The roots of the subprime crisis | 71 comments (71 topical, editorial, 0 hidden)

Re: The roots of the subprime crisis (4.00 / 4)

Great read... but I am sorry but I think you are quite wrong.

first, boom and boost are not necessary int he general sense (there is a huge discussion about cycles but that's antoehr topic... if you are Marxist)... and precisely the subpriem morgage is not necessary.. just look at the sapnish bank system and you see a clear example of why not.

So, some types of ups and downs of capitalism are indeed not "part of the equatio".

And regardind the secon point about making a metaphor between monetary policy and thermodyanmics to defend that there are ups and downs in general. Sorry, it is not right.

Thermodynamics, the first law is a complete uber tested theory (I know I gave classes) regarding a created entity whcih is energy whcih is conserved and that should eb defined in each system. the key point of thermodyanmics is to nbe able to identify this energy (I woudl rec Feynamn as always and the examples of the cubes in a children garden...what can I say,w e all talk about Feynman)

The reason why monetary policy can not be related with anything close to thermodynamics not even in the metaphoric sense is that the "variables" ( a key concept in tehrmodynamics) are not properly define in monetary policy.

Migeru has ptroduced some interest diaries about how you could stablish a real relation between tehrmodynamics in the metaphoric sense of "state varaibles" and "non-state varaibles". I would urge you to read them.

Summing up.. purely moentary arguemtns are compeltely wrong ing eneral, they do not reflect the presten economy and the variables are not even properly define.

Debt and growth and real economic growth can not be isolated from the different types of monetary base, and the bubble-debt phenomena. The lack of dundamental flux laws (or its equivalents) is a key problem of present economics plocies..sicne it can not allow you to stablish anything as a variable (you only eally understand a variable when you understand the flux close to equilibirum).

The fluxes of debt, money (the different types of) and the different scales of production and units (from cities, to states to group of industries) are not properly known 8though I know a bunch of people are working on it with too simple models)... therefore drivers and variables remain in a vaccuum which is esoteric.... until someone can define the itnernal variable proeprly I am afraid you are wrong.

in any case.. great read.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Tue Mar 11th, 2008 at 03:46:32 PM EST

Re: The roots of the subprime crisis (none / 0)

kcurie:

Migeru has ptroduced some interest diaries about how you could stablish a real relation between tehrmodynamics in the metaphoric sense of "state varaibles" and "non-state varaibles". I would urge you to read them.

I never wrote those diaries, but I developed the idea in comments. The idea is that nominal GDP is a "state variable" but although you can separate "nominal GDP growth" into "real GDP growth" and "inflation" any sensible definition results in "real GDP" and the "GDP deflator" (the "price level") being path-dependent. So the "nominal GDP" cannot be expressed as the product of a "real GDP" and a "GDP deflator" without reference to the history of the system.

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris

by Carrie (migeru at eurotrib dot com) on Tue Mar 11th, 2008 at 04:02:17 PM EST
[ Parent ]

Re: The roots of the subprime crisis (none / 0)

I thought you did finally ina diary...

uups sorry.. then comments..

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Tue Mar 11th, 2008 at 04:45:02 PM EST
[ Parent ]

Re: The roots of the subprime crisis (4.00 / 2)

Slightly corrected quote...

kcurie:

Migeru has produced some interesting diaries about how you could establish a real relation between thermodynamics in the metaphoric sense of "state variables" and "non-state variables". I would urge you to read them.
Summing up.. purely monetary arguments are completely wrong in general, they do not reflect the present economy and the variables are not even properly defined.

Agreed, except that I think inherently "closed" "definitions" and dialectics have been the problem, and do not help in finding solutions.

That's why I felt I had to get to the Metaphysics and the assumptions underpinning Economics - because conventional Economics seemed to bear no relation to the Reality I experience.

My contention is that "Value" - whatever it is - lies, like Beauty, in the eye of the Beholder and is definable only in relative terms...

I like E C Riegel's definition of Value as the "Relativity of Desire".

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Mar 11th, 2008 at 04:11:48 PM EST
[ Parent ]

Re: The roots of the subprime crisis (none / 1)

and you know I completely agree with your contention..absolutely..

I was pointing out that if a "value" of some kind or other monetary variables could be linked to a flux , it could quit this aurea of "beauty" style structure/concept.

I am not saying it is generally possible to do it. and I agree with you on that.. but I must say that some close or reductionist definition of those variables in certain conditions could be obtained. Or at least I see it possible. The problem is that no serious analysis is done.. not that I know.. the only thing that only comes close is the general analysis of international trade.. and even there when you have a bunch of possible definitions and a lot of data to construct it, well it turns out it is extremely difficult to quantify its effects on other parts of the economy. But in principle I could see a more fundamental economic theory where variables and fluxes do have to do with some economic realities (though only parcial)...

But the status of economic theory nowadays, except for some counting exception, is that it does not have any relation with Reality (as you like to say it).

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Tue Mar 11th, 2008 at 04:53:06 PM EST
[ Parent ]

Re: The roots of the subprime crisis (none / 1)

My contention is that "Value" - whatever it is - lies, like Beauty, in the eye of the Beholder and is definable only in relative terms...

To an extent. I would argue that while you are undoubtedly correct that it is nonsense to assign a universal value to such things as TVs or computers (I have no use for the former, and my grandmother has little use for the latter), there are a few things that have universal value: Shelter, clothes, food, water, air(!), heat, medicine, free time.

It seems a bit cavalier to deny the possibility of an absolute definition of value when millions are still without these very universally valuable goods.

Of course, if we define absolute value as only those items which are universally and indisputably valuable, and then try to maximise value, we would get a rather different notion of the ideal economic order.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Mar 12th, 2008 at 10:24:12 AM EST
[ Parent ]

glad you enjoyed it (4.00 / 3)

Glad you enjoyed the read. "Energy" is not a metaphor when it comes to economic activity; all economic activity involves using energy and intelligence on matter to make things or provide services. Sometimes the energy is human (food calories). The big explosion in economic productivity came when we learned how to use antique solar income (fossil fuels) to move matter. Intelligence is sometimes present in the form of an adaptable worker, following the algoriths of a trade or profession, and sometimes as design intelligence built into technologies that we use.

When energy is being used, the laws of thermodynamics apply--not as metaphor, but literally.

Industrial society is not sustainable. Unsustainable systems change--or disappear.

by Eric Zencey (Eric dot Zencey at UVM dot EDU) on Tue Mar 11th, 2008 at 06:15:32 PM EST
[ Parent ]

The roots of the subprime crisis | 71 comments (71 topical, 0 editorial, 0 hidden)

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