Part 2 was here.
Hat/tip
Brown: First of all, for the first time, we have come together to set principles to reform the global banking system. This is a comprehensive programme of measures that includes, for the first time, bringing the shadow banking system, including hedge funds, within the global regulatory net.
[Higham: Wow - so the Bavarian, Parisian and British old-family slush money, the proceeds from the drug-running and porn, along with the World Bank and BIS holdings plus all practices by said bodies are all going to be under one global supremo oligarchy? Well, at least he's honest in this.]
Keiser: Meeting of gamblers anonymous. These guys get together and they hope that if they follow some sort of steps and principles and logic, that they can overcome their gambling addiction. But they're not going to overcome their gambling addiction and the numbers being thrown around - 5 trillion here and 1 trillion there sounds like a lot of money, except when you consider that banks like JP Morgan have 90 trillion in dollars worth of derivatives on their books; there're hundreds of trillions of dollars of derivatives on various banks' books around the world where the captcha parties are in, as Gordon Brown put it, in the shadow banking system which is, right now, totally unaccounted for.
And when all's said and done, I'm afraid the banks are going to have to admit that many of the world's banks are completely insolvent and the jobless number that Gordon Brown referred to is only going to go higher in the short/medium term - we're talking about depression level unemployment in countries like the UK and the U.S. and it's amazing that, in the UK, the rhetoric coming out of Gordon Brown and his cabinet is that it's OK to take money from the IMF.
I'm sure the people of Britain are loving to hear this - they remember back in the 1970s, when Britain was a basket case, taking money from the IMF and now it's OK to take money from the IMF? How shameful is Gordon Brown? It's absurd. The people of Britain should run him out ... it's absurd. He's sold them short to the IMF, a global institution. The UK doesn't want to join the Eurozone but they're going to sell out to the IMF. How sick is that? Gordon Brown - step down!
Forbes:
Keiser: Oh it's more accounting fraud. In other words, the way the economy has been moving, and in the UK, they know this very well because they sacrificed their manufacturing base and mining and they squandered their North Sea reserves and they decided to become the hedge fund capital of the world and the concierge for all the money launderers and the money shysters and financial terrorists from America found a home in Britain.
Now that the game is blown up, interest rates are no longer accommodating this money laundering in Britain and the divine right of hedge funds. I thought Britain got rid of the divine right of kings back in 1649 withe the elimination of Charles I ... they need to get back to some kind of rule of law. These numbers that are bieng thrown around are pure fraud ...
The IMF are going to become the new receptacle ... they're going to take a fee again ... the same financial oligarchs that have seized the system in the UK and the U.S. and they're just going to simply repackage the debts, dump 'em in the IMF and say that this is somehow making progress.
[Higham - it was loud and clear in parts 1 and 2 that you only need to go to history to see that this is a repeat performance of exactly the same game, particularly in the U.S., throughout their history.
But even in looking at history, the question is which history? Obama likened his deal to the 1930s New Deal but in fact that is disingenuous in the extreme - it is much more like the Weimar Republic and its inevitable hyper-inflation. Tiberius Gracchus says that "good history", i.e. drawing the right lessons from the right era, contributes to understanding the present and presumably should have an impact on policy:
One way it does so is through encouraging scepticism: the good historian is a professional sceptic both of his sources and of her own ideas. You learn through history to distrust what the sources tells you (who, whom is a great historical question from Lenin) and also to distrust your own temptation to overarching explanation. The second thing that you learn that is crucial to writing and thinking about good history is some sort of sympathy or empathy with those that you are writing about.
Lenin. Y-e-e-e-s, Tiberius. Moving on. If we look at the history of money, we see the history of the current crisis, who caused it and why. Only once this is understood should one go back to one's Economics 101 and start sprouting macro-economic theories again.]
Try instead this video clip of Prof (Nobel laureate) Krugman on 18 April 2009 at Princeton on: The Return of Depression Economics
ReplyDeletehttp://www.youtube.com/watch?v=r5r17NrIMRY
I can recommend too the revised edition of his prescient book: The Return of Depression Economics and The Crisis of 2008 (Penguin 2008).
The new edition of his textbook for his principles course at Princeton was recently published: Economics (WH Freeman, May 2009)
Yes Bob. I'm well aware of Krugman - shall watch it now.
ReplyDeleteIn today's news reported by Reuters:
ReplyDelete"Aug 10 (Reuters) - The U.S. government saved the country from a 'full replay' of the Great Depression, Nobel Prize-winning economist Paul Krugman wrote in an opinion column in the New York Times on Monday."
http://www.reuters.com/article/governmentFilingsNews/idUSBNG53785420090810
Krugman's column in Monday's New York Times is here:
http://www.nytimes.com/2009/08/10/opinion/10krugman.html?_r=1
This is not what Krugman said in his lecture, when he showed comparative charts which used no grammatical past tense and didn't say we'd averted the crisis at all.
