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Tue Dec 23rd, 2008 at 05:18:21 AM EST
For those of you who, like me, have been bemused by the use, by President Sarkozy among others, of the term "Real Economy," as set apart from the supposedly "fake," financial economy, of wolves rather than the polite lambs of the "real," "good" economy, there's a fascinating and brief deconstruction, by linguist Alain Rey, editor in chief of the French language dictionary Le Robert (equivalent to Websters in the English language), of the term in today's Humanité (oh how I love the English translation, saves the hassle!)
This about sums it up:
...what interested me in this affair is that the term "financial crisis" is a very old expression, and completely normal because there have often been financial crises, most frequently associated with an economic crisis as in 1929, but this is the first time I've heard tell of "the real economy". This expression supposes, and this is rather monstrous, that the economy can't be real in the world of finance. That there are thus two Capitalisms : a bad one that is in the process of collapsing, and a good one, which is "the real economy". The standard of living and buying power belong to the world of the real economy, because they represent realities of daily life far from the unreal world of finance. And this view is corroborated by more and more astronomical figures. When one speaks of 100,000 euros, we remain in a world that is still of human dimensions, even if we don't ourselves possess such sums of money. When you speak of a million euros, we are more likely in the world of the rich, of the powerful, of soccer players, of Johnny Hallyday. Such figures can cause bitterness or admiration, but they remain real. But when one speaks of 27 billion, or 270 billion, or 2,700 billion dollars in a global economy, we are in a completely virtual sphere. There is no longer any human significance possible.
Yet, Capitalism is a single reality. It is fictitious to speak of a real economy. Marx had an expression that I often quote because I find it absolutely brilliant. For all material objects, all manufactured things, as well as the daily life and the landscapes, we are in a world of signs that represent, according to him, "hieroglyphics of human labor." All true value, he says, comes from work. But today, in this crisis, we see that true value no longer comes from work. Instead, it comes from sheer speculation. To speculate means to act on your imaginination, with no basis in reality, without any control. One lends on loans, and then one speaks of loans on borrowing. This is the contrary of good sense and personal experience. Wages, factory closings, standard of living, are all rather stable expressions because they relate to ordinary experience and to daily life.
The world of the imaginary is crashing down before our eyes, and part of this imaginary world is the false dichotomy of the "real" and the "financial" economy. In our present, liberal system, they are the same, and when the financial comes crashing down, so will the real. The more quickly we realize this, and draw the necessary conclusions, especially on the left, the better.
Thu Dec 4th, 2008 at 12:26:34 PM EST
My, my, that was quick...It wasn't long ago the pink monster began whispering the unthinkable. The City was a Reykjavik-on-Thames just waiting to happen, due to its exposure to the same financial conditions which bankrupted Iceland and its lack, like Iceland's central bankers, of a reserve currency.
Apparently British authorities are duly taking a fright and talking to the Commission about joining the Eurozone:
Some influential people in the higher echelons of government have been talking about it to the European Commission, apparently. The pound is now plummeting - again - and there are some fairly obvious signs that we do not seem to be able to run our economy very well. If our banking system needs to be nationalised completely, that might even bankrupt the nation. So the euro suddenly looks like a good idea, if it helps us get through this crisis.
Could it be it's time for the limeys to pay the piper for leading all the neo-liberal rats to capitals on the Continent? A perfect time to contemplate letting the British pay for the mess they've helped the Americans get us all in...
Wed Dec 3rd, 2008 at 07:27:57 AM EST
They still don't get it.
John Aravosis, whose Americablog is one of the more progressive web logs in the United States, has a number of pet issues he likes to push. Probably first and foremost is gay rights, which is understandable given his background. Lately though, he's been pushing for the US' god-granted right to cheap oil and gasoline. The spectacle is nothing short of disgusting:
OPEC Hoping to Push World into Recession
Screw OPEC. I seriously hope the Obama people have a stern talk with the Saudis and the Kuwaitis, among others, and let them know that the next time their existence is threatened the American people won't be so disposed towards saving their greedy, ungrateful asses.
More of Mr Aravosis claiming that Americans deserve 50-cent per litre gasoline can be found here, here, and here.
