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On The Descent Into A Weimar Reality
Thanks to our very own printing-historian hybrid, Ben Bernanke, all people who wish to understand the direction in which the economy is headed are now experts on the Great Depression. Yet more and more pundits claim that the true historical analog to our current tumultuous times are not the days after 1929, but the period between 1919 and 1923 in post WW I Germany, also known as th Weimar Republic. Attached is a summary presentation on the three critical pathways that shaped Germany in the interregnum, and set it off on a course to the Second World War. These three avenues were i)the infamous hyperinflation and associated meltdown, which even now is causing so much consternation for German politicians dealing with a suddenly printer-happy ECB, ii) the French invasion of the Ruhr, and iii) and the failed Munich Beerhall Putsch. As many see QE as a precursor to i) above, and ii) is currently playing out in various parts of the world to a lesser or greater extent, the question remains when will some disgruntled citizen rise out of the disenfranchised masses and replicate the so far missing iii). With recent developments within the tea party movement, and with the administration's plunging popularity rating, it is not a far stretch to see all three core Weimar "factors" replicated in our own back yard with a 90 year delay.
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Stop bullshittin, Treasures will get bought either by anonymous billionaires or whoever, stop bullshitten. The issue here is the distribution of wealth, in fact i'm pretty sure thats the only thing they are worrying about, Can't have too many people spending money like it can be fabricated on a whim, right? The largest distribution of wealth in a while has just tooken place....bring on the recovery!
Not sure who they think they bullshittin, they better dumb down the populace a lot more if they think we ignore it though.
Niall Ferguson and others have pointed to a very nefarious reason for German hyperinflation: The elites of Germany wanted to destroy Democracy and hence the government (The Pity of War 1998).
War reparations were not payable in inflated Marks. The allies had stipulated repayment in Gold Marks in 1921 that could not be inflated away. Keep in mind that German homeland had not been destroyed by the war. Also keep in mind that Germany kept the same central banker in charge that they had under the Kaiser.
Democracy under the Weimar government was a new and untried experiment in Germany, a nation which had been an empire since 1871 and had been The Holy Roman Empire from Charlemagne to 1806.
German nobility as a legally defined entity was only abolished in 1919. Power was still very much in the hands of the high aristocracy of the individual states which had been united, such as Saxony, Bavaria, Prussia, Holstein and many others. The high aristocracy still owned much of the productive land and most ordinary "citizens" had the same economic situation as since the middle ages: as tenant farmers.
The aristocratic families of Germany which ranked amongst the most powerful and conservative in Europe right up to WWI were concerned about the rise of Communism in Germany since 1918. Several large communist uprisings, most notably in Bavaria, threatened to abolish their ownership of land and factories. The exercise of far right politics by this group was in essence merely a continuation of what had been since the days of the Holy Roman Empire. Hitler became the vehicle for expression of their political will. Hitler developed many connections to the elite during the 1920s thanks to members of the elite who were followers, such as Ernst Hanfstaengl.
At the outset of Hitler's rise to power he included any and all groups to bolster support and votes...including a very left wing group. Once Hitler had the Army swear an oath of allegiance he eliminated the left wingers, the brown shirts (many homosexuals), etc.
Hitlers enormously expensive political rallies were financed by the industrialists (Krupp, etc), and they thought they could control Hitler. NOT! After Hitler's rise to power he dictated production schedules, prices, wages, etc, to the industrialists.
If you don't believe Hitler hated democracy as much as socialisim read Mein Kamph. Hitler was very candid in his book. The outside world read but did not believe.
Which is why it's that much more folly to not listen to the people spouting off today. Cuba Venezuala, Iran, North Korea, Russia. I fear where I had the Berlin wall coming down and the break up of the "evil empire" my children will have repeats of the Reichstag fire, the invasion of the sudaten land or maybe even concentration or re-education camps as forming memories. Most of us here get how, especially economically, the world is a powder keg just looking for a match. Get ready for interesting times as in the Chinese curse.
