wage decline over 30 years yet an increase in consumption (and hence
GDP). Questions obviously arise here on how - the answer is debt
spending - but how did the borrowing arise - wouldn't we expect
lending to fall with less money coming in to pay of debt contracted?
Part of the answer lies in greed and a property bubble created by
this. Loans appeared to be secured against property, but the banks
were fueling speculation to inflate property prices to 'earn'
bonuses. I see little difference in what they did and Deng ordering
'homes' that no one will live in. In a sense we all went into a
command economy. As with the famous Sino-Soviet experiments this was
and still is based on 'elite madness' and false accounting.
I mention habros because a poisoning feature of luxury seems
involved. It's surely all over - just switch on TV. The way we
normally think about running a household just don't apply, though
politicians mug us with this kind of false analogy. The promise in
the last election in the UK was that frontline services would not be
affected by cuts in waste and all the other lies of this kind - the
usual 5 cents in the dollar stuff pace Bob Dole. This never works and
we know it doesn't.
I would guess most people have a notion that GDP is a reflection of
effort and this is the problem. GDP goes up when we buy plastic
Chinese crap or TVs we didn't make on money borrowed against what was
supposed to be the ever rising value of our assets like housing. So
GDP goes up when we simply bubble property prices - usually good for
people owning property. What the banks did in this needs long
investigation and description - but in short they began to make money
make money - something that clearly can't be 'real'. The accounting
here involves governments creating electronic money (now QE) and
lending this at low rates to favoured banks (a surplus of capital
never built on effort) who appeared to be making money hand over
fist. This was really the Ponzi scheme and no more than anything
Madoff was doing. Ponzi schemes pay out not on earnings but with the
new money their lies on performance bring in. The lies are supported
by elaborate maths. I teach the maths and they don't work as claimed,
only reducing risk in margins. The key metaphor is to imagine playing
Monopoly against a banker with a couple of spare sets of money in her
back pocket.
The idea in this is to use capital ore and more effectively (fine) but
it all goes mad when the capital becomes earnings ten years off
treated as though you've made it now. The maths is complicated but
the schemes are not - it's almost like placing bets on all horses and
living it up on the winnings whilst ignoring the losses or inflating
the currency you use to 'account' for them.
What people can't grab is that economics and accounting is like this
anyway - though supposedly under strict rules. Businesses need to
stay alive until the good times when most profit is made. This is
fine until the madness or crooks get in and the idea ceases to be
about the viable business and becomes just profit.
I can build the case in figures but the issue is corruption - a
corruption as endemic as that in Soviet performance management. What
they are telling us is stark. We can't have the public services (who
cares who runs them if they do it properly) to educate kids, look
after old and disabled people and the rest even though we have plenty
of labour to do this - labour in some senses earned through massive
productivity rises in agriculture and manufacturing. Looming over us
is a massive and generally parasitic financial services sector that
matches these productivity gains in size - all of which could be
routinised to a fraction.
When we talk about making an industry efficient we have little problem
with allowing wages to come under international competition and all
the rest, Yet to match this in, say, policing by importing droves of
keen Chinese and sacking our expensive finest - and the very idea of
doing this at the top of banking seems impossible - though all the
skills are comparable.
I suspect the real issues cannot be addressed because most people
adjust to a view of just being cogs in the wheel and feel their sanity
threatened by thoughts of the criminality that has been going on
around them. They look for homely answers like 'blaming profligate
Greeks' (a hospital doctor in Greece gets under half what a lecturer
gets in the UK) and imagining austerity measures will let us save our
way out of the problems. This is not what history tells us - though,
of course, most people know no real history.
What is happening now is history. - it may as well be a re-write of
much imperialist history. I hope war is less on the cards, but I'm
not at all sure. Our ignorance is the real issue - and I suspect this
is ignorance about just how unfair the world is and how massively
irrational our systems are.. It's worse than we are thinking and our
public dialogue allows us to say.
The questions we aren't asking are about what would be left if there
was no more 'international trade' and we got round to making stuff
locally and allowing more global exchange of expertise through virtual
exchange. We aren't broke in such a system and have capital.
My guess is that most of what we call 'work' in the current system is
no such thing - it's neurosis.
On Jun 28, 12:58 pm, Ash <ashkas...@gmail.com> wrote:
> So, bullets=100pts, futures=-100TNpts. ;-)
>
> On 6/28/2011 12:07 AM, archytas wrote:
>
>
>
>
>
>
>
> > The truth on bullets is you get to eat if you have them and the food
> > holders don't!
>
> > On Jun 28, 3:52 am, rigsy03<rigs...@gmail.com> wrote:
> >> I wonder the number of vacant, distressed properties in the West?
