So happens that this scenario occurred to me, too.
....These are rather startlingly different ways of addressing the impasse but they actually point to the same problem – and it is bigger than the euro disaster, although that is the clearest and most acute manifestation of it. The economy is now beyond the control of national governments, and therefore outside the remit of democratic politics. It has become truly global, and thus a law unto itself; nation states have gone broke in their attempt to feed its gargantuan appetites for consumption and debt. The remedies for this began in panic and are now ending in delusion: first the banks went bust and were bailed out by governments; then the governments went bust and needed to be bailed out by – whom? International funding agencies which get their cash from – where? From central banks which will have to print gigantic amounts of money to replace all the money that simply disappeared in the bad debt that bankrupted the banks in the first place. And if we all agree to accept the illusion that this newly printed cash has actual value – if we all clap really hard and say that we believe in fairies – then the whole show can get back on the road and we will be rich again....
But unless ALL the Gummints pretend, in unison, NONE of it will stand.
Maybe we should start ignoring laws about "counterfeiting." Bernanke and SCOAMF certainly ignore 'em.
HT: CMR
Yes Dad, and lets draw the deds attention just like this.
ReplyDeletehttp://www.thestreet.com/story/10390631/raid-on-ron-paul-dollar-maker.html
All correct, as cited, but what's the answer? A bigger, international government won't do it: even a World Government can't do it, because the problems arise from yoking peoples with different moral assumptions into a single monetary or economic policy.
ReplyDeleteThat can't work for the same reason that your carefully crafted business can't sustain taking on your deadbeat Uncle Freddy with his massive drug habit and poor work ethics. You could kick him some money as charity, if you want to, but giving him stature and a role in your system isn't going to improve the system. Making it bigger isn't the solution.
Cutting out the deadbeat uncles may be a solution -- maybe we could have a different sort of union, whereby the most responsible nations have free trade (but their own monetary policy), and everyone else is locked out. Until and unless they shape up, that is; and any nation, no matter how responsible, must remain in shape or get tossed out.
But that doesn't fix the problems because the banks are international: they'll invest in housing developments in Africa as well as corporate projects in Scandinavia. And they're so big and so complex that no government could really track what all they're up to at any given time.
Maybe fairies are the best answer after all. Fairies could at least fix it all, if they chose.
"Nation states have gone broke in their attempt to feed its gargantuan appetites for consumption and debt."
ReplyDeleteThat's crap.
Which ones? Not the U.S., not Germany and not most developed nations throughout the world. This is a lie told by people who REALLY want to believe that this is premise is true so they can gut social benefits to poor people and SS benefits to people who've paid for it all of their lives.
The only reason that THIS nation state faces the POSSIBILITY of bankruptcy DECADES from now is due to rising health care costs. A long term challenge that most countries in the world don't face because they adopted some sort of universal health care years ago.
We have a demand problem right now. And nation states have EVERY ability to offset this temporary shortfall in demand. But they choose not to, which just makes the problem worse.
Have you ever stopped to think about who you're really holding water for? The retirees who've benefitted from the biggest asset bubbles that the world has ever seen and now are mad that things didn't work out for a couple of years (while still pulling a 10%+ return on their portfolio all of their lives)? You guys will be fine dadster. I know it.
ReplyDeleteNo. The inflation paranoia comes from the people who borrow short and lend long. That hate people like me who would rather see the government print money, spend it, create a moderate level of inflation, boost exports as the dollar falls, thus boosting employment for the average American. IOW, I want some of the burden of this mess put squarely on their backs as well.
The people you hold water for want a strong currency/low inflation above all else to assure that the destruction that they've been instrumental in creating remains squarely on the working class. THIS is why the inflation boogieman exists. Not for the benefit of YOU. For them.
Oh, yah, Strupp.
ReplyDeleteJust like those German citizens who were using a wheelbarrow full of cash to buy bread?
THOSE 'big interests'?
Or like SocSec recipients (and pension recipients) of a few years from now?
THOSE 'big interests'?
Bringing up the Weimar is equivalent to playing the Nazi card.
ReplyDeleteWhy not use Zimbabwe to make your point too?
Actually, Anony makes a good point.
ReplyDeleteWhile there is flaccid demand, simply flooding the market(s) with dollars, or euros, is...ahhh.....pointless.
And then, in 2, 3, or 5 years, fixed income people will be screwed.
So. We've seen what good flooding the market does, right Strupp? Tens of millions of new jobs? NOT. Unemployment-rate reduction to 6.5%? NOT. "Shadow" unemployment rate reduced to 12%? NOT.
And by the way: Which ones? Not the U.S., not Germany and not most developed nations throughout the world.
Greece. Spain. Italy. Portugal. Ireland.
You can say "They're NOT BK."
And pigs (or piigs) fly, Strupp.
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ReplyDeleteFrance just fully embraced debt spending and socialism with their parliamentary elections. Germany isn't going to bail them all out....
ReplyDelete6/18/2012 8:47 PM
"While there is flaccid demand, simply flooding the market(s) is...ah...pointless."