Wed Dec 3rd, 2008 at 04:11:53 AM EST
I never thought I'd wholeheartedly cheer a Wolfgang Münchau article in the Financial Times, but there's a first time for everything. Mr. Münchau really gets to the heart of what is going on in Germany, which will, as in the past, prove a day late and a dollar short in facing the truth of a severe deterioration of the economic climate here in Europe:
Germany's boycott of a co-ordinated European response to this crisis has become serious and persistent. Only a day after the European Commission proposed a modest European Union-wide stimulus of 1.5 per cent of gross domestic product, Peer Steinbrück, the German finance minister, declared that Berlin would reject any co-ordinated EU-level response on the spurious grounds that Germany would have to pay a quarter of the costs.
Yet even he knows that economic conditions have deteriorated more rapidly in the past four weeks than at any stage in our lifetimes. I expect that eurozone - and German - GDP will decline by anything between 2 and 4 per cent next year. Even the more optimistic forecasters admit that the risk is on the downside.
For those who have doubts, the severe downturn here in Eurozone land is real, and the proverbial German head in the sand becomes more and more inexcusable with each passing day.
A challenging take on the issues - promoted by DoDo
Sat Nov 15th, 2008 at 08:05:42 AM EST
Unfortunately, as is usually the case, for the wrong reasons:
In an interview with the Times, (Shadow Chancellor George) Osborne said people instinctively understood that the state could not borrow itself out of trouble. The weight of debt would stifle recovery and create a major risk for sterling, he added.
"Sterling has devalued rapidly against the euro and the dollar," Mr Osborne said.
"We are in danger, if the Government is not careful, of having a proper sterling collapse, a run on the pound.
"The danger of a run on the pound . . . is that it pushes up long-term interest rates, which is a huge burden on the economy.
"The more you borrow as a government the more you have to sell that debt and the less attractive your currency seems."
Well, you can't argue with that logic. Well, not if you've taken an economics course or two and remember them. And Mr Osborne is correct: Sterling is dropping like a stone, not just against USD, but also, EUR. The last time it was this low against a trade weighted basket of currencies, the Bank of England was still struggling in the aftermath of Black Wednesday.
Fri Nov 14th, 2008 at 09:19:53 AM EST
I know, I know, Anglo Disease is supposed to be spreading to everyone, and the Global recession is on! "Decoupling? No way ! If we're going to suffer," say the illuminati, in English of various accents, across the globe, "so are you!"
Even usually reasonable Anglo commentators get into the act. The PRC's not de-linking announces Chris, in Paris (and perhaps just up the street for all I know), snarkily:
Darn. And those spouting off about the decoupling theory all sounded so clever. Who ever could imagine that when the West goes into recession, it would impact China? It sounded so incredibly reasonable that rich buyers, full of money and credit could disappear and be replaced by workers averaging around $1000 per year in income. Gosh, it's just such a shock.
(Yeah Chris, get back to us if the PRC actually goes into a recession...you know, they've got a lot of dollars to spend their way out of this...)
Even Krugman got into the act, and pretty early too.
These usually reasonable lefties (for Americans, that is) line up nicely behind the recent pronouncements of John Thain, head of that very august organization of the left, Merrill Lynch:
"There is no such thing as decoupling. ... Each individual economy will be more or less affected, depending on reliance on global trade and commerce."
(Alas, this is true. We'll all be selling less to bankrupt Americans, and it's going to take some time to adjust. But who'd you rather be, the bankrupt person with no money to buy anything, or the temporarily cash-pressed person who has to find different people to sell to? I think I know the answer, and I'm not even a shopkeeper!)
So escape the Anglo curse? Perish the thought. We're all going to pay for the sins of debt-laden Anglo-American over-consumers too!
A funny thing happened along the way to the coïtus interruptus economicus. To all the decoupling naysayers, France says Bite Me!
Bucking the trend, French GDP unexpectedly expanded 0.1 percent from the second quarter, when it shrank 0.3 percent. Economists had forecast a contraction of 0.1 percent.
Eat that, neo-liberal punditocracy! The managed economy is holding up quite well, thank you.
Sat Oct 4th, 2008 at 11:54:32 AM EST
Do FT journalists ever stop peddling their free trade, liberalisation and deregulation gospel?
