly geared towards sounds...
It takes so much damn time, it's linear, I guess I'm just a hyperlink, 3 minute youtube type of person these days. :0
If it's something useful, I usually want to reread it or some sections a couple of times, so good old fashioned paper works best for me (blogs being also paper, i.e. stuff on a sheet). (Maybe it's because I review so many "so called" documentaries everywhere to find some good juice so I'm burnt out, I don't know)....
Anywho, what's the gist? When you say "theory" do you mean derivatives, structured finance? That would be no surprise but in terms of all economic theory, I haven't seen anything "break" here, I've seen a lot of stuff proclaimed as something when....it isn't because it violates the actual theory. (i.e. the Stimulus is Keynesian....not so, I don't have the breakdown but because there is no "hire Americans, buy exclusively America" imposed in at least the direct spending, which isn't even half of the $787B, I think it was ?? $30B for infrastructure? anywho, all of that's not true Keynesian.
Not to belittle midtowng's analysis and insight...
but EP exists for the ....economics grad. school drop outs...
it exists for all who can do self-study, get some help in reading some graphs, the entire idea is regular folk, esp. those with just a little mathematics and a little econ from undergrad, if you do just a little self study, you can start doing some monitoring on what's really going on economically.
In my opinion, we must. People cannot be turned off or think they just can't get it because some charts, graphs, mathematics and data/statistics pop up in a story.
We need regular folk to start understanding the details...
for the rule of thumb in most scams and twists is....
to hide the facts in mountains of information so the general public has no friggin' clue on what's really going on.....
by this crisis. FYI - I just listened to an interview by Prof. Steve Keen where he talks about engineer capitalism - check the middle row under Debtwatch.
....website where this diary is cross-posted: GREAT diary!
I always love your analysis and eloquence. If I had a FRACTION of your skills perhaps I would not have become an economics grad. school dropout!
Much of this stuff I have been saying and studying for a long time, although credit must go to one of my profs.---ironically NOT an econ. prof., but a political science one, who was pointing out these uncomfortable trends since the early 1990s.
"....under Capitalism, man exploits man. Under Communism it's just the opposite..." ---John Kenneth Galbraith
We've had an unsustainable economic system since 1972. It's gotten particularly bad since 1997.
It's now hitting a terminal state. The U.N. and our Asian creditors have called for a new global economic system.
Everyone knows what is coming, but no one will do what is necessary until they have to.
I saw yesterday that Eric Sprott is betting on another significant downturn in the markets and a much higher gold price, because of all the government intervention and consequences of their policies which would probably imply a lot more problems in housing as well: http://www.businessweek.com/news/2009-12-29/sprott-says-s-p-500-to-tumble-below-its-march-low-update2-.html
there's also some interesting stories on his firm's site on these topics: http://www.sprott.com/PreciousMetals.aspx?id=53
As I understand it, “emerging nation status” is a category defined by the WTO. You have posited that China should not be considered an emerging nation because of the size of its GNP, currency exchange policy, etc. My question:
What are the criteria WTO uses to define ‘emerging nation’? If they do not use size of GNP, currency policy, etc. then there would be no legal basis for the US to take action against China. The US would have to essentially withdraw from the WTO vis-à-vis the ‘emerging nation’ agreements.
As I understand it, based on journalist comments on ‘emerging nation’ status, size of GNP and currency policy are not WTO tests for ‘emerging nation’ status. I have seen references to ‘average GNP’ and political tests such as ‘transition from controlled economy to open economy’.
In short, I’m wondering if you think that China should not be considered an emerging economy because it no longer meets WTO test of that status, or are you saying that regardless of WTO test the US should no longer be bound by its WTO agreement and affect policies that are in our national interests?
I am not advocating any position. I am not asking rhetorically. I am just trying to get some clarification about a very interesting subject. Sorry for dovetailing my question with my favorite (controversial) subject ‘philosophy of social science math and reality’. That just confused the main purpose of my comment. “The devil made me do it!”
Thanks for your always prompt, informative and interesting response.