Derivatives and Hyperinflation
http://www.youtube.com/watch?v=nLV1DBmr4xc
Semiannual OTC derivatives statistics at end-December 2009
http://www.bis.org/statistics/derstats.htm
BTW, I don't support the Brenton Woods idea.
UN Speech by President Mugabe
http://www.youtube.com/watch?v=rWa_Sok0Dso
How your fucked under the World Banking System.
http://www.youtube.com/watch?v=sLkRyGGzH_8
Haha, Larouche.
Derivatives aren't fungus, but they do exist to essentially prevent hyperinflation in the general economy.
Come again, please.
Derivatives are basically out-of-money hybrids which facilitate risk transfers, lower borrowing costs, less volatility in currencies etc etc. UNLESS the "strike" is triggered via a credit event which will in turn make derivatives in-the-money obligations [much like futures] and the $ would necessarily hyperinflate if only 5% of CDS on REs [which are not even the biggest part of the derivatives market] need to be settled. Look at the value of the $ against gold [start looking somewhere in 1998 post LTCM, then jump in 2003 and jump again in October of 08]. The buck inflated like a bitch against gold [do not look at DXY; DXY is irrelevant]. And guess what was the main contributor of dollar devaluation post Oct. 08; yep baby, you guessed it; derivatives settlements and subsequent QE [which is a direct consequence of what happened in the der. markets].
Sure, I recognize that derivatives perform many roles in finance. If life were an abstraction, I could admire the innovation and thought that went into the creation of that market.
I really have no problems with derivatives in principle. I've said as much here before.
Eventually, yes, the QE needed to bail out these bag-holders will naturally lead to hyperinflation.
My position has been and remains that the derivatives market can be best understood as a dumping ground for all the cash forced into the system by the central banks. It's sealed off, tax-advantaged, controlled by a small number of politically-oriented players, and opaque to outsiders.
I dont want to, yet again, discuss the morality or the long term bennefits of CDS market [lets focus on CDS market here]
There is no "cash" in the derivatives market; only REs and cash flows. Nothing is "dumped" per se [I do not see how could it be; what would be dumped]. There is only risk multiplication there due to CDS market being 99% compromised of CDS written on synthetic REs, not bonds as you understand them.
It does not soak anything, only multiplies the gravity of the outcome if a major sovereign occurs. OK; in simple terms; for one real 1 billion bond insured by a CDS there is 100 billion $ in synthetic REs which serve just so new CDS could be sold. Its all nice and dandy, until you have to pay out 100 billion settlement due to CE occurring and your, lets say, 3y cash flow is only 6 billion. AIG all over again.
Also, if you have a private broker you can trade CDS. Or if you are an owner of a medium size business the CDS market is very much accessible to you, or if you are a high new worth individual.
Then I'm misinformed, although now that you mention it, I was aware about private brokerages and CDS, but have just mis-spoken about it.
I'm confused. So, these derivatives are not like regular securities in that when you sell them you don't get cash in return?
Written by a fellow ZH poster [its Wiki, but it will serve the purpose]:
Speculation
Credit default swaps allow investors to speculate on changes in CDS spreads of single names or of market indices such as the North American CDX index or the European iTraxx index. An investor might believe that an entity's CDS spreads are too high or too low, relative to the entity's bond yields, and attempt to profit from that view by entering into a trade, known as a basis trade, that combines a CDS with a cash bond and an interest-rate swap.
Finally, an investor might speculate on an entity's credit quality, since generally CDS spreads will increase as credit-worthiness declines, and decline as credit-worthiness increases. The investor might therefore buy CDS protection on a company to speculate that it is about to default. Alternatively, the investor might sell protection if it thinks that the company's creditworthiness might improve. The investor selling the CDS is viewed as being “long” on the CDS and the credit, as if the investor owned the bond.[4][6] In contrast, the investor who bought protection is “short” on the CDS and the underlying credit.[4][6] Credit default swaps opened up important new avenues to speculators. Investors could go long on a bond without any upfront cost of buying a bond; all the investor need do was promise to pay in the event of default.[21] Shorting a bond faced difficult practical problems, such that shorting was often not feasible; CDS made shorting credit possible and popular.[6][21]Because the speculator in either case does not own the bond, its position is said to be a synthetic long or short position.[4]
For example, a hedge fund believes that Risky Corp will soon default on its debt. Therefore, it buys $10 million worth of CDS protection for two years from AAA-Bank, with Risky Corp as the reference entity, at a spread of 500 basis points (=5%) per annum.
