Steve Keen On Parasitic Bankers, Deluded Economists, and Why “We Are Already In The Second Great Depression”
Everything that 'deluded' orthodox economists have done so far has been designed to aid the creditors (who remain the problem) while Steve Keen, the most familiar face of the non-orthodox economists, sees the only solution to this crisis as aiding the debtors. His interview with BBC’s HardTalk this week covers a great deal of ground from modern debt jubilees (and how they should be structured), the Tea-Party and Occupy movements (and his growing fear of historically repeating the endgames of previous economic and social disenfranchisements), and the parasitic nature of our existing financial sector.
He is unequivocal on the outcome of the status quo, as he has been for many years, citing politicians as reactors not leaders with the view that the youth movements we are seeing will force change of leadership to enable non-orthodox solutions to our simple problem – too much private debt. “Write off the private debts, nationalize the banking system, and start all over again” is his starting point but his ideas on implementation warrant some attention as he attempts to promote creative instability and reduce the destructive instabilities of capitalism – recognizing that our world is not in equilibrium as every Keynesian economist would believe but inherently cyclical and unstable.
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Keen has continually stated the problems correctly but offers an unworkable solution due to the incredibly dark and shady workings of the industry he claims to 'analyse'. I've always had the feel that he resorts to an academic sounding argument because if he were to simply state the crooked nature of the people in question, he'd be visited by the hush police.
I hate that cunt, she was worse with Bass.
agree with the assesment on keen. The best people to listen to (like Faber, Rickards, Casey and so on) can basically come out and say things about the financial state of affairs that a child could undertand. Academics however need to shrowed everything in mystery, or else their livlihood is under threat. There's a limited market for all out shills like roubini so keen goes for this wishy washy predictable middle ground third way crap, and all the while floggs off saying "no one predicted this but me, only I can undersand this yadda yadda bullcrap... and aside from being just coplete pie in the sky, a deby jubilee, really?? so he's advocating more fiat printing then, more currency debasement, less incentive to wrok and save, free houses for free loaders... unless you gave every citizen equel money with those in debt having no option but to use the money to pay down the debt, creditors losing everything (so deflationary pressures equal out the money printing)...nah even then this sucks what needs to happen is that governments just die and what should happen be left to happen...VOILA!
nah.. I think he's a realist.. He's saying there's no way we can pay off our debt, so why live 20 years in denial, and economic depression, when we could jave a grand program to get rid of it at once.
Although China will not be happy, if there is a debt jubilee, so it may may want America to annex most of its empire to it, possibly through war.
So perhaps the Syria-proxy Iran war--is to front run a debt jubilee, by controlling most of the world's oil supply, so the BRICs can not wage total war, once a debt jubilee is announced.
No, the realistic option is defult, governments just come out and say, sorry but this shit obviously aint getting paid, so lets stop borrowing from the unborn and just admit it. Creditors get burned, debtors dont get free shit. Thats what should happen, and it involves no pie in the sky money printing
no the realistic option is population collapse
http://thepeakoilpoet.blogspot.com/2011/11/land-of-skinny-people.html
pop
In a sense, Steve Keen's ex-post "solution" does not go far enough or is only half a solution. Maybe he could have said more if the presenter let him ever finish a point...
A debt jubilee for household and corporate debt combined with printing would indeed wipe the slate clean but it would also remove the incentive for the system to change to prevent this state of affairs ever happening again.
For some reason policymakers from academia to politicians to regulators and central bankers seem to completely ignore the perverse incentives present in modern capitalism:
1. Corporates have enormous incentive to take on debt and minimise corporate investment due to shareholder value maximisation, MBA ideology, large free floating shareholdings within limited liability who care only about short term profit, weak corporate governance unable to challenge executive compensation or re-align decision making for long-term benefit, and no long term stakeholders. Also, often it is easier for corporates to make a return from investing in financial assets instead of focussing on their core business strategy (look at what happened to GM and GE).
