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So many ways to avoid the truth

by Jerome a Paris Thu Jan 24th, 2008 at 02:17:54 AM EST

Martin Wolf, the senior economics commentator of the Financial Times (in London) has a column this morning where he proposes a number of explanations for today's crisis, and indicates his preference.

Guess what: it's China, Russia and Saudi Arabia's fault, with that old chestnut, the "savings glut" theory.

His article is worth going through, because he does list a number of plausible reasons, dismisses some a bit too summarily, and ends up choosing the least inconvenient for the proponents of neoliberalism (in the traditional economics meaning of that word: pro freetrade and pro deregulation - the hard version of which, currently being promoted by our global elites, has now also received the well-deserved monicker of "Shock Doctrine").

Let me explain in more detail what he means, and why I thinks he's wrong.

He starts well enough

One view is that this crisis is a product of a fundamentally defective financial system. An email I received this week laid out the charge: the crisis, it asserted, is the product of "greedy, immoral, solely self-interested and self-delusional decisions made throughout the 2000s, and earlier, by very real human beings at the very top of the financial food chain".

The argument would be that a liberalised financial system, which offers opportunities for extraordinary profits, has a parallel capacity for generating self-feeding mistakes. The story is familiar: financial innovation and an enthusiasm for risk-taking generate rapid increases in credit, which drive up asset prices, thereby justifying still more credit expansion and yet higher asset prices. Then comes a top to asset prices, panic selling, a credit freeze, mass insolvency and recession. An unregulated credit system, then, is inherently unstable and destabilising.

But he dismisses it. (I note that he discusses the systemic risk, but does not touch the sentence about decisions "at the very top of the financial food chain...")

Yet there is a different perspective. The argument here is that US monetary policy was too loose for too long after the collapse of the Wall Street bubble in 2000 and the terrorist outrage of September 11 2001. This critique is widely shared among economists, including John Taylor of Stanford University.* The view is also popular in financial markets: "It isn't our fault; it's the fault of Alan Greenspan, the `serial bubble blower'."

The argument that the crisis is the product of a gross monetary disorder has three variants: the orthodox view is simply that a mistake was made; a slightly less orthodox view is that the mistake was intellectual - the Fed's determination to ignore asset prices in the formation of monetary policy; a still less orthodox view is that man-made (fiat) money is inherently unstable.

This is the "bubbles" Greenspan theory, in different variants: a genuine mistake in the face of exceptional events (the dotcom/technological bubble, 9/11), a conscious decision to avoid assets prices, or a structual problem with the way money is created. He also does not address that last point, which I'm sure will provide fodded for ChrisCook...

But he moves on finally to the real culprit:

A final perspective is that the crisis is the consequence neither of financial fragility nor of mistakes by important central banks. It is the result of global macroeconomic disorder, particularly the massive flows of surplus capital from Asian emerging economies (notably China), oil exporters and a few high-income countries and, in addition, the financial surpluses of the corporate sectors of many countries.

In this perspective, central banks and so financial markets were merely reacting to the global economic environment. Surplus savings meant not only low real interest rates, but a need to generate high levels of offsetting demand in capital-importing countries, of which the US was much the most important.

In this view (which I share) the Fed could have avoided pursuing what seem like excessively expansionary monetary policies only if it had been willing to accept a prolonged recession, possibly a slump.

While he blames the problem on the surpluses of a few countries, he's still lettign the cat out of the bag: normal economic policy would have caused a recession in such circumstances.

He concludes from that last point that it was therefore a correct reaction to thesez imbalances.

My counterreaction is that the reaction only made the problem worse, by pushing it further until it could no longer be hidden under a mountain of money, and that will cause a worse recession. We're there right now, in fact.

And my position is that the monetary reaction to these imbalances was a coordinated effort with those that caused the surpluses on the other side in the first place, because these surpluses had the nice side effect of capturing and concentrating wealth in a few hands, a desired feature of economic policy by these policy makers.