>
> >> Well, China was humiliated by the tactics of the West in our forcing
> >> her to open to trade via opium and dynasty overthrow plus the theft of
> >> her national arts and treasures- keeping them "safe" in western
> >> museums, like the rest of our lootings.
>
> >> Americans accumulated their own debt with abuse of credit when it was
> >> easy street. The banks/financial institutions were irresponsible and
> >> so were our governments. You can't eat bullets.
>
> >> On Jun 27, 4:49 pm, archytas<nwte...@gmail.com> wrote:
>
> >>> I don't believe the modern arguments (post 1950) concern communism
> >>> other than as a futile ideal. We seem to have forgotten about habros
> >>> - the polluting quality of luxury. The term arises in a Greek play
> >>> celebrating the victory of the Athenian Democracy over the Persians.
> >>> The warning to the Greeks was that they must never become sissies
> >>> wallowing in emotions and luxury like the defeated Persians. Most of
> >>> us are barely aware of history and have no real clue what the Soviets
> >>> and Chinese were up to. Even in relation to what's going on in China
> >>> now, I find few who know they have built ghost cities and are fueling
> >>> GDP growth with a property bubble.
> >>> The broad brush of western economics is that the ignorant rabble have
> >>> no place in real decision-making and that they must both know this (in
> >>> order not to forget their place) and to deny it in fantasies to
> >>> encourage virtual self-aggrandizement. Thus we are to live in virtual
> >>> meritocracy whilst actually just part of a pack that will not
> >>> challenge the alphas. In a very real way, we do not argue with facts,
> >>> but the stories of literature which bounds our expectations. Video
> >>> games are a warning of what we are, even if we don't play them.
> >>> The debts that are everywhere like a nightmare are not to do with
> >>> money as a means of simple exchange, taken on to be worked off in some
> >>> equation of labour value. They have been manipulated as surely as any
> >>> in past empires. Just as Chinese GDP is floating on 64 million empty
> >>> buildings no one can afford to live in (terms are often half up front,
> >>> the balance over 3 years), our currencies float on deals between
> >>> governments and favoured banks. We have suppressed wages and banks
> >>> hardly even provide working capital for business, instead engaging in
> >>> speculation in giant Ponzi schemes hedged in ever increasing prices
> >>> for assets that no one would eventually be able to buy from a wage,
> >>> and securitised to the tax payer. Wages were collapsed over 30 years
> >>> by exporting manufacturing - but GDP kept rising as we borrowed
> >>> against the asset pile to buy more and more crap and pay welfare to
> >>> those deprived of jobs.
> >>> The rich grew vastly richer in this period. If there are 64 million
> >>> Chinese apartments empty, how many across the world are now holiday
> >>> homes and the rest. None of this is communist or capitalist economics
> >>> - it's more fundamental, possibly the economics of the city in which
> >>> absentee landlords gamble the labour of poor tenants and then replace
> >>> them with more economic sheep. The money that was always making money
> >>> in high finance was never making anything other than the debt. You
> >>> need to understand mark to model and mark to market. The money was
> >>> never being made - banks were allowed to value their own assets to
> >>> models kept secret for reasons of commercial security. Now, if they
> >>> have to really sell any 'assets' they are worth what the market will
> >>> pay. And given the way banks count loans as assets, they are all
> >>> probably bankrupt because most of the loans will be real liabilities.
> >>> None of us borrowed this 'money'. It was pumped in by the Fed, BoE,
> >>> EU Central and so on and stole your hard-earned from underneath you.
> >>> This was done to bring inflation, and as yet it hasn't worked (though
> >>> notice how much more food costs) because we can already see our wages
> >>> and jobs are under threat and won't sell our homes at knockdown.
> >>> What we should get away from is homily about needing to tighten belts
> >>> after 'our excesses'. GDP all over has been massively inflated pretty
> >>> much as Enron inflated its books. The problem is we can't direct
> >>> capital to the work that needs doing. The hot money is already in
> >>> Swiss vaults or buying up land and evicting the tenant farmers (as in
> >>> the Enclosures). It also wants to buy up our public sectors - with
> >>> the very money we have given to support the bent system.
> >>> The question has long been how we might direct capital into the work
> >>> that needs doing and fairly distribute in a way that doesn't kill of
> >>> innovation or focus power into an elite that operates like a Politburo
> >>> we can't vote out. The news is that we already have this situation,
> >>> and may even have another massive debtor nation about to hit hyper-
> >>> inflation whilst more armed to the teeth than Nazi Germany. Imagine
> >>> Palin in charge of that!