2. Household property ownership is increasingly considered virtually a public right and, even worse, a minimum asset to secure further borrowing for most individuals. Talk about monetisation of the "American Dream"! What happened to working for your dreams instead of having them handed to you on a plate at extraordinary long-term risk? Why do you need to own a house now so badly on the worst possible terms, e.g. zero deposit, interest only mortgages when rates can only rise? You could be using your funds to build on top of your current productivity or setting aside funds for inevitable bad periods plus your real dreams (even if they are eventual home ownership at least they will be on your terms).
3. Intermediaries have huge incentives to create debt and stoke up financial assets. TBTF/G-SIFI entities, deregulation, political capture, tax havens, the efficiency of the global capital markets all combine to make it trivial to increase not just leverage limited to individual markets or sectors (i.e. bubbles in traditional sense), but systemic leverage. This type of leverage cannot be easily removed due to interconnectedness.
Some of these features are specific to "Anglo-American capitalism", e.g. for corporates. However, all types of modern capitalism are failing mainly due to the last point - intermediaries and interconnection.
Steve Keen on HARDTalk interview did not offer any insight as to how to solve these causes that have existed and grown for 40 years. Without a solution there, it can and would happen all over again with or without a "debt jubilee".
writing off the debt fucks the people who lent real capital into the blackhole.
I mean, we're talking about "saving" the type of people who shouldn't be saved. Profligate spenders and deadbeats. So what then, so we can have those same people lever up all over again due to moral hazard?
We ALREADY SEE THAT. the people with poor FICOs who happen to be the right skin color continue to get "lent" money. JFC, has 30 years of welfare not proven what happens when you just give handouts to people? I mean, look at Africa- why should they bother trying to feed themselves or their children when whitey will just give them a famine jubilee every single fucking time? And, their population has doubled in the last 30 years.
Jubilee has to come with a symmetric cost, not a get out of jail free pass for the imprudent. And yes that means spay and neuter bankers as well...everyone in the loop.
To suggest that an outside impartial mediator can step up and pick 'winners' & 'losers' amongst the debtors and creditors on a global scale is absolutely the height of absurdity. At best it's intellectually dishonest. What allows this level of indebtedness is fiat. Change the monetary system or at least start a coherent discussion instead of this nonsense. A theoretically infinite money supply in a finite world seems a bit ridiculous, no? Never mind, I just saw the light... you're right... eliminate Africans. Then we'll all be happy and merry... Wow ... those Africans mooching off of the system... how did I miss it? So obvious...
Your white supremacy, KKK mentality is ridiculous. Chumbawamba is a forum friend of yours, right? He openly admits (proudly) that he defaulted on his debts, which, by definition, makes him a deadbeat. Are you suggesting he should be neutered?
Max Fischer, Civis Mundi
Everyone will default anyway no matter what. Get over it. Here you can buy a hundred trillion dollars for $247.50, so far.
Ron Paul Signed Zimbabwe One Hundred Trillion Dollar Bill
http://www.ebay.com/itm/ws/eBayISAPI.dll?ViewItem&item=250939520993#ht_500wt_1334
He was writing with a sense of irony. Get a grip.
"...writing off the debt fucks the people who lent real capital..."
Real capital???? Even a whackjob troll such as yourself, can't be that unholy ignorant, dood?
Since when does phantom wealth or fictitious capital equate to "real capital"? So you believe the 100th layer of securitized debt equals real capital, sonny?
The only profligate spenders here, lowbrow, are the banksters who sold hundreds of trillions of dollars of worthless credit derivatives, earning them billions of billions of thieving, illgotten "profits" --- while now lying through their greedhead, sociopathic and rotten-smelling teeth, proclaiming that everyone else must now adopt "austerity" to further underwrite their perfidy?