Such capture policies were impossible in the past, precisely because of their recessionary effects: capture too much of the value added by shrinking wages, and demand collapses, recession hits, and profits suffer.

But if you can capture profits without causing demand to collapse, by supporting it through debt, you're home and dry - and you even create a "virtous" circle whereby the financial sector becomes even bigger, more and bigger assets create apparent wealth that can be leveraged yet again, profits become bigger and even easier to capture, and the economic headlines look excellent.

To be fair, that whole scam was made possible with the cooperation of the Chinese and others, who protected their "take" in that cycle by keeping their currencies low, thus ensuring that global wages would remain as low as possible, that their demand would not grow to absorb the surpluses (because that would likely come in the shape of inflation, and cause the whole circus to collapse a lot earlier), and that they had plenty of liquidity to recycle in the financial system. Their "take" was a huge inflow of investment, rapid development and, in the smarter cases, infrastructure building that could prove durable.

But still, the core of the whole cycle was fiscal policy that favored the rich, macroeconomic policies and discourse that lauded profits as the ultimate goal and pushed for endless "reform" (meaning, lower wages and less stable jobs, thus a more compliant and cheaper workforce), and monetary policies that helped ride the inevitable empoverishment of the middle classes.

Thus this does not necessarily means that the financial system is inherently unstable, but it means that it can be, and that a few decisionmakers at the top can easily abuse policy for the profit of a few and at the expense of almost everybody else.

And it means that regulatory supervision of the system can only work if the narrative of profit and growth changes.

Which is our job.

Brilliant deconstruction, el Supremo.

A Vintage piece.

Our disagreement, as you know, relates to this

Thus this does not necessarily means that the financial system is inherently unstable,

I believe that in engineering terms the interest on deficit "fiat" Money represents a "positive feedback" that actually does render the system inherently unstable.

It's like the brick and the elastic: the elastic used to be weaker; the brick, smaller; and the friction of the surface, less. But sooner or later, if you keep pulling on the elastic, the brick will hit you in the face again, and harder.

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

by ChrisCook (cojockathotmaildotcom) on Wed Jan 23rd, 2008 at 01:07:20 PM EST
Jerome is gettign better everyday.. if it is possible.

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 Wed Jan 23rd, 2008 at 03:24:42 PM EST
[ Parent ]
He's certainly getting better, but he (like most of us) is also getting more pissed.
by tjbuff (timhess@adelphia.net) on Thu Jan 24th, 2008 at 02:48:23 PM EST
[ Parent ]
pissed and depressed.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Thu Jan 24th, 2008 at 04:47:23 PM EST
[ Parent ]
The asymmetrical 'boosts' to the system by monetary authorities adds to the instability.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu Jan 24th, 2008 at 11:29:23 AM EST
[ Parent ]
FT.com: The worst market crisis in 60 years by George Soros

Every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call market fundamentalism. Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalised and the US started to run a current account deficit.

Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.

The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Jan 23rd, 2008 at 01:08:48 PM EST
This is just the end of a housing boom during a Gilded Age.

Its not like the end of the 1920's or 1880's housing booms during a Gilded age were all that traumatic, was it?

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Jan 24th, 2008 at 12:20:44 AM EST
[ Parent ]
Am I right in thinking the current crisis shares more features with the Panic of 1873 than with the Crash of 1929?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Thu Jan 24th, 2008 at 02:10:00 AM EST
[ Parent ]
I'm thinking of parallels with the Great Panic that led to the Depression of the 1890's ...

... that is, a massive wave of capital flows from a massive trade surplus region (North Atlantic Europe, East Asia) to a massive trade deficit region (the Southern Cone, North America), with ever more dubious instruments to keep the ride going, until a major financial capital bubble in the trade deficit region bursts, revealing the financial mess that has been created over more than a decade and throwing a big monkey wrench in the engine of global purchasing power creation.