ReplyDeleteInstead, he showed, according to available data, that we were slightly worse off by comparison with the 1930 situation and heading down.
His message in the NYT is greatly at odds with his speech and makes one seriously wonder about the man.
Krugman's lecture at Princeton was on 18 April last.
ReplyDeleteEvents have moved on since then and - importantly - more data has become available relating to the US and other major world economies. During a recent visit to Britain to deliver a series of lectures at the LSE, he said in July, among other things, that the UK will emerge from the recession before the Eurozone and the US:
http://www.economy-news.co.uk/uk-end-of-recession-2707.html
There was also an extended interview of Krugman in the BBC Hardtalk series on 5 June, available here:
http://www.bbc.co.uk/iplayer/episode/b00l22ll/HARDtalk_Paul_Krugman_Nobel_Prize_winner_for_Economics_2008/
To read an informed and argued critique of Krugman, try this:
ReplyDeletehttp://wallstreetpit.com/9313-the-lucas-roundtable
Of course, the reason for believing that a fiscal stimulus is now necessary is that with base interest rates set at around half a per cent to zero by the respective central banks in the US and the UK, monetary policy has lost effectiveness apart from the option of quantitative easing - which right-wing loonies dismiss as the Zimbabwe option.
For a recent sober assessment of Quantitative Easing, try this by Daniel Pimlott in the FT on: Data cast doubt on monetary easing:
http://www.ft.com/cms/s/0/77805c6e-8159-11de-92e7-00144feabdc0.html
Right-wing loonies?
ReplyDeleteBit of a giveaway, Bob. :)
Compared to Femi-Nazi (see previous post) I think right wing loon is a bit moderate- afterall no loon killed six million people!
ReplyDeleteI'm glad we agree about history though. Thanks for taking the quote and for your comments on the post!
I've just viewed Mr K on hard talk provided by "Bob"
ReplyDeleteI have to say he does not speak the truth.
Banking finance at 9% of economy. False.
Comparison with previous debt to gdp levels...
Previous depression was totally dissimilar in origin.
He said, "A return to anything like full employment is indefinitely distant". That is true
But, that fact, since the consumer is 70% of the economy, means there can't be a true recovery until employment increases.
The injection of more debt will not work when the consumer is
a) debt saturated
b) altered savings pattern to plus 5% or 6% saving level (debt repayment in US statistics is added into "savings levels") from a minus 1% +/- saving level. Such will reduce GDP ongoing by approx 3.5% to 4%pa, before any other economic contractions are considered.
There are other blatant falsehoods. The man is singing from Mr O's song-sheet!
Try this instead
Yes the markets are rising.
One of Rubins methods was to prime the futures and buy indices. Rubin has returned to Mr O's team.
I believe Sonus covered the PPT in one of his posts.
The $80 trillion on JPM balance sheet creates a false market for bonds,
and helps keep interest rates artificially low
Krugman knows all this, as such I regard him as part of the problem
Oh, The Fed goes by the back door
ReplyDeleteAnd
Our friend the PM capper Makes a move east, presumably for when the Yuan becomes part of the basket
which Mr K thinks won't happen!
Mr O's book again.
You really can't trust a single word these guys say.
ReplyDeleteMy guess is that Prof Krugman will survive the personal attacks.
ReplyDeleteOne of his (several) claims to fame among economists is that he came to appreciate early on that the stagnation of Japan's economy during the 1990s - after its asset-price bubble burst in 1990 - could happen in other advanced market economies too in similar conditions.
What he also recognised was that much of mainstream macroeconomics, as taught in many leading universities, lacked the analytical tools to diagnose the ensuing problems and devise appropriate policy remedies to avert a return to the embedded depression of the 1930s from which we finally escaped through the massive public works programme we call WW2.
Unlike so many professional economists, Krugman recalled Keynes's principal focus in his seminal book: The General Theory of Employment, Interest and Money (1936):
"In particular, it is an outstanding characteristic of the economic system in which we live that, whilst it is subject to severe fluctuations in respect of output and employment, it is not violently unstable. Indeed it seems capable of remaining in a chronic condition of sub-normal activity for a considerable period without any marked tendency either towards recovery or towards complete collapse." [General Theory p.249]
http://ebooks.adelaide.edu.au/k/keynes/john_maynard/k44g/chapter18.html
Try the FT on Keynes:
http://www.ft.com/cms/s/0/a754a046-9c79-11dd-a42e-000077b07658.html?nclick_check=1
One failing in that piece is that it fails to acknowledge the special contribution of John Hicks with his LM-IS analysis - when Krugman makes a particular point of citing Hicks:
http://www.pkarchive.org/economy/GeneralTheoryKeynesIntro.html
John Hicks's paper on: Keynes and the Classics (1937) can be found here:
http://www.eco.utexas.edu/~hmcleave/368hicksonkeynes.html
What "attacks", Bob? I thought they were just questions over his about faces.