"We ALREADY SEE THAT. the people with poor FICOs who happen to be the right skin color continue to get "lent" money"
Trav7777 you're deluded. Have you never heard of urban decay? There's no credit in the ghetto.
"There's no credit in the ghetto."
Apparently not so ... I've heard that you can get "a nickle bag" on time, the hoe's, not so much.
So what Keen's saying is re-fuckulate the frammistan at the jiim-jam, frippin on the krotz?
instant classic! Thanks for the laugh.
ORI
Its basically called: 'pushing on a string.'
You have to, instead POOL DA STRINK!!!
http://www.youtube.com/watch?v=L7Dw60SVXQ4
CRAP!!!!
I knew he was a little off when describing OWS but..
I listened to this moron for 24 minutes to hear him wrap up with “If Obama had been elected in 2012 instead of 2008 ,, he could have seen... somebody with his charisma,, "
It’s been a while since I last projectile vomited like I just did.
Steve Keen could've very well said: 'With his charisma, if Obama was to be white, we would all be out of this mess by now. Unfortunately I see no white boy comming along to save the day, other than me, of course.'... as this makes as much sense as what he actually said.
CRAP indeed. I need to borrow, not only because I'll help to kick start the economy, but I will benefit from the debt jubilee too. Moronic.
'With his charisma,
Unfortunately I see no white boy comming along to save the day, other than me, of course.'
No, It was more with his charisma, and had ne not totally remained sold out to the MOTU and would still refuse to prosecute the thieving bastards......It had nothing to do with race and everything to do with being totally bought and paid for.
Charisma and complex economic designs have nothing in common, just as race has nothing in common with who solves the "problem". TPTB will select the "solution" that suits their needs, just like they did when they selected keynesianism, looking for a free lunch. Keynesianism gave them the free lunch, as it allowed governments to borrow from the unborn. Now they had their lunch, and they are looking for the dinner. It will mean printing, but printing in small enough doses so the host doesn't feel that the parasits are sucking the wealth away. Being the first with the access to the printed money, TPTB (gov and bankers) will gain. This can't end without a revolution.
'With his charisma,
Unfortunately I see no white boy comming along to save the day, other than me, of course.'
No, It was more with his charisma, and had he not totally remained sold out to the MOTU and would still refuse to prosecute the thieving bastards......It had nothing to do with race and everything to do with being totally bought and paid for.
Never forget Keene is an academic. He fundamentally trusts the system to self-correct, if you nudge it the right ways. Determining the right way is his personal taskmaster. He seems rather ignorant or out of touch with almost everything that goes on outside his own blog and his circle of economics pals.
I new he was a "bit off" when I heard him taking an absolutist UN 'consensus' position on greenhouse warming, and claiming all the evidence supported that view - which it clearly does not.
--
AUDIO: Ian Plimer - Heaven and Earth: Global Warming, the Missing Science - October 24, 2009
Financial Sense NewsHour
http://www.netcastdaily.com/broadcast/fsn2009-1024-2.mp3
--
Keene's great at what he does, modelling the economic system and gaining insights via extending that research away from the usual memes, but he has little clue how to fix things, so that the many on the street, will decide it's worth putting their energies and creativity and decades of patience into investing (real investing that is) in a viable economic future.
Where somethings remains something, and nothings remain nothing, rather than where we are now, where the nothing stores all the value - very badly.
The silly comment he made that OWS protesters should really be occupying all the economics departments, tells you how he's oriented, and what he thinks matters.
He's a theorist.
He is not a small business man, nor a wage slave - HE DOES NOT UNDERSTAND.
The real world isn't academic theories and papers Steve. It's people doing things for each other, en-mass, and thereby becoming deserving of a crust, and a place at the table, and to take a real part in policy to add guidance for the society towards things that enable that process.
We don't have that Steve.
What we actually have is PROFOUNDLY FUCKING SICK AND IRREDEEMABLE.
Other than that, I read him.
He has been talking to Obama !