That, of course was the peak of the previous period of globalization, followed by a period of economic bloc formation.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Jan 24th, 2008 at 09:47:59 AM EST
[ Parent ]
Followed by a World War.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Fri Feb 1st, 2008 at 05:13:56 AM EST
[ Parent ]
Jerome, I know just enough about real economics to embarrass myself, but it seems to me that none of his three perspectives are mutually exclusive, and that all three have some part is what is happening now.

We all bleed the same color.
by budr on Wed Jan 23rd, 2008 at 01:38:46 PM EST
Well, I know more than enough economics to embarrass myself, and my view is that you're correct.

Wolf is an idiot.  He may be even more dangerous than the WSJ editorial board, because he's actually capable of advocating bullshit based on incorrectly-explained non-bullshit to those who don't know better.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jan 23rd, 2008 at 07:53:30 PM EST
[ Parent ]
Undoubtedly all three perspectives, inputs, contributed to the situation.  We could sit down and come up with another 10 or 12 inputs that also contributed.  And the interactions and cross-relations between these different inputs need to be considered, to boot.

Only if one is interested in gaining knowledge¹ about the causes and possible solutions to the current problems, system.

Given what I've read of Mr. Wolf's writings, his interest seems to be in supporting a particular financial system using the terms and concepts of a really rather simple minded economic model.  An aspect of this economic model, as far as I can tell, is an inability to cognize a particular outcome, e.g., a financial panic, may have more than one cause.  Further it seems to escape Mr. Wolf, and his confrères et.al., that outcome may not be a linear relationship to the inputs.  

There is nothing startling new about acknowledging a result having more than one cause or the potential for an 'emergent' or 'bifurcative' result from a pool, or Set even, of causative factors.  Anyone paying attention over the last 50 years would consider it boringly familiar, even.  Why the Neo-Classical, neo-lib, school and their popularizers restrict their intellectual toolkit, thus their analysis, to the 1870s escapes me.  Not being an economist I leave the resolution of that question to Drew, Sargon, Jerome, and others 'round this joint.

¹ Note to Prof. Walsh .... :-þ  ;-)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Jan 24th, 2008 at 12:00:15 PM EST
[ Parent ]
I'd add an extra feature, from a certain point of view, if there is structural instability related to the role of a country like China, for example, isn't this really saying that:

The system is unable to remain stable when countries like China are thrown into the "free trade" mix.

"Free trade" was pursued for the benefit of those at the top of the tree, but the inevitable result was to create imbalances in the "open economy" that a market cannot deal with.

The solution (which I'm not saying I'm wholly comfortable with) might have been to phase in Chinese involvement in the "free market," reducing barriers over a number of years, rather than very quickly.

I guess, I'm groping towards the current crisis as an inevitable outcome of Doha (GATT) and the WTO.

I don't know how correct that is, but I do have a feeling it's part of the story tha Martin Wolf is trying to point to. But he would never want to acknowledge that the instability comes out of "free trade" engineering attempts.

by Metatone (metatone [a|t] gmail (dot) com) on Wed Jan 23rd, 2008 at 02:31:37 PM EST
While I'm at it, if we're talking about excess liquidity, the development of new financial instruments (which are sold on the basis of having less risk than previous ones) actually, in my view, amounts to an increase in effective liquidity in the system, irrespective of central bank interest rate actions.

That is to say, deregulation and the ensuing rush into complex financial instruments, creates extra liquidity right up until the moment people lose confidence in them.

So "Bubbles" crime wasn't just his actions on the base rate, but his consistent belief in deregulation.

by Metatone (metatone [a|t] gmail (dot) com) on Wed Jan 23rd, 2008 at 02:35:40 PM EST
[ Parent ]
IMHO one of the biggest blunders was to allow banks to take loans off their balance sheet by securitizing them. I say sell on the cash flows if you want, but keep the loan on your books.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Jan 23rd, 2008 at 03:11:46 PM EST
[ Parent ]

In doing this, they are essentially permanently outsourcing their principal business, which is the implicit (and sometimes explicit, in the world of trade finance) guarantee of the credit of borrowers.

Banks also offload the guarantee temporarily (credit derivatives) or partially (eg AMBAC and the other monoline credit insurers).