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- If Risky Corp does indeed default after, say, one year, then the hedge fund will have paid $500,000 to AAA-Bank, but will then receive $10 million (assuming zero recovery rate, and that AAA-Bank has the liquidity to cover the loss), thereby making a profit. AAA-Bank, and its investors, will incur a $9.5 million loss minus recovery unless the bank has somehow offset the position before the default.
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- However, if Risky Corp does not default, then the CDS contract will run for two years, and the hedge fund will have ended up paying $1 million, without any return, thereby making a loss. AAA-Bank by selling protection has made $1 million without any upfront investment.
Note that there is a third possibility in the above scenario; the hedge fund could decide to liquidate its position after a certain period of time in an attempt to realise its gains or losses. For example:
http://bits.wikimedia.org/skins-1.5/vector/images/bullet-icon.png?1); padding: 0px;">
- After 1 year, the market now considers Risky Corp more likely to default, so its CDS spread has widened from 500 to 1500 basis points. The hedge fund may choose to sell $10 million worth of protection for 1 year to AAA-Bank at this higher rate. Therefore over the two years the hedge fund will pay the bank 2 * 5% * $10 million = $1 million, but will receive 1 * 15% * $10 million = $1.5 million, giving a total profit of $500,000.
- In another scenario, after one year the market now considers Risky much less likely to default, so its CDS spread has tightened from 500 to 250 basis points. Again, the hedge fund may choose tosell $10 million worth of protection for 1 year to AAA-Bank at this lower spread. Therefore over the two years the hedge fund will pay the bank 2 * 5% * $10 million = $1 million, but will receive 1 * 2.5% * $10 million = $250,000, giving a total loss of $750,000. This loss is smaller than the $1 million loss that would have occurred if the second transaction had not been entered into.
Transactions such as these do not even have to be entered into over the long-term. If Risky Corp's CDS spread had widened by just a couple of basis points over the course of one day, the hedge fund could have entered into an offsetting contract immediately and made a small profit over the life of the two CDS contracts.
Credit default swaps are also used to structure synthetic collateralized debt obligations (CDOs). Instead of owning bonds or loans, a synthetic CDO gets credit exposure to a portfolio of fixed income assets without owning those assets through the use of CDS.[8] CDOs are viewed as complex and opaque financial instruments. An example of a synthetic CDO is Abacus 2007-AC1 which is the subject of the civil suit for fraud brought by the SEC against Goldman Sachs in April 2010.[22] Abacus is a synthetic CDO consisting of credit default swaps referencing a variety of mortgage backed securities.
Naked credit default swaps. In the examples above, the hedge fund did not own debt of Risky Corp. A CDS in which the buyer does not own the underlying debt is referred to as a naked credit default swap, estimated to be up to 80% of the credit default swap market.[23][24] There is currently a debate in the United States and Europe about whether speculative uses of credit default swaps should be banned. Legislation is under consideration by Congress as part of financial reform.[24]
Critics assert that naked CDS should be banned, comparing them to buying fire insurance on your neighbor’s house, which creates a huge incentive for arson. Analogizing to the concept of insurable interest, critics say you should not be able to buy a CDS -- insurance against default -- when you do not own the bond.[25][26][27] Short selling is also viewed as gambling and the CDS market as a casino.[28][24] Another concern is that the size of CDS market. Because naked credit default swaps are synthetic, there is no limit to how many can be sold. The gross amount of CDS far exceeds all “real” corporate bonds and loans outstanding.[26][7] As a result, the risk of default is magnified leading to concerns about systemic risk.[26]
Financier George Soros called for an outright ban on naked credit default swaps, viewing them as “toxic” and allowing speculators to bet against and “bear raid” companies or countries.[29] His concerns were echoed by several European politicians who, during the Greek Financial Crisis, accused naked CDS buyers as making the crisis worse.[30][31]
Despite these concerns, Secretary of Treasury Geithner[30][24] and Commodity Futures Trading Commission Chairman Gensler[32] are not in favor of an outright ban of naked credit default swaps. They prefer greater transparency and better capitalization requirements.[15][24]These officials think that naked CDS have a place in the market.