Amen! He talks about not putting his thoughts of solution in a cartoon! His solution is a cartoon. I've worked for 20+ years, invested my money, didn't buy a big ass house I couldn't afford, and now he wants to create some long-term social policy for all these idiots that says: oops the contract I signed aint worth shi$*, but I get to keep all the stuff I have. If we go to that demonic democratic mobish progressivism, I say we take our chances and revert back to a Monarchy.
Steve Keen is a good analyst who has made some compelling observations. On the solution side of the fence, he's smoking crack. A debt writeoff of the kind proposed would inevitably lead to additional capital misallocation (bad businesses would flourish, and there would be no real incentive to save). Good luck with that.
Just curious... do you really think that you're going to be able to hang on to what you have? Do you think that there's going to be a system that, although completely flat-assed broke, is going to protect YOUR stuff FOR YOU?
I understand Keen's points. If one is going to play that game of infinite growth on a finite planet then his makes about as much sense as TARPS, QE etc... MY POINT: IT'S ALL GOING TO FAIL- in which case it's really kind of silly to expect that which only seems to exist under this system that's collapsing to continue to exist.
Statements such as yours seem a bit out of place given that 2/3 of the world's population (of which folk in the Western world have lived off of) earn the equivalent of $3/day.
You fucking bet the farm on a Ponzi system. Get over it.
**
Nop, the only realistic sollution is inflation, and in todays situation that would need a hyper inflation. I don't believe in giving money away to everybody, that's communist and would create a even bigger hyperinflation. Inflate away in as much as possible a controled way.
15%a year for the next 7 years should do it and could still be viable for business.
Well that is correct, Romney wants to do that, that is light up the multiplier by attacking Iran (all his LBOs investment would be acquired for free, in a sense he would what Hugo Stinnes did in the early 1920s in Germany, as Hugo Stinnes even had his own printed Mark with his names. He built a fabulous conglomerate at some point, Romney is the present day Hugo Stinnes. I guess Romney is psychopath, they are all, but I am suspecting he wants to be the inflation king as Hugo Stinnes. If he does that Romney better not delude himself that popular justice will never happened to him...Psycopathsalways delude themselves than nothing can happen to them hence the self confidence that help them lead other people!!
So, you over-inflate the crap out of everything, then what? In case you haven't noticed, the USD has already been made dirt cheap yet where is everyone paying shit off?
Supposin' that things magically zero out, how do we then operate? Remember: NONE of the systems currently operating can exist without growth; how do you check them such that they don't over-draw from the future? Demographics suggest that our "productivity" will continue to decrease and that increasingly more energy will be required to obtain the resources that we consume.
Once again: economies of scale in reverse. Hitting zero isn't far enough down... and once we blow past zero (either debt jubilee or via inflation [or anything else]) there's no stops.
Inflation is nothing but goverment run theft.
Money is supposed to represent "VALUE"
@theMAXILOPEZpsycho
Exactly, just admit the debt won't be paid and the creditors who didn't do their due diligence learn the lesson that every one with loose standards learns.
You forgot the other part to that solution which is sound money backed by something (gold and silver). If anyone can just print up money it lessens the risk to the lenders who make money by printing (debt).
Risk is very important. The ability to win is just as important as the ability to lose.
what he is saying is that HIS central plan is preferable to our existing central plan. how about NO central plan?
we dont' need the government in the currency business, the science business, the education business or the "doing good" business.
Great news: govts are going to implode.
Bad news: you're likely not going to like what's coming.
NOTE: I don't approve of governments (not even for "property rights" [code for "I've got mine and my 'limited govt' will see to it that it stays that way"] which comes with the added baggage of State violence).
The professionalization of the universities has been a disaster for this ugliest and most dangerous of fields. Economics has more need of people looking at its basic assumptions than any other. But because our best and brightest are segregated in their own narrow (minded) departments, that doesn't happen. Good to hear Keen calling for occupying economics departments. They really do need to be humbled, humiliated and shamed. And now.