The solution I advocate is putting the assets into trust and dividing the guarantee payments from borrowers (because the guarantee is the true value their interest payments is exchanged for) between investors and managers through the creation and sale of proportional units of this revenue stream.

This partnership-based "unitisation" is of course selling on the cash flows as you suggest.

Because as Canadian financial markets show, you don't actually need to sell ownership and control when you can parcel up the revenues (into Income Trusts in that case) and sell off the units.

This "unitisation" is an emerging "asset-based" alternative to the "securisation" now pretty much frozen solid.

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

by ChrisCook (cojockathotmaildotcom) on Wed Jan 23rd, 2008 at 04:38:14 PM EST
[ Parent ]
... introduce a country like China into a more or less open trade system in the context of an international transactions system where the burden of adjustment is placed upon the current account surplus nation ... as pointed out by Keynes at Bretton Woods directly after WWII.

But what did he know?

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Jan 24th, 2008 at 12:24:02 AM EST
[ Parent ]
Jerome, stop picking on (mental) cripples. It's not their fault that they are unable to separate fact from fiction.

Strike that. They are actually paid to lie.

Those who promote the glories of the "free" market and unrestrained capitalism seem to be either employees of rightwing think tanks (funded by the super wealthy), ensconced safely in academia or media flacks working for the Murdoch's of the world.

 Keep it up!

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Wed Jan 23rd, 2008 at 03:14:47 PM EST
... the truth here is assuming away real solutions to problems, and then rummaging around to which false solution remaining is most appealing.

Balanced Trade eliminates massive net monetary flows to acquire financial assets ... when the trade account is in balance, then, abstracting from some smaller accounts, income flows, unrequited transfers, acquisitions of financial assets and official transactions all also net out to zero ...

... so without massive trade surpluses there cannot be massive outflows to acquire financial assets.

Fiat currency cannot stabilize an economy ... but stabilizing an economy is not the job of the money supply. The money supply needs to be flexible to accommodate changes in economic activity ... and that economic activity requires real stabilizers, not nominal stabilizers, with the most important of those being a Job Guarantee policy.

Balanced Trade with a domestic Job Guarantee ... entirely off the menu. So the problems are not solvable, so the problems must be redefined to eliminate worrying about impacts on regular citizens and focus concern on how to protect large portfolios.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Jan 23rd, 2008 at 07:09:24 PM EST
I'll go further - what's missing for most people is direct economic participation.

Stability won't happen unless markets are distributed rather than centralised, mindless casino speculation is outlawed, investment self-organises in a bottom-up way, and the economy becomes project-based rather than job-based.

What's happening now is analogous to the enclosures, only this time it's money - and fiat money at that - which is being enclosed and hoarded, to everyone's detriment.

Money should be a common resource, available to all. The usual rhetoric is that the peasants can't be trusted with it. But the historical record proves that self-styled aristos are appallingly bad at managing cash accounts, natural resources, natural talent, and innovative and creative skills.

So if we're going to have a financial revolution, market exclusivity is going to have to be one of the first things to do, replaced with a much wider and more personal experience of participation and stakeholding, back down to the community level.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jan 24th, 2008 at 08:15:59 AM EST
[ Parent ]
Money should be a common resource, available to all.

Would you mind expanding on that? I'm not being critical, just interested ... because of course the entire history of money is about it being scarce and available only at the price of great difficulty and suffering, unless of course you belonged to a select class that controlled certain things.

So how, in practice, does money become a 'common resource'? Do we not also have to contend with erroneous folk ideas about money in that process? One of those ideas being that money should be scarce, because otherwise people will never put their noses to the grindstone and things will not get done ... an idea which, on the face of it, is consonant with everyday experience (how much work would you do if you actually had the money you needed already?)

Again, I do not put this forward as an objection, but you can see that the idea has a lot going against it in terms of people's actual experience of money.

by wing26 on Thu Jan 24th, 2008 at 08:57:48 AM EST
[ Parent ]
I'd love to expand on that, but a full expansion would need a set of diaries, not just one or two.