> >>> We have all had trouble breaking the ancien regimes. Even the USA is
> >>> a Republik, rather than participative democracy - and democracy itself
> >>> has vile origins. Greece is run by a few rich-bastard families, the
> >>> US by banking interest, the UK is still basically a privateer island
> >>> (though privateers were strictly French) and the EU is still an
> >>> aggrandizement of ideas of stopping war with Germans and maintaining
> >>> coal and steel industries.
> >>> There is another way if we give up and homilies that barely work for
> >>> individual households let alone economic groups. Much of the debt
> >>> within the EU could be cancelled between countries in a Jubilee.
> >>> Beyond this we could ensure individuals get more control in economics
> >>> through wages and make investment an ethical business.
> >>> On Jun 27, 8:30 pm, paradox<eadohe...@hotmail.com> wrote:
> >>>> But communism (in theory) is about every man contributing to the
> >>>> communal pot, to be distributed by dint of a principle of "equity".
> >>>> Free markets (or Capitalism, or whatever resonates) is about man
> >>>> pursuing his own ends, for which an emergent, enabling by-product is
> >>>> the economy (as we know it); of course, great disparities of wealth
> >>>> (and power) are an unavoidable (some might argue desirable) feature,
> >>>> as man has an unequal capacity to create value (and we can get into
> >>>> the ethics of the "why's" and the "wherefore's"). (Re)distribution is
> >>>> a political initiative to manage these disparities through taxation.
> >>>> And yes, you're right, wealth will perpetuate "at the top", but really
> >>>> as a consequence of an enhanced capacity to create even greater value;
> >>>> i think that this is what tends to appear as the great "visible hand".
> >>>> Thing about "growth", rigsy / contemplative, is it's one of the very
> >>>> few mega non-zero sums around; thats what makes it so beguiling and
> >>>> difficult to manage; so we swing from boom to bust to boom to...:)
> >>>> On Jun 27, 2:49 pm, rigsy03<rigs...@gmail.com> wrote:
> >>>>> I don't agree- unless you are talking about Communism- which flopped.
> >>>>> Man serves the economy and whichever power happens to be in charge who
> >>>>> may then decide to redistribute wealth/products but this is not a
> >>>>> voluntary agreement. But generally, wealth remains at the top for the
> >>>>> prime reason of maintaining power.
> >>>>> On Jun 25, 3:26 am, paradox<eadohe...@hotmail.com> wrote:
> >>>>>> Hmm...fine points all!
> >>>>>> Lets not forget though, that the economy serves man, not the other way
> >>>>>> round? Just an observation regarding your suspicion of the "growth"
> >>>>>> imperative in contemporary economics.
> >>>>>> On Jun 24, 9:54 pm, Contemplative<wjwiel...@gmail.com> wrote:
> >>>>>>> The key phrase for me is "relative homeostasis". I agree that the
> >>>>>>> encouragement you refer to
> >>>>>>> is desirable. I am unsure of it's possibility. Our belief that growth is
> >>>>>>> mandatory for our economy
> >>>>>>> encourages activities and behaviors that, I think, out-pace the ability of
> >>>>>>> the natural system to
> >>>>>>> balance itself at its natural rate. I am not convinced that we have a solid
> >>>>>>> enough understanding
> >>>>>>> of our own system to allow us to recognize true key indicators of systemic
> >>>>>>> health, rationally process
> >>>>>>> that input, and subsequently make good decisions about the which conditions
> >>>>>>> we should encourage.
> >>>>>>> To state it bluntly, I think our desire for growth is malignant...
> >>>>>>> I don't mean to be doom and gloom about this, and actually I think there is
> >>>>>>> reason to be optimistic.
> >>>>>>> But economics seems to me to have that stereotypical characteristic of
> >>>>>>> having 20/20 vision through
> >>>>>>> the rear view mirror. Economic policy decisions that are both long term and
> >>>>>>> aggressive(such as increased
> >>>>>>> home ownership) which use 'tweaks' to the system to achieve the aims are
> >>>>>>> likely destructive and very
> >>>>>>> unpredictable. In a relatively isolated or buffered system, they may be
> >>>>>>> more predictable, but we are not
> >>>>>>> in an economy which is either buffered or isolated. We are comparatively
> >>>>>>> wide open(global), and playing
> >>>>>>> in a much bigger sandbox than we have been, say 25 years ago. ...and from
> >>>>>>> my perspective, we don't
> >>>>>>> know the playing field well enough to be aggressive, though we should be
> >>>>>>> looking long term. ...and by
> >>>>>>> long term, I mean more than two quarters out!
> >>>>>>> Thanks for the opportunity to think this through a bit...! :-)- Hide quoted text -
> >>>>>> - Show quoted text -- Hide quoted text -
>
> ...
>
> read more »
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