ReplyDeleteThe bottom line is that in the NYT, he's done an about face from his position, which I quote, saying that if you want to know the scale of unemployment, go to Greenspan and ask him ... to a position where he is now arguing for Big Brother and even calling it that.
On the one hand, he admits, by his irony, that interventionist policies are not good and his comment is redolent of Jackson telling people to go to Biddle ... and now saying something a bit different that Obama is right to intervene.
Yet he's equating Obama and the Fed in doing this and the two couldn't be further apart. One is a big spending interventionist using non-existent money and with only tied power to print money - he controls the printing press but not when it is to be used ... and the otehr, which uses the fractional reserve system to fraudulently plunge the country into misery as and when it wishes.
For Krugman not to officially say what he knows is frightening because the man is fulfilling Burke's urging negatively - a good man doing nothing.
Bob, did you look at the three vids in part two?
The money does not actually exist in the economy - it's a book keeping entry, these so called trillions. It is not the government's trillions, it is the Shadow Bankers' trillions. That's not my conspiratorial term - it's Gordo's.
This money is not even ours actually, the taxpayers'. It is the international finance's money being lent.
So what's Big Brother in this anyway? Big Brother is the State controlling our lives but the thrust of these posts is that the State should very much wrest control of the money supply back from the Fed.
People seem to be talking cross purposes here and utilizing emotive terms for obscure reasons.
These posts are unequivocal though:
1. The State, insofar as it is the people, should wrest control of the money supply out of the hands of the CBs;
2. Fractional reserve banking, based on thin air, should cease.
Micro-economics and not macro should reign.
There is no subject more prone to exercising vanity than economics, especially when bright people have aquired just enough knowledge to be dangerous. We strut knowledge and strangle wisdom.
ReplyDeleteKeynes was one of the great frauds of all time; his mind was as great as the master--Rousseau.
The principles for a good outcome in economics cannot be removed from those that are essential to liberty. As liberty is not understood, economics cannot be. Economics does not need to be understood if you have liberty. The less we understand the economy the better it does.
Garet Garrett saw that by its very nature private capitalism limits government, while von Mises observed that credit expansion is the government’s foremost tool in it's struggle against the market economy: there was no reason whatever to abandon the principle of free enterprise in the field of banking. Or anything else.
As we let government determine every meaning and aspect of money, it is inevitable that government will do what it always does--protect and project itself. Why would it not? So we are left arguing what it is that might be the least harmful vanity.
I think you are on the right track, James. But there are no conspiracies except the ancient one to return to the primal order. All socialists are little dictators, lords of their shrinking realm. Even many capitalist have no idea what that actually is and could not defend it, and may be instead inclined to defend socialism. We are comfortable defending what we are in fact ignorant of, and uncomfortable in defending what we know we do not understand. No matter that it works.
xlbrl: "The less we understand the economy the better it does."
ReplyDeleteIn other words: let ignorance prevail.
BTW what do we do if and when major financial institutions - like LTCM, Bear Stearns, Lehman Brothers - fail if we know nothing about the economy and their role in it? Engage in witchcraft - or sit and do nothing like Hoover did when faced with the Great Depression in the 1930s?
Our present problems are partly because the monetary authorities in the US and the UK ignored this timely warning from Warren Buffett in 2003:
"The rapidly growing trade in derivatives poses a 'mega-catastrophic risk' for the economy and most shares are still 'too expensive', legendary investor Warren Buffett has warned."
http://news.bbc.co.uk/1/hi/business/2817995.stm
And don't tell me that Warren Buffett is ignorant about the economy.
XLBRL,
ReplyDeleteYou are correct, partly.
But I would contest one of your points.
In the future.
xlbrl: The less we understand the economy the better it does.
ReplyDeleteBob B: In other words: let ignorance prevail.
When Robert Samuelson made that statement it was an acknowledgement of his long experience, not ignorance, and the writing of Hayek. The greater ignorance is found in innumerable economic theories, one more clever than the next. The cleverest wins, and as Keynes was more clever by far than others, we suffered his. We understand theory less well than things we mistake for theory.
Hayek saw that the extended order of capitalism--not crapitalism or cronyism or statism, but private capitalism--this way:
The extended order of capitalism is transcendent–that which far surpasses the reach of our understanding, wishes and purposes, and sense of perception. It incorporates and generates knowledge which no individual brain and no single organization could posses or invent.
To extend human cooperation beyond the limits of human awareness requires being governed not by shared purposes but abstract rules of conduct.
Powerful instinctual and rationalistic impulses rebel against the rules and institutions that capitalism requires."
That kind of ignorance. Abstract rules of conduct, in liberty. Not everybody's clever ideas. That's the kind of thing most people such as myself can understand just well enough to let alone and prosper in. It takes a sharper mind to understand and believe the elaborate misunderstandings of the parade of geniuses who place theory above experience.