Money is really just story-telling, and the scarcity is artificial. We're not really talking about money so much as access to education and opportunities to express originality and innovation.

Money buys trinkets, but the most important things it buys are the power to define narratives.

It turns out that you don't necessarily need money to change narratives. Having it helps, but canny use of pressure points and alternative or new media can be influential too.

It's also possible to imagine ways in which investment, funding and 'work' are restructured to lock out predatory speculation, so that people keep more of their productivity. This can be done without breaking any of the existing institutions - by locking money into other more participatory alternative institutions, a start can be made on starving the predators into irrelevance.

(I'd say more but I'm hoping to spend the year doing something to put these ideas into practice, and I'd rather not talk about details for now until I see how that works out.)

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jan 24th, 2008 at 09:11:18 AM EST
[ Parent ]
Access to money/credit/capital is the basis of economic self-determination.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Fri Feb 1st, 2008 at 05:12:32 AM EST
[ Parent ]
Why assume stability as either Desired or Achievable?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu Jan 24th, 2008 at 12:23:13 PM EST
[ Parent ]
Stability is desired because without stability, people require growth to provide a margin of security in the face of the volatility. If the goal is an economic system that accommodates growth without being addicted to it, confidence that the system has a stable safety net below which it will not fall is critical.

As far as achievable, that is not an assumption, it is a conclusion of the Job Guarantee plus Balanced Trade analysis.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Jan 24th, 2008 at 04:20:32 PM EST
[ Parent ]
Stability is good because of risk aversion. If the future is perceived as unstable things get more expensive.

And risk aversion is not just a personality trait: in the absence of a social safety net the downside risk can be quite scary.

We have met the enemy, and he is us — Pogo

by Migeru (migeru at eurotrib dot com) on Fri Feb 1st, 2008 at 05:11:10 AM EST
[ Parent ]
It occurs to me, thinking of what ignorant bystander said:

Martin Wolf is the Tom Friedman of financial columnists.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jan 23rd, 2008 at 07:56:02 PM EST
Today, the US Supreme Court agreed that banks cannot be held liable for lending money to Enron fake entities to assist Enron's stock pumping. If anyone manages to see the "Smartest Guys in the Room", there is a clip where this ponzi scheme is being pitched to reps from some of the biggest banks and they are enthusiastically buying into it.
The scheme was, as I remember it, Enron creates a fake company and lends it Enron shares. The fake company uses those shares as collateral and borrows money from the banks, which it then uses to buy stuff from Enron, increasing Enron's reportable revenue, which drives up the value of Enron stocks.
by rootless2 on Thu Jan 24th, 2008 at 01:30:57 AM EST
Guardian Unlimited | Comment is free | The market price
The market price

The Fed's interest rate-slashing response to this inevitable crisis is flawed and fraught with risk

Larry Elliott in Davos
Thursday January 24, 2008
The Guardian

Davos is in a state of shock. Regulars at the talkfest in the snow in Switzerland are accustomed to turning up for a few days of mutual back-slapping, congratulating themselves on the robust state of the global economy and its potential for limitless expansion.

This year the talk is of falling asset prices, of murky financial instruments that have burrowed their way deep into the system, and of the possibility - horror of horrors - that the global economy might be on the brink of a full-scale crisis.

In truth, the sense of surprise is hard to credit, since everything that has happened was entirely predictable. For 25 years or more, the great and the good of the financial markets have been chipping away at the constraints that were put on them the last time they brought the global economy to its knees, ably aided and abetted by politicians, the international institutions and a battery of thinktanks supported by corporate interests.

Get the government off our backs, they said. Let the markets work, they said. Regulation is the enemy of innovation and efficiency, they said. Politicians duly obliged and now, according to George Soros, there is a systemic problem the like of which we have not seen for 60 years.