ReplyDeleteNot pointless, but relatively ineffective. But expansionary monetary policy coupled with deficit spending during time periods of flaccid demand is very effective. This idea really isn't up for debate. The problem is that people think we actually tried this over the past 4 years and we haven't come close.
"Germany isn't going to bail them all out"
Why sure they are. They can bail Eurozone nations out directly now or they stand by and watch Spain, Italy, etc. default on their debt (issued primarily by German banks) and then bail out their own banking system at a later date. The only reason Germany is choosing the latter is because the collapse in German exports to their major trading partners (those same countries) has only just begun.
And the Socialist countries of Europe are doing better than all of us right now so I don't know what that has to do about anything.
If the socialist countries of Europe are doing better than the US, then why is Obama blaming our problems on their fiscal woes? Set aside the facts of their historically higher unemployment rates, especially among the youth. Or their declining demographics and birth rates...
ReplyDeleteSounds like Strupp would be a great emigree to Greece.
Ha? The only EU members that resemble socialist states are Sweden, Norway and possibly Denmark. Below are their historically higher unemployment rates....or not. If you're referring to other European nations as being "socialist" then you don't understand the definition of socialism.
ReplyDeletehttp://www.indexmundi.com/g/g.aspx?c=no&v=74
http://www.indexmundi.com/g/g.aspx?v=74&c=sw&l=en
http://www.indexmundi.com/g/g.aspx?v=74&c=da&l=en
And declining demographics don't make any sense in this argument. The European countries that you seem to be alluding to don't have a problem with a shrinking population right now. They have double digit unemployment in most cases. Who cares if they're population's shrinking? They can't fully employ the people they have.
Lastly, I haven't a clue what Obama has said or hasn't said about the EU. If he's blaming our economic problems on Europe then he's wrong. The President has been trumpeting austerity like the rest of the crazies for the past 2 years so I'd be surpised if he's talking bad about Europe since they seem to be adopting the same policies.
The Nordic states have miniscule populations and economies, not to mention the amount of revenue they get from petroleum. Norway never even joined the EU. But you knew that already Strupp.
ReplyDeleteBut if you don't think the other countries are socialist? Really? I may give you Germany, but they also are in the best fiscal shape and have the largest economy - which should tell you something else about socialism. Spain, Italy, Portugal, Ireland, Greece... the dominos are tipping.
In fact the countries that recovered the best are those that didn't increase their deficit spending - the former eastern blocs and Germany.
And Mr Strupp still hasn't explained why Weimar doesn't apply, aside from stupid cracks about "the Nazi card."
ReplyDeleteMaybe he doesn't have aging parents.
So Greece, Portugal and Ireland are a cautionary tales we should all worry about and Nordic countries are miniscule and insignificant even though they have bigger economies than all of them. Classic!
ReplyDeleteAnd your beacon of capitalist virtue (Germany) has social expenditures as a percent of GDP bigger than every nation you list. Bigger than Spain's, Portugal's, Italy's and SLIGHTLY lower than...um...Sweden's (24% vs. 25%). They actually fit your definition of "Socialist nation" just as well, if not more than, everyone else in the Europe.
Last, Germany's debt/GDP has gone from 65%/GDP in 2008 to about 83%/GDP in 2012. Now that's doesn't fit my definition of deficit spending (we didn't come close either), but then again, they haven't had to bail out their banking system yet like we have. That's coming as they crush ther trading partners under the weight of internal devaluation.
And with Germany slipping back into recession as exports recede and unemployment ticking up again, you'll have to move on to another country to try and make your point.
Dad, Vox has a very intersting piece on Free Trade....
ReplyDeletehttp://voxday.blogspot.com/2012/06/pat-buchanan-vs-gary-north.html
Struppster, question. I've been pondering the comments in here and here's the question. How solid do you think some of the Euro-zone will be when we can no longer keep our forces of Empire there, and they have to cover all their costs without our aid? Many of those countries don't have the huge burden of complete defense due to our presence. What do you think? I am truly curious.
ReplyDeleteSorry for the delay Billiam.
ReplyDeleteConsider this. We currently spend about 5%/GDP on "defense". Combined spending of all EU nations on "defense" is about 1.6%/GDP. While this doesn't sound like a lot compared to us, 1.6%/GDP constitutes the largest defense expenditure/GDP in the world other than us.
I would argue that EU wouldn't have to spend a whole lot more for "defense" if we left town because their current spending is sufficient to "defend" the Eurozone.
The REAL issue is that we spend 5%/GDP to build F-22's and aircraft carriers named after Republicans that sit in SD doing nothing in between our wasteful wars in the Middle East. We could easily scale back our forces to pre-9/11 levels and "defend" the homeland just fine.
I agree that we could scale back our forces. In fact, for years I've said we should close our bases in Europe as well as quite a few in the pacific. I also think that many European nations are cooking the numbers, as are we, to make it look better than it is.
ReplyDeleteThat was me, Billiam. Damn google!
ReplyDelete