Proponents of naked credit default swaps say that short selling in various forms, whether credit default swaps, options or futures, has the beneficial effect of increasing liquidity in the marketplace.[25]That benefits hedging activities. Without speculators buying and selling naked CDS, banks wanting to hedge might not find a ready seller of protection.[25][24]Speculators also create a more competitive marketplace, keeping prices down for hedgers. A robust market in credit default swaps can also serve as a barometer to regulators and investors about the credit health of a company or country.[25][33]
Despite politicians assertions that speculators are making the Greek crisis worse, Germany's market regulator BaFin found no proof supporting the claim.[31] Some suggest that without credit default swaps, Greece’s borrowing costs would be higher.[31]
Tell me was that really a strategy, dumbing down the populace? Really, was that part of the plan? How American of you, you fuckers should be shot.
Blast from the past:
No pusti or butsos? I didn't understand a word
LOL, you don't need to understand a word...Harry Klyn is a comic genius. The ending is fitting of ZH!
One does not have to find the comic genios's schtick to be intelligible. It is though he is doing naked bets on what might be funny if it is possible to understand the genius.
Another connection: Loss of revenue from the Ruhr region
parallel: Loss of revenue from the Gulf of Mexico (and some of our satellites- i.e., Central America)
The comparison between the Tea Party and the Munich Beerhall Putsch was the best part of the article.
Excelent comparison. Very appropriated...
Bill Ayers and his friends have already designed the holding camps for the re-education. It was part of the 60's Weather Underground dream.
They serve tea at putches, too?
history rhymes:
"In 1929, four years after receiving the 1926 Nobel Peace Prize, Stresemann died of a heart attack at the age of 51. This event marked the end of the "Golden Era" of the Weimar Republic."
Living iN canada - the land of what most of you called 3 years ago as the backwater of North America i sit and look form my lofty perch high above the carnage that used to be the great US of A and see the land of opportunity.
Here's why
If Hyperinflation happens in the US your currency is worthless and mine is worth a gajillion.
If deflation comes to the USA my currency is worth a trajillion and I buy tracts os San Frnacisco for 1000 Cdn dollars.
If I pull out my gold maples - then I buy half the world.
Gee what a shitty I have.
As long as you stay healthy mogul. :) Btw. Don't get too comfy on your perch just yet. I've been to Toronto a couple of times this year. There sure looks like a lot of overbuilding reminicent of what we had here in the states a few years back. I hope it works out better for you guys than it did for us.
http://www.greaterfool.ca/
Garth Turner writes a cheery little blog on the state of Canadian Real Estate.
After reading some of that, listen to this: http://www.youtube.com/watch?v=u1HT27qPsSE Repeat as necessary. Saying, "This time is different." works too.
LOL
Take a peek at RIMM's Annual Report or 10K and see where most of the Blackberry's are sold.
The power point keeps referring to the Nazis as far right. Correction. Nazi was an acronym for National Socialist Workers Party. The Nazis were in fact, a party of the left. The scarlet red in the Nazi flag was no mistake and was used to induce Communists to join the Nazi party. Like all left wing parties, the Nazis believed in the state over the individual. They believed in large government. Eugenics was introduced here in America by the left. (See Margaret Sanger) I'm not trying to nitpick here. But for far too long the right has been accused of being the party of the Nazis. Nothing could be further from the truth.
Yo, could you get more retarded? If you tried?
Do you think you could come up with something more substantive than yo?
The President of the Munich police has informed the press that the first concentration camp holding 5,000 political prisoners is to be organised within the next few days near the town of Dachau in Bavaria.
