There was talk about renaming the Krugman thread for this purpose, but that seems to be going nowhere. Besides which, I feel the Krugman thread should be left to discuss Krugman while this thread can be used for more general economic discussion.
Discuss:
- The merits of competing theories.
- The role of the government in managing the economy.
- The causes of and solutions to our current economic woes.
- Comparisons between the economic systems of different countries.
- Theoretical and existing alternatives to our current market system.
edited 17th Dec '12 10:58:52 AM by Topazan
@DeMarquis: It's an opinion piece, yes. I'm looking at their rules as seen here
.
Fuck you, Fascist sympathizers
I believe Estonia has a Currency Board in lieu of a Central Bank, and is known for being particularly adept at neoliberal economics, making it a darling of the right and of the EU. They tend to succeed where Latvia and Lithuania fail.
When it comes to politics, I have given up on figuring out what is right, left, center.
Plants are aliens, and fungi are nanomachines.
![[up]](https://static.tvtropes.org/pmwiki/pub/smiles/arrow_up.png "[up]"){kind=icon}
Uh... wrong thread?
Commenting on " neo(liberal) being a darling of the (right) ".
Right and left seems to have different meanings in the USA and in Europe. Plus, my stint about one month ago on economic systems had me running in circles with just their naming scheme.
Plants are aliens, and fungi are nanomachines.
V
The Democrats would be centre-right at best most of in Europe. Reading the Standard European Political Landscape page is a good primer for politics this side of the Atlantic — and "Liberal" has a different meaning
On another note, Neoliberals and Odoliberals are usually in the centre. And if you're looking for Keynesianism and greater Government control of Industry, that'll mostly on the Far Left and Far Right — and neither are Progressives.
edited 24th Aug '15 12:00:28 AM by Greenmantle
Keep Rolling On
Also I'm hearing stocks are apparently tumbling world wide?
Yep. China's attempts at applying Keynes hasn't been working. I heard they're gonna use state pensions to prop up the stock market.
Honestly, from what I keep reading about how much shareholder worship is bad for companies and innovation and everything else, I can't say I'm too upset to see the stock market tumble. I think that it may have had value at one point, but it's since become a place for people to just make quick bucks rather than to actually support good companies.
Lost in Space
China's attempt at applying what? I think you're reading the wrong websites. Keynes would be spinning in his grave if he saw what was going on over there.
At no point did Keynes ever say that a depreciating currency amid the collapse of a stock market bubble should be fought by pumping even more money into stocks, and if you can find an actual Keynesian economist who advocated it, I'll eat my hat.
edited 24th Aug '15 8:22:47 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Professional Forum Ninja
edited 24th Aug '15 5:17:51 AM by tclittle
"We're all paper, we're all scissors, we're all fightin' with our mirrors, scared we'll never find somebody to love."
V
Viewpoint: Did big personalities worsen the financial crash?
There are certain expectations that we have of great business leaders. One is that they are charismatic. But while company boards continue to prioritise charisma as a quality in their chief executives, the data tells us that charismatic bosses are less likely to be effective. They are also more likely to be to narcissistic, to take overly risky decisions, and to demand higher pay.
The appeal of the charismatic leader is strongest at times of uncertainty and crisis, which explains why it might emerge with particular strength in the financial markets. The markets are, after all, characterised by volatility, and it is that very volatility that renders participants vulnerable to a charismatic voice. Traders' performance is benchmarked (sometimes daily) against their peers, and they "live or die by their profit and loss". Both factors increase the likelihood of "herding" (following the crowd) and "churning" (excessive high-volume trading as a means of gaining higher financial incentives via commissions on trades).
But on 17 July that year, Federal Reserve Chairman Ben Bernanke delivered a speech designed to draw confidence back to the markets. At the same moment a hedge fund named FrontPoint hosted an open conference call to warn of exactly the opposite. Bernanke's rhetoric was flawed yet effective, while Bloomberg and FrontPoint's warnings remained unheeded.
In April 2007, hedge fund managers Jim Chanos and Paul Singer had warned the leaders of the G7 of the impending financial instability that would soon hit Wall Street. They were met by little more than "polite applause and stifled yawns".
Hedge funds largely rely on what short seller Chanos referred to as financial detective work - a "back to basics" approach that rests on the rigorous analysis of data and thus remains relatively immune to the emotional contagion, charismatic rhetoric and hubris so characteristic of the speculative investor in the wider markets.
Hedge funds have consistently outperformed the market. Between 1994-2014, hedge fund returns were 1.4 times (445%/314%) higher than the wider equity market (eg the US S&P 500 index of companies) with only half the volatility (7.2%/15.1%). Distressed hedge funds (those specialising in companies that are in trouble) performed even better. They demonstrated 2.2 times higher returns (695%/314%) with only 6.4% volatility.
