Off Topic; The downfall of the US.

The Depression is *still* being analyzed. These things take a very long time.

Here is some bleeding edge stuff - the gold standard was being abused by the French ( who were terrified of another hyperinflation and "cheated" on their exchange rate). Best explanation to date, IMO.

And the Japan-malaise is most likely simple demography coupled with productivity gains. We can guess that, anyway.

Other than WWII or going off the gold standard, nothing else can be traced to relieving us of the Depression. And again, it should shock everyone how poorly we understand this.

Abject balderdash. In recessions, people with more money are at higher risk of losing it, and people with more income are also at higher risk of losing *that*.

The exception is people who work for rent-seekers like GE.

That's an excellent way to have less money - you let them *fail*, then pick up the customers. Ask Warren Buffet...

It's simply not understood. What happened here is that Greenspan managed to confuse people about what this means. they also missed strong failure modes in complex financial engineering products - Micheal Lewis is generally the lead book-writer on how this happened.

You can't say that the '08 crash was inevitable. It would have at least been very different had Bear-Stearns not insisted on *only* overnight repo financing, or if AIG had not been a cult.

I don't claim to know, either - I am just saying that people like Eugene Fama are not making things up. Usually, Keynsians and non-Keynsians are simply assuming different suites of constraints. But the way markets work is when people can short things that go wrong to provide *a* price. Interfering with that makes things worse.

-- Les Cargill

Well, it appeared as though you were assuming that I approved of people like Mao and Stalin, which is not the case. Devil's advocate can be a usefull tool to tease out other's bias and intolerance of anyone elses point of view but their own. However, I bet a lot of those who have been defrauded or lost everything might approve of more extreme measures and who can blame them ?. Doesn't mean I approve of it, just an observation.

Which was the point I was trying to make.

Typical rightist. Ok, are we done with this polarisation crap now :-) ?.

Fiercely independent here and take very little on face value without some sort of verification. That's the scientific method, right ?. Am quite quite will willing to accept that people of all parties have good ideas. Country, not party, is what matters. Extreme party loyalty is so primitively tribal that it would be laughable if it weren't so sad. We expect more from intelligent, educated people. The reason politics is so broken is that scoring points has become the primary focus, not working together to solve problems. Many of these people are not fit to sweep the streets, never mind run a country, they are so prejudiced and constantly looking for the main chance...

Regards,

Chris

This paragraph misses its mark by an extremely wide margin. For one, the UN process failed ( its usual thing to do ) on Dubya, and Dubya rounded up to "go". An unusual choice, but not unprecedented.

Both Gorbachev and Kruschev proved Stalin's "error"; Deng Xio Peng proved Mao's. Denying that both were meatgrinder-states all but designed to kill people is ludicrous.

Not according to the best guess of anybody writing about the crisis. No depository institution failed until wider contagion took them out*, so the only part of Glass-Steagall that is relevant is the proscription against derivatives in finance. One need only look at interest rates now and 30 years ago to see that derivatives have *some* benefit.

(not sure what the total FDIC liability has been, but the erasure of the wall between Ibanks and depository institutions has not been part of this.)

*(source for this is Micheal Lewis' "Big Short")

TO be sure, Brinksley Borne "warned" of the problem with derivatives run amok, but even now no clear controls on them are well-understood. None of the primary failures were of derivative instruments, but rather the failure of internal structures of governance.

The percentage of GDP taken up by government is rising dramatically. That's almost universally accepted as a bad thing.

-- Les Cargill

"Russian writer Vadim Erlikman, for example, makes the following estimates: executions, 1.5 million; gulags, 5 million; deportations,

1.7 million out of 7.5 million deported; and POWs and German civilians, 1 million ? a total of about 9 million victims of repression.[99]"

John

What I wanted to do is point out that Stalin was more than just a bad manager.

Of course, practically any person or entity who manages an economy turns out to be a bad manager, which Stalin was, too.

John

That's Barack's strategy--he's digging us furiously towards China.

(His latest budget proposal spends $1.79 for every $1 in federal revenue. He calls this a "painful cut.")

-- Cheers, James Arthur

Sorry, should have had /sarcasm_on, for the first line :-).

I guess the point is that at some stage, we have to move on and learn from the hatreds of the past so we can build a better future. You can't do anything stuck in a loop, historical or otherwise...

Regards,

Chris

Two problems with that: 1) Are politicians--the most ambitious,self-serving, self-promoting of men--more ethical, better schooled, more industrious, with purer motivations? 2) It is exactly state interventions that have created the monopolies, too-big-to-fail myths, housing bubbles, and other such nonsense.

It's good for government to set the rules, bad when they bet on the game, and worst when they own it.