Here, he said, Communists, "Marxists" and Reichsbanner leaders who endangered the security of the State would be kept in custody. It was impossible to find room for them in the State prisons, nor was it possible to release them. Experience had shown, he said, that the moment they were released, they started their agitation again.
If the safety and order of the State were to be guaranteed, measures were inevitable, and they would be carried out without any petty consideration. This is the first clear statement hitherto made regarding concentration camps. The extent of the terror may be measured from the size of this Bavarian camp which - one may gather - will be only one of many. The Munich police president's statement leaves no more doubt whatever that the Socialists and Republicans will be given exactly the same sort of "civic education" as the Communists.
http://www.guardian.co.uk/theguardian/1933/mar/21/fromthearchive
Fair enough Zina. The reason Hitler went after the Communists and Marxist was b/c of the large influence of Jews within the Communist Party. It wasn't per se Communism that Hitler opposed. It was his rabid anti-semitism that ultimately caused him to not only go after Communist party members in his own party but to eventually turn on Russia. Mein Kampf makes very clear that Hitler hated the Jewish influence within the Communist party not the ideology per se.
Hitler was certainly anti-semetic. However he went after the Communists, Marxists, and Jews because he could make them targets instead of his government. Obama has been running through the same program with the Jews replaced by doctors, health care providers, energy suppliers, and banks. Exact same strategy, just a change in the standin for the Jew.
'Hitler was certainly anti-semetic.'
I have read this comment a zillion times. Can you tell us the WHY? If you cannot perhaps you need to read some more history. Dig deeper.
Because socialism requires complete control over the apparatus of state and the dictation of all aspects of life, no two factions will ever hate each other as much as two rival socialist factions, each claiming to be the bearer of the One True Socialism. The conflict of the Nazis and the Marxists is simply a case example of two different socialist factions struggling for power against each other. It's no different than the various purges and struggles the different factions in the USSR went through.
Bingo.
It could be stated the very same for Nazis and the US, likely with greater accuracy.
When reading Hitler and all his thinkers, it is pretty clear that Hitler admired the US and its organization. He had big issues with Europeans policy, not that much with US policy he considered to be a model for the times.
Eugenics, segregation, reservation, colonial expansion to secure a vital space were shared in common by Germany and the US.
Absolutely.
"Hitler had genuine admiration for the decisive manner in which the President had taken over the reins of government. “I have sympathy for Mr. Roosevelt,” he told a correspondent of the New York Times two months later, “because he marches straight toward his objectives over Congress, lobbies and bureaucracy.” Hitler went on to note that he was the sole leader in Europe who expressed “understanding of the methods and motives of President Roosevelt.”
http://www.fff.org/comment/com0310j.asp
I think you need to read this:
http://forum.stirpes.net/economics/17381-role-private-property-nazi-econ...
Also found here:
http://journals.cambridge.org/action/displayAbstract;jsessionid=5AD09512...
Some excerpts:
"Private property in the industry of the Third Reich is often considered a mere formal provision without much substance. However, that is not correct, because firms, despite the rationing and licensing activities of the state, still had ample scope to devise their own production and investment patterns."
"In the second part of the paper it is analysed whether private property of industrial companies in the Nazi economy, the formal existence of which is unanimously agreed on in the literature, was perhaps an empty shell without much significance to entrepreneurs, a proposition which is voiced quite often. In that case there would have been not such a great real difference between the Nazi economy and socialism. It is shown, however, that freedom of contract, that important corollary of private property rights, was as a rule not abolished during the Third Reich. In fact firms preserved a good deal of their autonomy even under the Nazi regime."
"A corollary of the still great autonomy of industry with regard to its production plans and another difference to a centrally planned economy was that enterprises normally continued to select their customers themselves. An obligation to serve a specific demand did rarely exist for the majority of firms at least before the war. That also applied to orders from state agencies. Firms could in principle refuse to accept them."
You've got it exactly right!! Well done.