Economists should be treated exactly like astrologers. Keen is just another arrogant Marxist, with zero respect for contracts or the rule of law.
if all contracts are based on a ponzi scheme, then they are invalid, and to enforce them is immoral
If you truly believe what you've just posted, then you need to return your house to the homebuilder and you need to return all the goods you've purchased using fiat money to the original sellers. Otherwise you're guilty of theft for having paid with your "invalid" ponzi money. Furthermore, if you've ever worked and were given US dollars (ponzi money) in exchange for your labor, then you're an idiot by your own argument.
Max Fischer, Civis Mundi
Huh? Home-builders and "original sellers" ALREADY WERE PAID OFF! (unless you have a private contract with them, but the majority rely on financing via banks)
I've said it before and I'll repeat myself: I won't do business with ANYONE who has intentionally defaulted on ANY contract (when he/she didn't have to); if we want to restore proper behavior then we've got to act like that which we're demanding. (so, in a way I kind of agree with what you're trying to say, but how you said it sucked)
Good thing for contracts to be broken from time to time. You believe in divorce don't you? If it is OK to divorce your wife, why isn't it OK to divorce a bank?
There's a difference between "broken" and "mutually agreed-upon premature termination." The later provides for clean dissolution, the former clashes with law.
Here's a hypothetical for you then:
What would you do if you were born into debt slavery? Your father, grandfather, great grandfathers and so on had piled up so much debt that you and your progeny would have to work it off in slavery for 150 generations.
Debt jubilee sounds pretty good then, huh? Besides, it's inevitable.
Business law 301 for god sake. You are not bound by the debts of your forebears, unless you accept that assignment as part of some inheritance. Mom's basements must be getting awfully crowded.
...unless the debt is government debt? Because as it stands, you, as a taxpayer, are liable for the debt run up by previous generations.
silly, the contracts were based upon fraud, and there is no rule of law. Where have you been? And what do you have against the Marx Brothers?
I rather like Curly.
Curly was not a Marx Brother. He was one of the 3 Stooges. Kinda like the troika running things here in the US- Obama, Geithner, Bernanke
Google "humor."
that really is an insult to astrologers.
Every society has it's witch doctors. I propose we roll this generations' eco-clima-nomists back a few thousand years and get some shamans:
http://en.wikipedia.org/wiki/Ayahuasca
It'd be more fun!
Shamans have more respect/understanding of the physical world.
Give the guy a break. He's just a wonk after all. How often does a total wonk get to get a bit of limelight? As for the claim he was the only one to see it coming - well in little ol' Australia he was indeed one of the few (though anyone who was reading the net knew - ie basically anyone who bothered to look). It does get on one's nerves i must admit but having poor social skills is part and parcel of being a wonk.
pop
lmao.. the show is called Hardtalk, not Softtalk
Agreed - 'piss poor' interviewer. Dumb as a dull axe! Lots of chopping - saying nothing!
Keene attempts to explain very complex economic interactions in a simple way, to a simpleton, that just won't shut her motor mouth off long enough to listen properly!
"Hardtalk" ??? Hardly!
Hmmm.
I find it strange that so many find the interviewer excessively obtrusive or even a "simpleton".
She seemed to be intelligent and permitted Keen to make his case, while asking mostly pertinent questions. Why the hostility?
Well for starters her continued repetition of "you claim that you were the only one to see the GFC...." seems to have worked - as much as he tried to refute everybody on this board is bashing him for apparently saying it? Also note how she kept on about giving money to debtors was not fair to prudent savers etc.... while he clearly stated and clarified at the start and many times over that it needed to be systemic I.e same amount given to everybody and those with debt HAD to pay debt with it while the others got to keep it thus maintaining the relative difference.
Still it is just more of same. Printed money. Banks lending money that they create and charging interest on it. Governments taking the central role.