Best
Do you think that Government Treasury bond funds show under Mutual Funds or the residual? I know that at my work the only option form our 401k that didn't get killed in the downturn was the Government Bonds category and so everybody piled in. If those show under residual rather than the other categories then the number might be real, but not replicable. The money has already shifted and there isn't any more. And as stocks recover a little (for no good reason) the flow will go other way. Anybody know what happens to Government Bond funds as money flows out massively? I am not sure. If it were stocks I'd say it'd get killed. But since bonds have a real yield it probably wouldn't be so bad. Maybe it is only inflation that slaughters bond funds.
If someone else sees a finance/mathematics paper that implies something fictional, but they do not have the STEM background to read it, or understand the math contained within, fire it over here and we'll take a look at it and try to decipher to English.
I think we've got a huge problem via the concept of derivatives vs. what they are actually made of...
I don't see how writing a bunch of gobblygook that isn't sound science helps anyone mitigate anything beyond pocketing some nice short term profits.
It would be different if the particular derivative itself was a sound, verifiable model, then one could argue the function of it....but nonsensical functions themselves? How can they defend this?
Because the WTO gives special rules to EEs, whether or not GDP is given per capita or not, is not the issue.
The issue is China will be the 2nd largest, onto becoming the largest economy, the dominant economy, therefore (as if any EE should be given special rules via the WTO to set tariffs legally and so forth is a separate issue) but China should not be given that status.
It's well documented China has done all sorts of mercantile behavior to dominant the globe economically and per capita or not, in a nation-state situation, that's not how GDP works...it's against nation-states, their currency, their relative strength. That's why GDP on a global comparison scale is not presented as per capita, it's not a relevant comparison when dealing with global economics. You are not comparing individuals (as if GDP is distributed equally, a true piece of fiction there), you are comparing domestic economies of nation-states.
Frankly "low cost labor" is an element within trade theory which can literally destroy a 1st world economy, depending. There is an inflection point in trade theory, which show, you can indeed wipe out a 1st world economy through cheap labor, low costs of production. Enabling the "race to the bottom on wages" by making the means of production mobile is a very common criticism on how trade is implemented.
I don't know what this has to do with mathematics here, but EP is a fact based site and facts, reality are found in the details, including mathematics.
It doesn't help to know who wrote the China PNTR, or that the Clinton administration, bought and paid for, pushed it through, if one does not know the details of that trade agreement and why it is so detrimental to the U.S. national and economic interests.
Citigroup was one of the biggest players behind pushing for the China PNTR and this was due to capital, loans, they financed the 3 rivers dam for instance, but there were a host of multinational's who believed in the mythical 1.5 billion consumer market in China and wanted access....also these same companies, often under the lobbyists "U.S. Chamber of Commerce", do know that when one makes the means of production mobile, one can labor arbitrage wages, so that was a part of their motivation as well.
I cannot find the piece now but the chief architect of the PNTR actually apologized to the world on it and said he was wrong, he gave a series of talks, which I wish I could find. I know I posted them on EP.
Finally, I think you're trying to set up a false debate. The point was to use fact, very stone accurate fact, with mathematics on this site. I have seen so many arguments spring up on blogs and even just yesterday, every major TV cable news show claimed we had a 3.6% holiday sales increase, when one just needs to do a little analysis, even the authors of yesterday's report admitted the extra day skewed the results....to know that reporting that figure was not accurate.
So, the point is many people get their facts wrong. From EIs, to never having even read one line of a WTO trade agreement, to never cracking a book to never reading a single stat, to not understanding say a VAT, which has some pretty odd calculations in it, per item...
yet they will go on and on, arguing on something, when they first do not even understand how something works...
or the MSM will report some headline...when it's completely incorrect.
That's the point of EP, one must get their baseline facts right and in Econ, that usually does involve at least addition and subtraction.
It's not an either/or proposition on EP, it's just saying one has to get their facts right and another idea is to get people firmly grounded in what the actual facts are, even so they can determine some of facts for themselves.
The general assumption is that we look after our own interest thus creating less risk via derivation.
Building ways to hedge the risk via the derivation of an asset, is the prevalent view at decision making level, educational institutions and government policy level.
The missing link here is, those who can create the risk reduction are the same ones creating higher risks, and able to cover-up using rating agencies as clown in the financial farce. The wheel of fortune continues.......