To read Giles Merritt, a former FT journalist and current SecGen of a "Think Tank" based out of Brussels called "Friends of Europe," the very worst thing we can do, as Europeans facing the Anglo-American credit crisis, is meddle with our trade policy to the detriment of the gospel of trade liberalisation pushed by those very same Anglo-Americans over the past three decades.
Nobody really knows what caused the Great Depression of the 1930s, but its specter is haunting us now. Will the financial meltdown spreading around the world lead to a re-run of the events that followed the Wall Street crash of October 1929? The answer to this question lies ahead of course, but the clues we have are unsettling.
Tue Sep 30th, 2008 at 04:37:22 AM EST
The end of Europe? Of our collective if imperfectly shared prosperity? Heaven's no. The end of the Growth and Stability Pact which hamstrings member states facing economic downturns and which, combined with a stingy central bank, puts people out of work and social safety nets under stress.
Rumblings begin from Europe's periphery:
BUDGET CUTBACKS by the Government will not rescue the economy, the Labour Party has warned.
Calling for a shift in Government thinking on how to escape the downturn, the Opposition party has made the case for a 1 billion fund to hire unemployed building workers to build schools and public housing, and insulate existing dwellings in order to help meet climate change targets.
Issuing a 10-point recovery plan yesterday, Labour said newly-jobless workers should be immediately retrained, rather than left to languish on the dole queues for a year before qualifying...
"There is a need for immediate measures to cushion the blow," said party leader, Eamon Gilmore, as he published Labour's Key Proposals for Economic Recovery.
The party urged the Government to:
- Employ thousands out of construction workers to build schools, and properly insulate homes;
- Direct newly-unemployed into training courses and college;
- Focus on improving exports;
- Set out four-year economic plan to get through existing crisis;
- Target National Development Plan on jobs-intensive projects, such as schools and public housing;
- Ring-fence education from budgetary cutbacks;
- Offer tax-breaks to high-tech start-up firms; and end tax breaks for property and high-earner pension plans;
- Improve value-for-money in the public service, but block cuts that lead only to greater costs for the State in the end;
- Investigate the performance of the Central Bank and Financial Regulator over the last five years, and;
- Back EU moves to curb international financial excesses.
Mon Sep 29th, 2008 at 05:39:57 PM EST
Yes, I know it's not entirely unexpected. Redstar thinks the markets express fundamental value today, on a day the Dow dropped 7%, the Nasdaq over 9% and the S&P 500, in it's biggest drop since Black Monday 1987, almost as much as the silly Nasdaq tech stocks. Fundamental value because the US economy is still overvalued, after various credit bubbles, by perhaps 20%.
Ah, but take a look at the details of the S&P 500 today...there's even more market data than you think...giving you a picture of macro trends to expect. For out of 500 stocks tracked by the Standard and Poors 500, only one, that's right one, advanced today: the Campbell's Soup Company.
Tue Sep 23rd, 2008 at 04:17:05 PM EST
CONFIDENTIAL BUSINESS PROPOSAL
Dear Mr. American,
Good day and compliments.
I am HENRI PAULSON, the Ministry of the Treasury of the Republic of America, and the personal financial adviser to GEORGE W. BUSH (the eldest son of the former dictator of America, GENERAL GEORGE HUSSEIN WALKER BUSH).
Thu Jul 3rd, 2008 at 02:30:06 PM EST
Today, on my way to work, I listened to a National Public Radio report on the state of the health care system in Germany, a report which concorded globally, if not in the details, with my own experiences with the health care system in France. In terms of the actual report, the general thrust was to attempt to dispel illusions that Americans typically have about social health care, and as such, was accurate and also well argued, though given NPR's small audience, one which will fall, literally, on deaf ears. This is a big redwood tree, falling in the forest, but alas, few are there to hear it.
One piece of it, the Intro, really struck me as the first time in US media I have heard a theme we talk about often and which Americans, average Joe Six-pack Americans, simply don't get:
Germany has the world's oldest universal care system and is arguably the most successful. Like Americans, most Germans get their health coverage through their employers. But Germany's rich pay higher premiums to subsidize insurance for the poor -- a principle the Germans call "solidarity."
There's that word: Solidarity. And it's not just Germans calling it by name. It is the expression of our shared European values, of each according to ability, to each according to need. Or, if you prefer a less Marxian giving of the phrase, it is the product of a shared belief that we are all in this together. And it is a concept truly foreign to the values of Americans, for whom the overriding, if inefficiently and unevenly applied, value is Charity.