Not a single mention of a hard currency, competing currencies, less government and central control - the things we need to keep the system honest in a long run.
I thought she just parroted what he said. Should have just been a speech.
I must totally disagree, she was trying to clarify points of his thesis that were incredulous.
I agree. It really sounds like raw, unbacked money printing to me. It's hard to see how this approach doesn't cause an immediate explosion of commodity price inflation.
Bang on GMB, I always wondered how he can see the problem so clearly, and offer such bullshit solutions. There is no way my labour should be used to either pay for the banks malinvestments, or the speculators who borrowed from them. Pay for your own mistakes, and the mistakes of your staff, thats what I have to do, just about every fucking day.
That Bitch needs a good dose of Pb.
Comedy. More than half of this interview is verbal diarrhea. The name of the game is avoid responsibility through obscurantism and creditors can't lose as we all now know.
A little Pb in the right places solves an awful lot of problems.
What are going to do with our Gold, is he going to nationalize it?
Are Steve Keene and Charles Hugh Smith twins separated at birth??? Brothers??? And their demeanor and message are about the same too!! Uncanny!!
And you never see them together in one place... coincidence? I think not.
Unworkable Voodoo you are right, here is the proof.
I want to know when I should borrow money just before the jubilee and buy 15 units in Florida just before the jubilee : SPECULATION.
I am a saver! what is the point? Wait for the jubilee and borrow more, do not save! what is the point? People and capital would move in an another country where they have the right incentive.
What is the incentive for the guy who is quitting his job and putting his capital on the line to build a business, forgo leisure and re-invest his capital to make sure he has overtime an actual increase in comfort and standard of living better than he had not done so? Imagine if his neighbor borrowed himself to the neck betting on jubilee actually ends up with a larger home courtesy of government money jubilee. This is welfare for the lazy. As much as I hate the fiat malinvestment and cronies, this Jubilee removes all incentive that make society move forward.
NOW if you want to be fair and not remove the problem as it is proposed you give money to both the guy indebted and the guy without debt WHAT IS THE DIFFERENCE WITH HELICOPTER MONEY?
I suspect that your problems are deeper that you would think...
1) Buying property ("units" sounds like condos) in Florida?
2) A Saver? You like fiat That much?
On point #2, businesses invest money/fiat for good reason: money is a tool; it somehow morphed into this thing that can "create" on its own.
No comment on point #1.
"This is welfare for the lazy."
LOL. Yeah, we've had that already with all those bank bailouts, haven't we? I think that maybe Keen is just saying to these folks that unless they want their heads to end up on pikes that maybe they might consider doing the same (yes, stupid "solution") thing for debtors. And, really, if you had looked at the state of the financial companies' books you'd have seen that they WERE (and probably still are) big debtors. It's all a circle jerk...
Talks well, but is full of crap. His argument is basically if you run up too much debt you just don't pay, what the hell is so "revolutionary" about that ?
To compare his economics to physics is specious, a physics theorem can be shown repeatedly to "work", where as his economic ideas will never work.
This guys is insane. Agreed that they should have an orderly right down of debt, but it should come in the form of liquidation. Savers and investors in real assets should be rewarded not punished. People who bought houses at bubble prices with no down payment assuming the price would go up forever should feel the pain of reality. Yes the banks were greedy and should have had tighter capital controls (not to mention regulated derivs) they should feel the pain too.
Punishing the smart ones who cashed out and savers is the wrong message. Lock this guy up before he does more damage.
This concept of a "modern jubilee" most likely will gain traction. It's a structured approach, so it is not at its core a jubilee in my opinion.
Nonetheless it allows for an East-West oriental/occidental solution to reconciling the concept of a currency based on "In God We Trust" simultaneously offloading Fannie Mae onto the Chinese with the second half of Mervyn King's "divorced currency" solution.