Professor Shiller(Case-Shiller index) will argue, derivatives will reduce risk if well placed in the asset risk time value.
The problem of CDO CDS's we are dealing is as much faulty quantification, faulty derivation, and dishonest valuation from the parties who are trusted to operate as self-regulated entities, as it is faulty acceptance of the present financial fallacies instilled in people.
The rating agencies allowed their profits to surpass their chartered mandate. At this point we are better off without chartered rating agencies.
It is my view, self-interest prevailed with the purchase of optimism from products that could have had added cushion if the dishonest ways in which the system operates will no always fail in the backs of tax payers to "bail out" the incompetents.
Keep up the cover up at the tune of mambo jambo!!!
I'll just start with a thanks for the work (and which I have cited) that midtowng and others at the Economic Populist have done.
That said, that $528 billion of US govt. debt was bought by the household sector in 2009 does not seem to be that amazing to me considering that Private Wealth (as pointed out in the post) was $37 trillion. No doubt that value rose in 2007, fell in 2008 and rose in 2009, still it is more than enough to cover a $528 billion purchase when other asset classes were in doubt or falling. Most of that wealth was owned by the top 10%, who are not likely to have suffered as much as the rest of us.
In 2009, the savings rate rose dramatically, and capital investment fell, so increasing government deficit spending is not that far from the mark if we didn't want another great depression. Color me not fearful ... for now.
Still, the cost of the bailouts of wall street and the wealthy are going to be with us for quite some time. From their perspective, we gave them free money for which they have the pleasure of charging us interest. We all know our perspective.
Thanks again for all the info.
Wow, I had not realized that the situation was quite this bad, and you outlined it in perfectly rational form. It kind of seems like there isn't really much that could be done in the way of remedying the current situation, aside from trying to avoid making it worse. The next couple decades will surely unfold to be tough times for all of us as a result of the past year.
GDP is not, as I understand it, the differentiating characteristic of emerging markets. Among other things, per capita income is a significant differentiator. Given the size of the Chinese population, it will necessarily have a very large GDP but that number tells us nothing about the income or standard of living of the average Chinaperson.
Also, I should think the ability to compete in the international markets would be a factor. I’m not sure there are many if any Chinese industries that could compete with American and European capital and technology intensive industries e.g. aerospace, information technology, etc. Emerging countries compete in low cost labor intensive industries like toys and clothes but low cost labor means low standard of living.
More important to my mind, your often raised issue of China’s market and currency statue again brings me back (with no small trepidation) to the issue of math and people economic analysis. It seems to me that math describes WHAT the US situation is vis-à-vis China, but it does not explain WHY. WHY being understood in this context as an explanation of WHO the people are who negotiate our treaties, foreign policies, international currency exchanges, etc. You say there is something wrong with PNTR. But, PNTR is not an act of nature. Someone signs on the proverbial dotted line so to speak. Some people obviously think that all the various agreements that determine our economic relationship with China are in someone’s advantage. Unless and until we know who those people are and what benefit they derive from the China relationship, we do not know the cause of the relationship. If we do not know the cause we cannot make a change. Social change comes from pressure put on the people who are responsible for the situation to be changed. Real people ‘flesh and blood’ people who end up with real money in their bank accounts, not abstractions like the FED or Treasury or the Administration, etc.
This does not mean that I am against or afraid of math. Indeed, I think I have enough statistics education to understand its limitations as a basis for scientific explanations of social phenomena. R square is an invaluable tool for formulating explanatory hypotheses. But, if the terms of the hypothesis do not include real people, then further analysis will only yield another R square – on ad infinitum. Seems to me. What do you think?
Best
I just finished paying off my social work degree and my term paper, earned nearly a decade ago. I would be so much further ahead if I had never gone to college. 4 more years of work, saving for retirement, not accruing student loans that took me 9 years to pay off (making double and triple payments). I wish my parents had pushed me towards a vocational program instead of a university. I've told my teenager that she should either choose a lucrative degree in a high demand field (pharmacy or nursing) or bypass college and head straight for job training.
....but I've been here for almost a full year now :-)!!! I know I haven't contributed much in terms of comments, etc., but I read this site avidly.