-- Cheers, James Arthur

(The above header is far too depressing, let's have a bit more optimism :-)

I just can't see that. It's business that is exporting jobs and most people in this group seem to want less state intervention, so I assume they would approve of that. How can it be Obama's fault if he does nothing ?.

So what do you think should be done ?. In the uk, proposed cuts are being criticised because of the effect on (mainly public sector) employment and everybody's sister's aunt's special pleading group, but on balance, i'm in favour because I want to see the country live within it's means. The state got far too big under labour and services expanded greatly, at great cost, fostering a feeling of entitlement which was just not realistic in terms of the limits to state provision. If i'm expected to keep my personal finances in order at the bank and get short shift if limits are exceeded, then I expect the state to keep their's in order as well. Of course, if you cut too deep, then you end up with real hardship and social unrest on the streets, so there has to be a balance.

As for business, I would like to see a lot more tax breaks / encouragement / less red tape for capital equipment and investment in R&D for business, especially small startups, because they are the seedcorn for the future. In the end, it's business that provides most of jobs, which then provide tax revenue, etc etc, to pay for public services. We live in a very competitive world now, manufacturing can be done cheaper elsewhere (which of course distorts domestic markets), so we really only have our inventiveness and ip to trade with. If the basis of capitalism is trade, we have to have something to trade if we are to survive and not become a second class nation with poor standard of living.

I would also like to see far more control over the activities of financial institutions and banks, to prevent a repeat of the banking crisis, but it looks like something is going to be done about the worst excesses anyway. In the past, the bank's tail wagged the government dog, which can't ever be right...

Regards,

Chris

Yeah, forget the past. We're too smart to repeat it. ...except we are.

What about all three?

And what is that percentage? I asked krw to point to a relevant statistical measure, not reiterate the uusal right-wing politcal rant.

-- Bill Sloman, Nijmegen

ou

20 or

Judicial executions - no matter how crummy the legal system - aren't murder. As usual, you missed the - rather cynical - point that I was making.

-- Bill Sloman, Nijmegen

And you failed. He mis-managed the security system just as badly as he mis-managed the economy, but the deaths weren't - technically speaking

- murder.

There are better and worse managers. Your - ill-informed - right-wing point of view is that the economy shouldn't be managed at all, but left to the mercies of the unrestricted free market, which would give us the idiocies of boom and bust. This leaves you free to write off everybody who manages the economy as a bad manager, because according to your long-exploded theory, nobody can manage an economy as well as your mythical free market.

Stalin's mis-management didn't stop the Soviet Union from out- manufacturing Hilter's Germany, which is how they got to win WW2, with a little - not all that significant - help from the US and the UK. The US trucks do seem to have made a difference to the Russian war effort, but the US tanks were discarded as useless.

-- Bill Sloman, Nijmegen

Obviously not. But they do have to get re-elected, which is a test that bankers and market makers don't have to pass. Of course the US electoral expenditure rules make US politicians particularly susceptible to persuasion from people with a lot of money to spend on electoral advertising.

By the same logic that makes the demoncrats responsible for the ninja loans that your blameless bankers made, which were the real and fundamental cause of the sub-prime mortagage crisis.

Granting the ideological blinkers which restrict your view of the world, I suppose you can post this kind of pompous rubbish and expect it to be taken seriously.

-- Bill Sloman, Nijmegen

-- Les Cargill

Een Capitalist Amerika, economy manages *you* :)

"The curious task of economics," Hayek said, "is to demonstrate to men how little they really know about what they imagine they can design."

-- Les Cargill

The best historical guess is that what we want to do is have something like the gold standard, but with a steadily rising 3-ish percent increase of "gold" per year. The easiest way to do this is with a central bank and *very disciplined* fiat money.

SFAIK, there is no economist who does not think that this is true, not even Keynsians.

This is an application of raw, basic information theory. When you tot up how many "bits" it takes to represent price signalling in unconstrained markets, the number is way, way, *WAY* more than even a large number of extraordinarily well-coordinated and perfect wonks can manage.

There are cases where local improvements can be made - one might be farm subsidies, if we really priced the insurance against serious gluts and shortages. But the known exceptions are very few and have taken a long time to get right.

They won with not only American materiel directly shipped ala Lend-Lease but little details like the design for the T34 tank.

It was about $11 billion.

Britain's war debt to the US was about $4.33 billion.

But the T34 was not.

-- Les Cargill

And historians are having good luck debunking this.

Most rich economists are left-wingers. People like Arnold Kling live on previously made money, generally.

It's very complicated. But people with lots of assets who lose the cash flow to cover 'em lose the assets.

If...

Let us just say that the stories about what happened don't involve that much bad real estate paper. But I bet the good papers on the subject won't be written for seventy years...

SFAIK, a strong central bank that uses the right measures to keep the stock of money stable will cause recessions to be less painful. We don't really have one of those...

-- Les Cargill