My gut is that this will gain traction. My gut is also that this is strongly backed by George Soros.
http://tradewithdave.com/?p=8518
http://tradewithdave.com/?p=8507
Dave Harrison
Keep trying, Dave. Your approach is one of the more thoughtful and informed responses to what is transpiring that I have encountered.
In fact, I call on you to work up your perspective into a full ZH posting. The short "teasers" you put out on your own blog are suggestive and often illuminating, but the overall "thesis" has to be inferred from multiple readings of scattered texts. This "snippet" approach is exacerbated by your ellipical postings here at ZH. I never would have realized how valuable your perspective was if I had not been persuaded to actually read your blog. After several days of steady reading, I was hooked.
I think you have something valuable to contribute. I hope you soon feel ready to make a more detailed and comprehensive statement. Consider yourself challenged.
Regards
I think you're right, it will gain traction.
For a start - it's free shit!* And not just for a bunch of bankers... but for EVERYONE! What he appears to be arguing is that central banks give (say) $100k to everyone with a pulse. If you were a prudent saver, you're $100K richer. If you are up to your eyeballs in debt, this money is given to your creditors. This money is 'written off' via fractional reserve lending's reverse process. It disappears from the banks' balance sheets altogether. As Keen says, they now no longer have the debt outstanding, meaning they are no longer getting interest from it, so their positive cashflow shrinks. Most banks would go under, he proposes they are nationalized so the underlying payments system we have all come to rely on for all our economic transactions will continue to function, while the banks' bondholders and shareholders get a massive haircut.
Yes, he doesn't mention implementing a sound currency, and he wants government control of the money supply, but... what he is suggesting here as a way of preventing a vast near-term implosion of our economies is probably the only politically-acceptable solution on the table. Once banks are nationalized, we can push for the implementation of free-market currencies, but as it stands, as long as the banks are in private hands, they will wield too much power over the political process to ever allow this to happen. Crash them, and we might have a fighting chance.
*Yes, I know his solution is inflationary... but frankly, I think one, massive spike of inflation, whereby the prices of non-credit-bought items (wages, fuel, clothes, etc) come back in line with credit-bought items (houses & financial instruments), is probably better than decades of monetary gyrations as TPTB get bailed out time after time.
;-P
first second of that video: " oh it's that awful woman again"
he still argues for printing money, but then giving it to the debtors. Wouldn't this create inflation in the short run?
We already had the Jubilee. It was for Wall Street, the creditors. All the non-paying, toxic debt that bogged down Wall Street was transfered to the taxpayer's balance sheet in exchange for cash. Now they've got all this cash, and no one to lend it to. LOL.
This is what a Wall Street Jubilee looks like:
http://research.stlouisfed.org/fred2/graph/fredgraph.pdf?id=EXCRESNS
When do the debtors get to exchange the crap on their balance sheets for cash?
Max Fischer, Civis Mundi
Silly Robot.
WRONG! They have the government to lend to. And the government is trying to get the banks to write off all the crap that's STILL on their balance sheets. In other words "the banks got the cash from the taxpayer to maintain solvency" otherwise as i think we all would agree they would have been obliterated in 2008. Now the problem is "zombie banks" who only lend to the the Federal Government (which is not a State by the way--those are in fact "the Fifty" and they're the one's the Federal Government is in fact bailing out and by forcing the banks to lend to trying to rescue.) The long and short is this: how much longer can the current usurious interest rate policy be continued such that consumption is obliterated and the economy double dips until SAVERS are finally rewarded with soaring interest rates as the Sovereign level? I say we have but days to wait courtesy of "Europe" which "has not gone down this path" of dictat interest rates. Of course i'm a believer that should BofA drop below 5 bucks a share it should be delisted and all its holdings liquidated at auction--if under the Fed's supervision so as not avoid a disorderly collapse so much the better. In other words your "debt jubiliee" comes in the form of governments having to pay the cost of all those "freebies" they've offered over decades without concern or consequence about how they are paid for and who earns an income with which to pay for them. the "Final Solution" is upon us. ALL OF US. RIGHT NOW.
you're effing crazy.
