Economic Sense?

[MidnightCowboy]

Certainly a lone voice in the Euro wilderness but Steve keen is the only economist I've heard make any sense since this whole thing began.

http://news.bbc.co.uk/2/hi/programme...lk/default.stm

[aangekoekt]

Agreed there. I'm not really one for conspiracy-theories, but this whole business stinks. We tell our children not to be greedy but it seems to be one of the basics to survive as a grown-up.

[MidnightCowboy]

Originally Posted by aangekoekt

Agreed there. I'm not really one for conspiracy-theories, but this whole business stinks. We tell our children not to be greedy but it seems to be one of the basics to survive as a grown-up.

True.

I'm not denying the obvious "contributory negligence" on behalf of consumers. No one forced them to accumulate 10 credit cards each, take two foreign holidays every year, new cars etc., but making this possible was what started the downward spiral. Funding most of it from property equity only made things worse.

[Sope]

Intriguing idea, it's a shame the establishment's closed minds would never even consider it though.

[wdhpr]

Seriously !!!!!!
I wouldn't of believed this if I hadn't heard it myself. What happens when the price of a loaf of bread cost's 10,000 EUROs. This is like trying to put out a fire by throwing gasoline on it. I think I understand the concept but it don't see it working in the real world. Greed feeds on itself, something that can never be removed from the equation.

[wdhpr]

I'm sorry if my opinion seemed a little harsh. So in fairness I decided to go back and listened to it again.

Honestly IMO a snowball in a very hot place has a better chance. My country in on the same track as most of Europe although Germany is still in pretty good shape. Canada believe it or not is doing very well comparatively but even they are going to have to deal with entitlement spending. The problem is everyone is looking for an easy solution. The painful truth is that we have to learn to live within our means and this applies to government as well. All one needs to do is look back on the great socialist experiments and see they have always collapsed from within. China has adopted many capitalistic techniques but they too are not immune to reckless spending.

[MidnightCowboy]

Without moving into a political debate, it's also interesting to note the degree of control China exerts over its population and to speculate on how they will be able to maintain this in the future? Millions of Chinese are short of water for instance and all those eyes are busy following the rise of the new middle classes and super-rich. Could be very interesting.

You're sure right though about human greed as typified by the events during the Thanksgiving sales. Using pepper spray to get to the front of a queue is about the best
At least the armed robbers were sensible enough to attack folks in the car parks afterwards instead of competing inside with all those heaving and smelly bodies

[Sope]

Regarding economics, whatever we are doing now, doesn't appear to be working. Maybe it's going to take a leader with vision and bravery to get us out of the current mess and make permanent changes to the system for the better (not suggesting Keen is that man or his ideas specifically are the right ones).
Sadly the establishment is too set in it's ways to make any such radical changes. After all, it's not the rich and powerful who are suffering so there's little incentive to stick their necks out too far.

[Terarus]

I agree that when people spend way out of their means and expect an easy solution to it they are oblivious to what bankruptcy means. But bankrupting the banks, nationalising the financial sector is just as flawed as what we have right now - no govt can ever dictate the allocation of resources better than individuals driven..yes unfortunately, by greed itself.
A borrower won't borrow unless he/she is certain they can make profits (thus they must have a distinct advantage over others) and lenders won't lend unless they are compensated adequately.
Keen suggests that the govt takes over and pays down the debt of individuals. It sounds very nice but its subject to extreme flaws:
1) Individuals can continue to borrow and expect the govt to pay for them - monitoring and preventing this behaviour is a cost to society
2) The paying down of debt can result in the "weak" (weak is defined as unsuccessful or bad businesses) in getting a boost to their positions. This can make it unfair to better managed businesses and lead to a buildup of inefficient players in the market - another cost to society
3) With no incentive to profits (if the govt controls finance), lending will be more govt prioritised and give little returns per dollar of loan. Think of our superannuation and money in the bank right now, we get interest as long as banks make money on their loans. If the govt takes over, how much interest or returns do we get on our retirement funds? People will shift money away from low return investments to higher and riskier ones (equities); a bubble in the making? The shift in funds also makes the govt short of cash to lend; thus printing money is needed and inflation should follow (links with bubble)
4) Lending becomes costly. Of course, govt can hire people to determine who gets loans and stuff, but because profits is not the goal; you can imagine high risk borrowers (with potential high returns) are all weeded out in favour of low risk low return loans (to prevent potential bad debt). Note that a lot of new technologies and research are based on high risk high return profiles - no loans = no progress

[eyeb]

It's why I think the public works projects from FDR worked and why it's needed now... (not sure how many are americans on here so...) The projects were to create jobs that benefited the everyone, improving neighborhoods/roads/train rails/etc. Using the jobs, people learned skills/and importantly earned a paycheck which they used to pay off debt.

I mean the government can give all the money to the banks so they dont go under, but a bank is only a bank when people have money to put into them. Without that the banks lose their function, it's essentially putting a full tank in a car and having no driver, which in turn leads to the car rusting away anyways. Instead put some of the money into getting a driver for the car. Not saying that a driver is useful with an empty tank but a balance of some sort is needed... That's my views of it anyways, even a bad driver that moves the half full car a few miles is moving the car a few miles, as long as it doesn't end up in a crash with someone else lol.

Using that analogy, seems like politicians are too afraid of half measures where it ends in a crash, but to me any movement is at least progress. Shoring up all the money into their wallets might let them get out of it fine, but they are rotting away the country just waiting for it to get better by some other means which implies that they aren't doing their jobs as leaders if they leave it to some outside force

besides, any money they spend now can be obtained later in taxes... spend $ for a few years, when economy is better you get the same money back + interest for the taxes in the decades to come

edit: clarifying my views a bit more, but I don't support giving money to "job creators" because 1 job creator can't create jobs that benefits the country, so if the money is from taxpayers, it should help the country so that's why I'd support public works projects. And it doesn't punish the people who did well because they'll be supplying the workers with their tools/food/etc.