We need to stop thinking in terms of "left vs. right." It's a false dichotomy and deliberately so, to foster confusion and obfuscate the true political spectrum. (Hence the ongoing confusion and debate about where to place the Nazis on the left/right scale, of all things).
The true political spectrum runs from ANARCHY on one end (maximum personal freedom; minimum government control) to STATISM on the other end (whether you call the statists socialists, communists, fascists, Nazis, royalty or what have you, they are on this end).
Really all governments, other than a true constitutional Republic, fall on the STATISM end of the spectrum and, much like the Republicans and Democrats, are usually the same dog's breakfast at their core (with only minor cosmetic differences and/or differences in process). That was the genius of what the Founding Fathers gace us: The most perfect road map for limited government and individual liberty and prosperity ever devised. We have fallen away from that standard and our Supreme Court has let us down, bowing to the very popular (democratic) pressures it was chartered to resist.
Literally all it would take to make this country great again is to go back and apply the Constitution rigorously.
Last post tonight. I don't feed the trolls. You know who you are. Your problem, we provide facts & we see decades ahead.
Robert Welch in 1958 predicting Insiders plans to destroy America
http://www.youtube.com/watch?v=AZU0c8DAIU4
1944 Bretton Woods International Monetary Conference
http://www.youtube.com/watch?v=GVytOtfPZe8
Please tell us your solutions. We really are not interested in how many times you change your diapers.
Smithsonian Agreement Collapses - Gold Ownership Resumes
http://www.youtube.com/watch?v=g6vzDDo6J1Y
good points. When deciding which thought models I will use to determine where things are headed I look at predictions and writings in the past to see which ones worked best. Neocons like Fukama, multhusians, marxists, brookings institute democrats, cia sponsored authors at the National Review...all those guys have bad track records. The Robert Welch's "None Dare Call It A Conspiracy", George Orwells, HG Wells...all have proven to have had some amazing foresight. Looking at those three guys and their many sources is enlightening.
Regarding the economy, there was one school of economic thought that was not fooled by the fake prosperity bubble economy and that was the Austrians.
I haven't looked at it that way Tyler, I do believe you may be right. It almost looks as if we will have an american version of fascism in the not to distant future.
Weimar events took place at the speed of paper. GFC events are happening at the speed of light.
I'm a pretty simple guy. It seems to me that Lord Acton had it right... power corrupts and absolute power corrupts absolutely. It doesn't much matter if the power is in the hands of huge corporations or huge government. I think that the rank and file of the Tea Partiers get that on a gut level. Will people try to gain power over them.. sure. Will they succeed? We'll see.
World War Three to commence in 3........2.........1........
When are wages going to start running ahead so we can load our wheelbarrows up and go to the store?
i wonder what hyper-inflation metric is used on slide #6.
it differs meaningfully from the data on chart #3 in Dylan Grice's 02/26/10 Popular Delusions piece ( http://www.scribd.com/doc/27523406/26-February-2010 )
It almost looks as if we will have an american version of fascism in the not to distant future.
If Jonah Goldberg has it correct, the first fascist President was Woodrow Wilson. Mussolini was a great admirer of FDR. He was heard to exclaim "He is one of us". Of course the Nazis were socialist. They attacked the Commies because they were fighting over control of the same market. It was like GM vs Ford, not right/left.
I agree. My thoughts posted above:
We need to stop thinking in terms of "left vs. right." It's a false dichotomy and deliberately so, to foster confusion and obfuscate the true political spectrum. (Hence the ongoing confusion and debate about where to place the Nazis on the left/right scale, of all things).
The true political spectrum runs from ANARCHY on one end (maximum personal freedom; minimum government control) to STATISM on the other end (whether you call the statists socialists, communists, fascists, Nazis, royalty or what have you, they are on this end).
Really all governments, other than a true constitutional Republic, fall on the STATISM end of the spectrum and, much like the Republicans and Democrats, are usually the same dog's breakfast at their core (with only minor cosmetic differences and/or differences in process). That was the genius of what the Founding Fathers gave us: The most perfect road map for limited government and individual liberty and prosperity ever devised. We have fallen away from that standard and our Supreme Court has let us down, bowing to the very popular (democratic) pressures it was chartered to resist.