You think this interest on your money comes from magic. The economy has to pay it. GROWTH has to pay it. There is no growth.
Fucking rewarded with high interest rates? News flash, genius, you can get that RIGHT NOW on greek bonds. Go buy some and enjoy your magic coupon
And this is the crux of the issue: insufficient growth to pay off past debts, carry current loads (sustain existing functions) AND to pay off mounting interest (which is money that never existed and isn't really accounted for).
And that insufficient growth has absolutely NOTHING to do with energy supplies. There is absolutely NO EVIDENCE that the world is lacking in energy right now. NONE! The Peak Oil argument will work one day. Not today though, nor with this present crisis.
Max Fischer, Civis Mundi
So whats the cause of insufficient growth? Lack of demand? Debt overload? Misallocation of capital? Compounding interest ?
These are more symptoms than causes , no? All enabled through a population and credit boom caused by easy oil.
Oil production is plateuing , the first leg of the stool thus wobbling. The credit leg started wobbling very soon after and later the population leg will wobble before the 3 snap.
Dear Max Fischer, ref: "And that insufficient growth has absolutely NOTHING to do with energy supplies. There is absolutely NO EVIDENCE that the world is lacking in energy right now. NONE! The Peak Oil argument will work one day. Not today though, nor with this present crisis."
So the price of oil increasing from $30/b to $100/b sucking hundreds of billions of dollars of wealth out of the rest of the economy has nothing to do with lack of growth in the economy? Go study the effect of dropping EROEI on economic growth.
The second depression debate rages on. I say that we are stuck in a rut (slow growth, 9% unemployment. house prices flat to declining STILL,)
New Home Sales and Existing Home Sales Still Stuck in a Rut - Needs A Jump Start In The Economy
http://confoundedinterest.wordpress.com
The losses at the banks and GSEs are massive and are blocking growth.
"9% unemployment"... what planet are you from? Actual unemployment is a lot more like 20%+
Thank you. It's infuriating that the gov't puts out a number that everyone knows is bullshit but which still supplies cover to people who want to pretend that things are better than they are.
That's if you believe Government and Government shills. A 'rut' the best they can come up with.
20% REAL unemployment in the US AND the UK. Inflation running at much, much more than is being admitted in both countries. And by under-estimating inflation, it's amazing what it does to give a positive spin on retail sales, GDP and general economic well-being.
JFC, you act like this PAPER shit that they can just ignore is inhibiting REAL economic activity?
You people are going to have to figure out what IS causing the lack of growth. Banks can lend what they don't have whether they are insolvent or not.
There is NOBODY TO LEND TO. The economy ITSELF is demonstrating CONTRACTION. The reasons for this have been explained many times by me and others. Learn them.
Scrapping the bottom.... the can is kicking back and any attempt to lever is pointless the money does not find animal spirit, in historical terms it is a classic secular debt saturation point, debt will have to be destroyedeither by inflation orbankruptcies, but Iran and Bernanke are giving us the answer....
"debt will have to be destroyed"
It's not a matter of having to be destroyed so much as it is that it WILL be destroyed. We can blame Mother Nature, but I suspect that that's not going to get us very far.
Slinky down the staircase.
Economies of scale in reverse: shit will become increasingly (non-linearly) less affordable.
Another difference with Japan which had a good external context: Japan had very low unemployment during their 18th hundred-squared- like deflation (deflation adjustment where shorter in the 18th hundred thank to limit imposed by gold), how politically can this be sustained in the US. It already creates problems. If inflation does not come from demand it will come scrapping the bottom multiplier or through unrest shock, mass movements can create clogs and cost increases if they are disruptive enough, wars, oil supply shocks, we have a pile of dynamite, any fuse of cost-push nature can lighten it up.