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To: reaper who wrote (150298)	2/8/2002 4:11:10 PM
From: patron_anejo_por_favor	Respond to of 436258

Nice insights, Reaper. Given how much investment was blown away in the bubble, it seems fair to assume that deflation is well entrenched here now (as it has been in Japan for the past decade)...the printathon and helicopter currency drops can't and won't keep up (though that's what all of the mainstream economists say, except for Roach and perhaps the guy at JPM...).

To: reaper who wrote (150298)	2/8/2002 5:34:04 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 436258

well, an essential point here is that the rate of investment to consumption has been extremely large during the bubble years, due to a way too easy monetary policy. as Shostak says, by creating money out of thin air, an exchange of something for nothing takes place, which perforce leads to a shrinking of the real pool of funding. the central banks manipulation of interest rates has led to entrepreneurs misreading future demand. result: malinvestment and massive industrial overcapacities. other manifestations of the bubble are the huge rise in private sector debt and the plunge in the savings rate: both have reached extremes that HAVE to be corrected in order to lay the foundations for a durable recovery. however, monetary and fiscal policy is geared toward warding off the necessary correction, which harbors the risk of entrenching the downturn for a very long time. Japan is a case in point actually. everybody is shying away from taking the bitter medicine, which would involve a great deal of short term pain. instead we're likely in for a lengthy period of sub-par economic performance, interrupted by frequent recessions.

To: reaper who wrote (150298)	2/8/2002 10:11:55 PM
From: maceng2	Respond to of 436258

Hi reaper. Very interested in the topic. I'm only recently interested in economics. I like both Keynes and Austrian economics. I may chip in on the subject, if I feel I have something to say. Just now it's this... Re this story... newscientist.com I also watched a UK debate on TV on this subject. The CEO of Allied was in the discussion panel. His major point was that the $O.5B+ losses only represented 8% of assets, and that they still had a good credit rating "AA" if I remember. He stressed this was no big deal. Well, OK they still have to make a profit. Banks do that one way or another. So where will this $0.5B+ shortfall come from to make up the difference? The answer is of course that that the banks customers will make up the shortfall. They will have a little less money to invest and save, or even spend. That money went into the banking system and was realised as profits or criminal gains. The real economy pays up, and that money is subtracted from the real economy. Result. Downward spiral. Not good imho. And then there is Enron etc. It is a big deal imho. On top of that, my credit card number was copied from somewhere, an some criminal went on a spending spree. I killed the card number when I found out of course, and got my money back. I tried to prosecute the criminals, but the police were not bothered. So who pays the bill? The insurance cos?? So who pays them ??? Major crappola on the way imho..