Literally all it would take to make this country great again is to go back and apply the Constitution rigorously.
And find new Indians to restart a new Ponzi scheme. The most important part of the plan. Without it, you can throw away your Constitution piece of paper.
The Nazis were corporatists, plain and simple. The same as Italian facists. The Spanish facists. And facists fu8king everywhere. They believed in using the power of the state to protect business and create a marriage with it. It is right-wing ideology as opposed to the left which would have the the state control the means of production.
I still don't get it...should I buy a wheelbarrow?
Just borrow one ........... in case you are rolled.
They believed in using the power of the state to protect business and create a marriage with it. It is right-wing ideology as opposed to the left which would have the the state control the means of production.
You see where you go wrong here is to think that state capitalism is the same as laizze faire entrepreneurship. Capitalism is a Marxist word, after all.
If Obama gets a corporate stake in the banks with taxpayer dollars, it that right wing? Corporations support socialist programs in order to be allowed a priveleged position in the market place. Is that right wing?
It is the fascist bargain.
Or the Chicago Way.
In the case of laisser faire entrepreneurship, how does it come that an entrepreneur is not laisser faire to entrepreneur a partnership with the State?
Okay, very poorly written but your statement is so antinomic to your label I could not resist.
The banks being bailed out does not come out of the blue, it is a result of a specific status (too big to fail) acquired thanks to competition. Nothing forced on by the State. The status appears as a result of efforts by entreprises.
Same with patting a potential partner in the back to gain his favour.
The distinction between your so called laisser faire entrepreneurship and capitalism is grounded on nothing.
Surprisingly, nobody has mentioned J.M. Keynes. He was an economic advisor with the British delegation to the peace talks. He wrote a (later famous) essay on how Germany could not possibly meet its reparation obligations (like Greece today). This essay is readable and persuasive, citing facts and figures. He was ignored by the allies.
So whose fault was WW2? The Germans', or the allies who ignored the advice of (what they would eventually consider) the economist of the century?
Weimar Germany 'printed' many, many times more money than Bernanke. Read your history and you'll see the vast gap between Weimar and 100% of GDP.
on Wed, 06/02/2010 - 01:48
#388915
The banks being bailed out does not come out of the blue, it is a result of a specific status (too big to fail) acquired thanks to competition.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Do you not see the contradiction? "Too big to be allowed to fail" is not a competitive terminology. It is like "the Yankees are too good to lose" so the umps give them runs they didn't earn.
Do you see?
on Wed, 06/02/2010 - 02:11
#388925
Surprisingly, nobody has mentioned J.M. Keynes. He was an economic advisor with the British delegation to the peace talks. He wrote a (later famous) essay on how Germany could not possibly meet its reparation obligations (like Greece today). This essay is readable and persuasive, citing facts and figures. He was ignored by the allies.
So whose fault was WW2? The Germans', or the allies who ignored the advice of (what they would eventually consider) the economist of the century?
$$$$$$$$$$$$$$$$$$$$$$$$$$$
The same Keynes who wrote in the foreword to the German edition of the General Theory (see external link), Keynes states that "the theory of aggregated production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire."
In those days "totalitarian" wasn't a dirty word yet.
Thanks for that, Zen0. New information for me.
Keynes was always at pains to emphasize the emergency nature of the situation, and probably saw Germany as a bulwark against any westward march of the Red Menace. He admired German culture and was dismayed at the horrid WW1 settlement.
That said, I think he really did think that the emergency would eventually end and the heavy hand of the state could be withdrawn. I don't think he would've approved of the perpetual inflation carried out in his name, just as a doctor who prescribes antibiotics would shudder to see them used for every cough or cold.
Or perhaps Keynes thought that the inevitable force of history was toward totalitarianism, and that what he proposed would be a more enlightened variety than that of Stalin. I don't know, I've only read Essays in Persuasion, never the General Theory, so my acquaintance with JMK is more limited than yours.