And now what do we find? Those self-same financial institutions, having made a colossal mess of things, are relying on the forces of darkness to bail them out. We're hurting, they say. Our losses are enormous, they say. We're too big to fail, they say.

by Metatone (metatone [a|t] gmail (dot) com) on Thu Jan 24th, 2008 at 11:00:46 AM EST
My, my, my.

How the spreading of verbal haze changes

...murky financial instruments that have burrowed their way deep into the system

Only last summer these were "sophisticated tools of risk management"

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Jan 24th, 2008 at 12:20:08 PM EST
[ Parent ]
Apparently, some commentators have reached the same conclusion. Le Monde Diplomatique (Far left, french montlhy newspaper owned by the Le Monde groupe) has a review of three books (in french) who detail the structure of american growth. One of them explicitly focuses on how credit was used to boost aggregate demand, notably through the ownership society dream.

Here is the link, in case some of you are interested.

La reconstitution d'un taux d'épargne qui cesserait de faire des Etats-Unis le siège, quand ce n'est pas le relais immédiat, de crises financières à répétition « requiert une consolidation budgétaire incompatible avec les orientations politiques de la majorité conservatrice au pouvoir. [Elle] implique surtout une remontée considérable de l'épargne des ménages. Cela suppose une révision déchirante de la consommation à crédit, doublée d'un gaspillage terrifiant des ressources non renouvelables, qui constitue le mode de vie américain ».

Sorry no time to translate... will do later this evening, with some more excerpts.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine
by UnEstranAvecVueSurMer (holopherne ahem gmail) on Thu Jan 24th, 2008 at 12:55:38 PM EST
also ignored the fourth, "LOL variant" of the truth:

man-made (fiat) money

IV. A)  What other kinds are there?
        1.  woman-made money?
            a) it´s about time ´Women Make Money´ and
               Bernanketal better watch their arses.
        2.  un-fiat money like the dollar, which
            nobody believes in....
        3.  sight-unseen pieces of paper with new and
            improved names, traded electronically,  
            backed up by secret memos and emails that
            mispeak of some ethereal asset backing
            them up.....

Our knowledge has surpassed our wisdom. -Charu Saxena.

by metavision on Thu Jan 24th, 2008 at 01:48:46 PM EST
The biggest is and shall be the praise of the Chinese Way of doing Economics [1]: work as hell and damn your right to have a personal live which of course has no economical value, particularly because you can always compensate the absence from your children's life with expensive toys, and the resulting lack of a proper education can be corrected with the importation of people at cheap (starvation) prices.

So.... America is Dead, long live Asia, </height 8> and don't mention social democracy.

After all, as the earth being an orb means that globalisation is inevitable, likewise the orb's westward spinning must surely dictate that an american hegemony must be substituted by asian leadership, right?

[1] one should probably say the Perceived chinese way. after all, as a new member of this forum pointed out recently (can't find the link), many chinese people have 2 month holidays, 2 hours for lunch, though not true free unions. (the special areas for exportation industries may be an exception, i don't know).

by findmeaDoorIntoSummer on Thu Jan 24th, 2008 at 04:03:55 PM EST
I personally am certain that stuff about two months' holiday and (official) two hour lunches is untrue, or applies only to a very small fraction of the population. Certainly it does not apply to workers in foreign-owned enterprises. I have never, ever heard any person mention 'two month holidays in China' and I live in Hong Kong - I would have heard someone mention it by now, if it were widely applicable (cos we only get two weeks). So you don't need to add the word 'perceived' to your comment.
by wing26 on Fri Jan 25th, 2008 at 12:45:01 AM EST
[ Parent ]
thank you. there are not many of us who know what is happening in china.

hmmm, now I recall that I know someone who worked in shangai for a while....

by findmeaDoorIntoSummer on Fri Jan 25th, 2008 at 06:05:55 AM EST
[ Parent ]

What is amazing to me is not one diary I have seen regarding the biggest fraud in the history of banking and it happened in France. Whats going on and why havent you commented on this? Are you waiting for a fuller explanation? Thats never stopped any of us before!!!

by An American in London on Sat Jan 26th, 2008 at 04:17:03 AM EST

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