Thu Jun 5th, 2008 at 02:53:31 AM EST
Stirling Newberry, an American intellectual (yes, there are a few) from the center-left tradition, published a bit of a tract on energy, the environment, and how it relates to future developments and what he sees as the coming "progressive century".
Newberry makes a case for the view that, like the absolutist 18th century, the present "reactionary" century is in the process of reaching the logical end of its internal contradictions of perpetual "growth," which fuels a degenerate version of freedom, a freedom of those few who profit from the reactionary economic system via passive rents. Let's first look at what he means by "degenerate" version of freedom:
Mathematically, freedom is the search for Nash Disequilibria: where individual actors can unilaterally act to improve their position...Liberty is the reverse, it is the search for Nash Equilbiria which have a positive tendency. That is actors acting together to make the net sum of human activity better. Each has degenerate forms. The degenerate form of Freedom does not regard the sum of the payouts from the matrix of choices as being important. That's dense, let's unpack it.
Think of all of the choices possible to an individual. Some will be better, some will be worse. If the better choices require other actors to cooperate in being better, then the actor cannot make themselves better off without cooperation. We can describe then three sets of choice regions, one where an actor can choose to be better off without cooperation, one where the actor receives disproportionate compensation, which means that integrating the choice matrix leads to the first case, and those choice regions where an actor must make other actors as least as much better in sum as himself.
The degenerate case of Freedom is one which does not regard how well others are doing as important, or postulates that there is no second order matrix of relative goods. Since it is easy to construct the first, and to empirically show the second, the degenerate case of Freedom rests on denial of mathematics or history, or both.
The degenerate case of liberty is the reverse, it is the worship of the Nash Equilibrium itself, without regard to the positive feedback state. This degenerate case leads to paralysis. These degenerate cases can produce an oscillator: those who fear change clinging to degenerate co-dependency, and those who chafe at the co-dependency wanting disruptive unilateral action for its own sake.
If not bored yet, follow me over the fold.
Diary rescue by Migeru
Mon May 26th, 2008 at 02:52:36 PM EST
An op-ed in the New York Times, forwarded to me by a relative, reminded me of some of the low-frequency cultural noise I was hearing a couple of weeks back when in Paris. As simple math would have it, 1968 was 40 years ago today, and elements of the generation which produced it then are now commemorating it now. (As an aside, why do we now mark the importance of events at 20, 30, 40 year intervals? when was the old fashioned half-or full-century deemed insufficiently contemporary? Commercial reasons?). And so, the so-called "paper of record" in America would have it's word to say, for the benefit of those few literati and glitterati in America who still have some material basis to be referential to Paname, on an event which largely missed the US.
When reading, please note the religious (re-)conversion of the author, J.-C. Guillebaud, a journalist of some reputation. This is important for reading certain aspects of the article, which might also explain its publication in this American newspaper. As is often the case, what the Grey Lady in charge at the New York Times sees as fit to print tells us more about the Grey Lady, and what she thinks her readers want to read, than about what is being covered.
Sat May 3rd, 2008 at 01:04:22 AM EST
Short and sweet, formalizing plans for Saturday PM. Thinking we start the apero at 18h30 at Le Dalou, 30 Place Nation, Metro Nation (of course).
I have reservations for 8 at 21h30, at l'Inédit Café, Angle rue de la Lancette et 4, rue Taine. Very good food and cheap (everything under EUR 10) We can walk from Nation or, if lazy, take the metro. Metro is Daumesnil.
Tue Apr 8th, 2008 at 01:55:14 AM EST
Well, not exactly. Instead, we had the Olympic torch come to Paris only to be doused by those who would pursue their own political agenda at the expense of those of the proper center of attention: Olympic athletes.
Today, the Olympic flame came to Paris, and an opportunistic mayor, who likely wants to someday be President, joined with a craven party, which went so far as to call into question French participation in upcoming Olympic Games. I mean, what the fuck? We see now a political faction in France obviously bent on exploiting, for domestic political purposes, the world's premier showcase for personal struggle in pursuit of achievement, for fairplay, for human triumph over adversity and, ultimately, peace. I can't wait to see what the clueless fucking morons come up with next in America while they continue to not give a shit about the millions of women and children who are still homeless in that country due to their chosen economic system.
