Our Man is seriously confused. If he accepts the formula of the last 30 years - you know, the market knows best+private=efficient vs government knows Jack/public = red tape - then he should turn to the market to get us out of this mess. Hmmm. Well, left to itself the market turned banks into casinos and citizens into gamblers betting all on black - but lady luck plumped for red. OK, so the market can't make our dreams come true now. Can the future really be secured by mortgaging ourselves to the hilt to build more bridges and murals and such? Our Man doesn't want to wait for a world war to regenerate the global economy. Our Man's not sure where to look for answers, but he suspects Japan is a good place to start. He thinks any residual strength of the Japanese economy comes from its formerly inflexible labour market. Remember the far-from-free-market idea of jobs for life? Remove the fear of unemployment from enough folk and they'll happily spend their money to keep the economy afloat. Turn every worker into a super-efficient streamlined free agent - and they are stuffing their futons with cash for fear of the karate chop. As Japan is discovering now.
While Our Man goes looking for any loose change in his sofa, why not try these ideas to while away the time. Who says austerity has to be, er, dull:
- Manga rental
- Seven Gods of Good Fortune
- Yes, I am a salaryman
- Elderly shoplifters in Japan
- 11 Veterans Tell How to Make the Most of Your Stay in Japan
- Odds of Dying (Our Man would say they are pretty high...)
(Picture lifted from Not all doom and gloom)
6 comments:
'Well, left to itself the market turned banks into casinos and citizens into gamblers betting all on black - but lady luck plumped for red.'
oh no our man,you've listened to the pumpers.there was regualtion all over the shop,in the UK,FSA,BoE,SFO,,they were all asleep at the wheel of the Titanic.There response to the crisis was to get the band playing and shuffle the deckchairs.
If the market had been left to run freely,loose lending standards for commercial and residential real estate would have ceased in the 2002/3 recession.
The BoE cut rates into an inflationary boom.The USA repealed Glass Steagall,effectively allowing banks to leverage up from 12 to 30 times capital etc etc etc.
The market found them out in the end.Sadly too late for US and UK tax payers
Your high-falutin' City talk is bamboozling Our Man (not hard to do, it has to be said). So you are saying the market would have sorted itself out in 2002 if the pols had encouraged the recession, but when the US let banks do what they wanted, they got greedy and stupid. So, the all-knowing market, then freer made a series of bad bets. The market is now correcting itself, thanks to shovel loads of public cash. This proves the efficacy of a pure free market system?
we should have allowed the recession after the tech bubble to go through,wipe out the poorly run and inefficient businesses.What greenspan did was pump the money supply to avert the recession.
This is what happens when you allow political appointees to set interest rates.This current crisis was caused by having way too many regulatory bodies that were run by people who made Baldrick seem a financial genius.
so if you choose to regulate the cost of money via a central bank,they can effectively create bubbles by not tallying their inflation data accurtately or in deed,artfically distort the money supply including credit)
I am not against regulation per se.Acts like glass steagall,set up during the last great depression,limited leverage in the banking sector.
COINCIDENCE OR NOT?
Glass steagall was repealed in 1999 when it was 66 years old.The current bubble can be traced from the end of the tech boom circa2000/2001.Greenspan kept interest rates low allowing banks to lend far more credit than they had capital(leverage).Bankers,finally having a fed Governor(and Treasury secretary paulson)who thought he was able to avoid recession for eternity,were allowed/postiviely encouraged to increase the velocity of money by whatever means...CDO's,CLO's,MBS's,etc
Sadly,all Greenspan had done was create the biggest credit bubble in history and delayed the recession by 4 years.Paulson in the meantime manged to do well out of the bubble as chief exec of Merrill and then pulled a real blinder when he managed to get the tarp passed for $700 billion to get enable Wall St bonuses to be paid for the year 2008............sorry to help ssave the banking system
http://uk.youtube.com/watch?v=328Q79GoR7g
here's Baldrick doing maths.
I know, it's the Guardian, but a nice list of the 25 most culpable (sure there are more):
http://www.guardian.co.uk/business/2009/jan/26/road-ruin-recession-individuals-economy
thanks for that.very hrash on mervyn king.Brown took a lot ofresponsisbility away from him.No mention of the FSA either,or the UK public.
no mention in dispatches for Hank the plank Paulson
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