http://www.siliconinvestor.com/readmsg.aspx?msgid=21969072
Another interesting result is that the low productivity industry will employ an ever-larger percentage of the workforce.
The low productive government just grows and grows eh? How many haliburton no bids and bridges to nowhere and crooked lobbying do we need in this capitalist society? Our real economy dies, while the financial one grows - wall street takes in 30 billion in bonuses for little utility.
bankdersysrisk.blogspot.com
However the country now goes into deficit spending to keep the people working and to stabilize the banking system. As a large unemployed population is a recipe for political unrest the government is very motivated to keep people employed in some way. Government spending goes on a binge, increasing when it should be decreasing.
Dr. Bernanke thesis is that we did not inflate enough to prevent event the very few years of mild deflation we experienced during the 1930’s during the depression. He also believes that a country can grow their way out of a debt crisis. Given the right circumstances I do not disagree with him on this point if the growth is not dependent on the accumulation of debt and adds to the real economic base of the country.
I do no feel that this economic recovery fits that mold as just building houses with debt, and then increasing the value of the houses by flooding the market with debt doesn’t in any way really add to the economic base of the country.
If the country had increased the debt with jobs in manufacturing, engineering, and other real economy and wealth building functions that create an income stream I would expect the US to be in better shape than a society based on the expansion of credit. Of course if the money for manufacturing didn’t get allocated correctly, then massive oversupply would ensue.
...In this period I also expect democratic governments to increase spending on public works, military and social programs. In no way will the governments reign in current spending.
As the US dollar is the most widely used currency on the planet I would also expect to see foreign banks dumping US assets as they shift away from a US dollar standard to a basket of currencies. This will flood the international market with US securities, discounting them, and devaluing the purchasing power of the US dollar.
As the US dollar is highly overvalued in purchasing power I would expect to see the US dollar fall faster than other currencies. This will in effect make it cheaper to produce things in the US again and rebuild our manufacturing base.
....As many whom could understand, dream, followed the money, and willing to take risk move out of productive industry into the financial economy. As always a few lucky people get very rich and get out of the ascending market in time. The rest become bankrupt or wiped out and are worse off then when the asset bubble started.
Why do people become bankrupt, this is because even though the government creates some kind of corporation which assumes the loans, refinances them, and then liquidates them if necessary, like the RTC or HOLC, the borrower is still responsible for the balance of the loan, not the bank. So if the home goes underwater, the borrower is still on the hook to pay the difference. This leads to people losing all of their money.
This was the birth of Freddie Mac was through the programs generated in the Great Depression.
At this time some people have home owners insurance, protecting the borrower from owing on an underwater mortgage. Other borrowers have borrowed against the appreciation of the home and have nothing left to cushion the fall in value. Normally banks do not pursue the borrower for the underwater portion of the money due to past bankruptcy rules, however with the change in the bankruptcy laws they will. Banks always went after you if you could pay the underwater part of the mortgage, especially if you had money in the bank.
Therefore home loans are risky to the borrower, not the lender.
The BoJ did not assume the bad loans, they already had them, they just kept them on the books without getting rid of them, then borrowed heavily as many of these loans were not serviced (non-performing loans) to keep the banks from insolvency and bankruptcy.
The difference to which people compare the BoJ to US bailouts is that in America we buy the loans from the banks and either refinance them, upon further failure the US liquidates the loans. Japan kept the loans and kept the banks alive by providing them money to make up for the missed payments.
A country must be able to borrow effetely to accomplish this tactic that Japan used. It provided crushing debt to the Japanese and they still have never recovered from this cataclysm. As I stated before I am still open to further review of the Japanese banking crisis upon further information.
Therefore current US policy is to provide for expanding the money supply through lending for as long as can be accomplished.
Are governments worried about people not working in conventional jobs?
I don’t think the US or Japan has any policy about asset bubbles making jobs, in fact both the US and Japan had policies otherwise and encouraged it. “Ownership Society” is the common US mantra. Therefore governments see GDP growth through asset bubbles as providing jobs, they do not care if it is speculative in nature.
The US definitely does not have a policy about what type of jobs America’s have as we have lost most of our manufacturing base and real jobs to other countries. A disproportioned amount of US jobs are now either tied to the government or to the financial sector. Production of real goods has almost died in the US.
Thus, over time and assuming output shares are relatively fixed, the percentage of the labor force employed by the low productivity industries will increase, with, obviously, a corresponding drop in the percentage employed in the more productive industries.
Yes Indeed - how sad.
I fail how to see building bridges to nowhere or haliburton no bid contract workers are good other than keeping idle hands busy. Wage slaves were one thing - but debt slavery seems to be the future no?
Wealth is the degree to which wants are need are satisfied, and that is dependent upon how well pure resources are turned into goods and services, which itself is dependent upon the depth and breadth of capital goods, which in turn is dependent upon our level of knowledge. And thus, ultimately Warren is making the assumption that knowledge gains have been zero in the last several generations.
I referenced before my grandfather and his sons relating to what this country was supposed to provide them as citizens - life, liberty, and the pursuit of happiness - that is wealth as I see it - lots of those 3 things. I agree knowledge can aid that - but not in and of itself - knowledge can also be used to hinder that as well. Dropping a nukular bomb on your head from IRAN would not be good use of that knowledge eh gpowell? They couldn't do that 90 years ago in my granddads day. Application of knowledge - If I felt I was surrounded by lots of evil people wanting to use knowledge to hurt me gpowell - I would want them to be dumb - not master minds.
My grandfather lived to 90, drank all the moonshine he wanted and screwed all the women he could, and didn't have to worry about big brother tracking him on the satellite or putting tracking bracelets on his ankle - his sons had less life, less liberty, and I dont think they were as happy - we are going down the wrong direction if wealth is supposed to be life, liberty, and pursuing your happiness eh?
Hawaii is a nice place gpowell - I lived there a few years - why are so many there sucking down the ice and meth? What do you know that they don't - they seem pretty miserable to me to do that to themselves.
Message 22064727
In fact now that I think about it some more - several of the small south ga towns I lived in I feel were better places before the KNOWLEDGE of how to make a meth lab came into town - hehe. |