"....under Capitalism, man exploits man. Under Communism it's just the opposite..."
---John Kenneth Galbraith
Much of financial theory assumes rational investors and efficient market hypothesis and other crazy assumption like everybody can borrow money at risk-free rate. Modern portfolio theory - CAPM - Security Market Line and basic normal distribution assumptions have been shaken to their core.
RebelCapitalist.com - Financial Information for the Rest of Us.
I could be wrong but I believe that just before Brad Sester ‘went off the air' so to speak and stopped blogging, he wrote something to the effect that Treasury was not dependent on foreign investors because Households were buying so much. I could not understand how that could be, given that Households were having trouble coming up with the rent. But, then again I never did understand Brad Sester, he is out of my league.
But, the above section on the “Phantom” category is making me think I understood more than I thought. If anyone remembers Sester’s comments on the subject or knows how to find them it would be interesting to review them in the context of Midtowng’s discussion.
We have been warned,
AND
Screwed!
Frank T.
for some reason, which is strange because I'm highly geared towards sounds...
It takes so much damn time, it's linear, I guess I'm just a hyperlink, 3 minute youtube type of person these days. :0
If it's something useful, I usually want to reread it or some sections a couple of times, so good old fashioned paper works best for me (blogs being also paper, i.e. stuff on a sheet). (Maybe it's because I review so many "so called" documentaries everywhere to find some good juice so I'm burnt out, I don't know)....
Anywho, what's the gist? When you say "theory" do you mean derivatives, structured finance? That would be no surprise but in terms of all economic theory, I haven't seen anything "break" here, I've seen a lot of stuff proclaimed as something when....it isn't because it violates the actual theory. (i.e. the Stimulus is Keynesian....not so, I don't have the breakdown but because there is no "hire Americans, buy exclusively America" imposed in at least the direct spending, which isn't even half of the $787B, I think it was ?? $30B for infrastructure? anywho, all of that's not true Keynesian.
Not to belittle midtowng's analysis and insight...
but EP exists for the ....economics grad. school drop outs...
it exists for all who can do self-study, get some help in reading some graphs, the entire idea is regular folk, esp. those with just a little mathematics and a little econ from undergrad, if you do just a little self study, you can start doing some monitoring on what's really going on economically.
In my opinion, we must. People cannot be turned off or think they just can't get it because some charts, graphs, mathematics and data/statistics pop up in a story.
We need regular folk to start understanding the details...
for the rule of thumb in most scams and twists is....
to hide the facts in mountains of information so the general public has no friggin' clue on what's really going on.....
by this crisis. FYI - I just listened to an interview by Prof. Steve Keen where he talks about engineer capitalism - check the middle row under Debtwatch.
RebelCapitalist.com - Financial Information for the Rest of Us.
It's time to shed this neoliberal economic model. I offer the following as a basis to shedding it:
1) In short-term a direct jobs program including training program (bring back the trade school). More efficient and targeted stimulus spending.
2) Increase marginal tax rates on top bracket and reform rest of code.
3) Eliminate tax code bias in favor of debt and sorry that includes tax deduction for mortgage interest.
4) Defend our manufacturing sector by continuing to enforce trade agreements.
5) Make the financial sector smaller - break up "too big to fail" or provide concrete disincentives to be big.
6) Support policies such as the Employee Free Choice Act - we need as Prof. John K. Galbraith said - Countervailing Power to big corporations.
RebelCapitalist.com - Financial Information for the Rest of Us.
....website where this diary is cross-posted: GREAT diary!
I always love your analysis and eloquence. If I had a FRACTION of your skills perhaps I would not have become an economics grad. school dropout!
Much of this stuff I have been saying and studying for a long time, although credit must go to one of my profs.---ironically NOT an econ. prof., but a political science one, who was pointing out these uncomfortable trends since the early 1990s.
"....under Capitalism, man exploits man. Under Communism it's just the opposite..." ---John Kenneth Galbraith
We've had an unsustainable economic system since 1972. It's gotten particularly bad since 1997.
It's now hitting a terminal state. The U.N. and our Asian creditors have called for a new global economic system.
Everyone knows what is coming, but no one will do what is necessary until they have to.
Pages