And I don't even want to go into the behaviour of the Greens, chosen marketing partners of the PS. Holy shit. Given the behaviour their leadership today I would have thought fuckin' McDonald's opened up a Soylent Green restaurant at Montparnasse. Except wait wait, Noel Mammaire (faute d'orthographe faite expres) would probably approve of the latter over the former, on grounds of, in combination with soixante-huitard style free love, it's a renewable resource and cuts down on global overpopulation.
We may as well just quit putting on these games.
Today, the spirit of the Olympics, a flame lit at Mount Olympus last week as it was two thousand years ago, and carried around the world, this year to Beijing, has been pissed on by the unserious left in France. As in Socrates days, those who never did so well at sports were out in force in the streets to spoil that spirit and participate what they are good at...being anti-social and disruptive.
Wed Apr 2nd, 2008 at 12:55:24 PM EST
So, the cocktail weenie circuit, military version, has descended upon Bucharest today. Nato yet again extols the virtues of the outdated alliance, now repositioned to fight wars in "the south" all the while, inexplicably to Russia, expanding eastward.
For the next couple of days, Washington will try to cojole other Nato members to ante up some more troops to die in its forgotten war in Afghanistan. In fact, perhaps some of our atlanticist "contributors" have already made their way to the cheerleading section of the gala?
Thankfully, we have Dimitri Rozogin, Russia's ambassador to Nato, to cut through the bullshit.
Wed Apr 2nd, 2008 at 11:54:54 AM EST
It's funny, living in America, I seldom get the impression, watching the news, that anything is fundamentally and severely wrong with the state of Anglo-American capitalism in the US. The candidates are not really talking about it. The business pages, to be sure, talk about the housing crisis here, the credit crunch there, but you have to listen hard because every other day, we also hear about a rally which shows that the fundamentals are really strong, corporate profits as a percent of GDP are really quite good and so on.
So as you crane your neck and listen hard, you can and do hear about different dots in the matrix of the unfolding financial crisis in US markets, but rarely does anyone in America connect those dots.
Fortunately, we have the IMF to cut through the American press bullshit...
Tue Mar 18th, 2008 at 05:10:43 PM EST
Over the past few years, the likelihood of a significant financial crisis in Anglo-American financial markets, and consequent economic stresses centered in both countries, has been a topic of regular commentary and analysis on these pages. In fact, a collaborative topical discussion of the matter and likely outcomes was published here on ET shortly after the long out-of-power Democratic Party was installed in both houses of Congress in the United States. To the surprise of many commentators back then, America's so-called opposition took the reins of power in the halls of its legislative branch. Alas, this power has been used to little, if any, effect on the fiscal, social and economic matters we often discuss.
In light of recent market events, and the first bank failures in decades, first in the UK and then in the US, it would be a good time to revisit that discussion.
Back then, we were discussing how the Euro had surpassed the dollar in terms of circulation. Now, we're observing that the US is no longer the largest economy in the world. All of this quite predictable, and predicted.
Wed Feb 27th, 2008 at 12:33:11 PM EST
Au cas ou vous l'avez pas encore vue...
Sorry, too much here is untranslatable....
Sun Feb 10th, 2008 at 12:38:34 PM EST
Late Spring 1992 found Denmark in a tight spot, having in early June that year narrowly rejected, in a referendum, the Treaty of Maastricht. And, what may have been even more importantly for many regular Danes, the promising home side had only just failed to qualify to that year's European Cup tournament in neighboring Sweden, classed behind war-torn Yugoslavia in group qualifying play. The prospect of the coming summer looked as dull and grey as January on Fyn.
But Denmark's luck was to turn in a matter of a few short weeks. First, political turmoil in Yugoslavia prompted its football side's expulsion from the tournament; Denmark were in. The political situation, however, appeared a bit more intractable. Uffe Ellemann-Jensen, Denmark's outspoken centre-right Foreign Minister, who had spearheaded European efforts to recognize the Baltic nations of Estonia, Latvia and Lithuania and, in so doing, set the tone for EU relations with the former Soviet Union for years to come, was headed to Lisbon to salvage Maastricht.
by Oui - Mar 14
by Oui - Mar 9
by Oui - Mar 3