But the warnings of hedge fund experts were ignored. They contradicted the powerful groundswell of over-optimism and euphoria so characteristic of charismatic authority - a tidal wave of euphoria so powerful that it demanded the destruction of any logical dissent that got in its way.
History shows that charismatic rhetoric relies on the demonisation of an enemy to deflect blame and to continue to stoke the fires of emotion. In the financial crisis, those who predicted falling prices, the short sellers (such as hedge funds managers like Chanos and Singer) were blamed illogically by everyone from Wall Street chief executives to the Archbishop of York as the key architects of the crisis.
The financial markets have a tendency for charismatic hubris and sentiment. In the case of the 2008 crisis, this enabled a small coterie of chief executives and traders to exploit the US housing bubble for their own benefit at the expense of other investors who trusted their insights. Termed "financial porn" by writer Jane Bryant Quinn, the explosion in 24/7 cable news networks, internet investing sites, investing manuals and financial spam further muddies the waters for investors, promoting confusion and irrationality.
Ultimately, charisma is, by its very nature, seductive, yet volatile - a star that burns bright, but fades quickly. In the case of the 2008 financial crisis, the cost of this seduction was high, yet it is a price that man always seems willing to pay.
Fuck you, Fascist sympathizers
Yeah, DOW down 1000 points on opening, though it bounced back a bit after that. Although stock prices have been badly over-inflated and the fundamentals on this side of the Pacific continue to be solid.
I still don't see too much risk of China contagion, given that their market still isn't fully open.
Lost in Space
As I posted in the U.S. Politics thread, the problem is a global glut of savings with no good real investment opportunities. That money flows around the world on the back of "free trade" in capital movement, chasing bubble after bubble and leaving financial chaos in its wake. It's a problem that has no internal solution; governments must act to suck the energy out of financial markets.
Shameful Display
So which economies are going to suffer most from this, and which are going to rebound quickly?
edited 24th Aug '15 9:44:48 AM by JackOLantern1337
I Bring Doom,and a bit of gloom, but mostly gloom.
Blowout soon fellow Stalker
Whichever ones have the least problem with heavy government intervention
Oh really when?
Lost in Space
Economies that have a huge chunk of private savings in their stock markets and are leveraged against those investments are going to hurt a lot. *cough* China.
edited 24th Aug '15 9:51:47 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Shameful Display
So in other words this is going to really hurt for the US. Oh joy, and we just got out of the last crisis.
This sounds pretty similar with what Japan did, building schools for only a few students, highways with very little traffic. Though in China's case, expect shoddy construction.
Essentially building a mall in the middle of nowhere and expecting shoppers to appear like magic.
(sighs) My country's government is also on a public spending binge right now. I doubt we will be back to being an IMF creditor nation anytime soon.
Plants are aliens, and fungi are nanomachines.
The law in the night
This construction binge isn't really a Keynesian work as much it is creating the mother of all immobiliary bubbles.
. Keynes is basically summarized as, if things are going bad - pour more money into it. When things are going fine, cash in your chips.
Good Keynes would be if that money is poured into sound investments. Unfortunately, Bad Keynes happens directly proportional to the level of stupidity + corruption.
Plants are aliens, and fungi are nanomachines.
A procrastination in of itself
Thing is hasn't China been on a massive boom for the last something years? So Keynes would mean China paying off debt and building up a cushion against economic instability. Not building tons of empty buildings that aren't needed.
Also China hasn't been building to stimulate the economy, it's been building to make money. That's not Keynes, that's State Capitalism.
edited 24th Aug '15 10:57:57 AM by Silasw
“And the Bunny nails it!” ~ Gabrael “If the UN can get through a day without everyone strangling everyone else so can we.” ~ Cyran
The law in the night
That is a heavy flanderizations of Keynes, usually the investments have to go in sectors that are defunct, out dated or no existent or at least expand the existing ones.
Not building cities in the middle of nowhere without any real prospect where people would stop benefiting as soon as the construction works cease.
Inter arma enim silent leges
Lost in Space
Indeed. Keynesianism does not say "throw money at problems". It says that when private demand is the problem, boost private demand. When supply is the problem, boost supply. China's problem is an excess of manufacturing dedicated to exports, so that while it is receiving vast amounts of income, that income is not reflected in the availability of goods and services for its own people.
This is a supply-side issue and needs to be addressed by directing its excess capital to building factories and whatnot to supply stuff to its own people.
edited 24th Aug '15 11:02:10 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Edit: Good pagetopper...
edited 23rd Aug '15 2:38:40 PM by Quag15