Econ: The Forecast is...?
 

It's just the market self-regulating. I'm sure in 5-10 years we'll be back to excessive spending and let-the-good-times-roll for a while before then next crash in 2030... http://www.discussworldissues.com/fo...ilies/wink.gif

How can governments know which firms to save or the “right” size of any industry? That is for consumers to decide.
This quote is evidence that The Economist has jumped the shark, since it is effectively throwing gasoline on the fire. A commitment to decentralized, unregulated decision making has borked the economy, yet these idiots insist that the solution is more of the same.

If you want evidence of how stupid things have got, look at what has happened over the past 15 years. Infrastructure has been allowed to degrade and health care has not been properly funded, and most of the money that should have been spent on that has been channeled into consumer spending, for which people have very little to show.

I can think of two areas of private spending in the last 15 years or so which have made a real improvement to peoples' lives. One is spending on computers and the internet, and the other is improved mobile telephony. Both have made a real difference to human life in the way that cars or television did.

But the amount of our collective income spent on computers and telephones is quite small. Most consumer spending in the last 15 years has been on crap. You know how your parents used to discourage you from buying crap because they said you'd have nothing to show for it down the line, well that's our societies. We've blown most of it on ephemeral rubbish, most of which is competitive consumption.

Is there a politician or government that is going to have the stones to say "no" to the middle class aspirationals? If not, then we're all screwed.

... the next bubble

I think you're all drawing the wrong lessons.

Agathon:
Companies aren't in trouble because of the decentralized nature of capitalist decision-making. They're in trouble because they expanded to meet a need that has disappeared overnight. That's not entirely their fault. Blame the easy credit of the boom times. Firms could expand to meet growing demand, or they could be left in the dust by their competitors.

DanS:
In a few months credit availability won't be the main problem. Convincing firms to use that credit to expand at a time of falling demand will be hard. Further loosening of credit will be like pushing on a string.

I think he's questioning whether production should be governed by the consumer, or by some other form of shenanigans.

DanS:
In a few months credit availability won't be the main problem. Convincing firms to use that credit to expand at a time of falling demand will be hard. Further loosening of credit will be like pushing on a string. I think he's questioning, or denying, the severity of the shenanigans that got us where we are.

Why should anyone believe a word you say? You've been a relentless optimist the whole way through the bubble, as can be proven by a visit to the OT archive.

You're the last person anyone should listen to on the topic, since you've been proven comically wrong.

How are you any different from the pseudo-optimists in the mainstream financial press? As soon as you lot finally and belatedly acknowledge a recession (after it has been obvious to everyone else for some time), you all immediately say that the worst is over and that things are getting better.

Just admit that you can't bear to tell the truth and have to sugar coat everything.

Having lived in an actual society that proclaimed itself to be communist, I would say that not having production governed by the consumer is a recipe for failure.

The price system is supposed to prevent this from happening. It's a market failure. I'm not saying that individual firms are at fault. The failure is systemic because the market has not priced things correctly. In fact it has priced them appallingly badly, so much so that the usual defences of the free market look comically bad.

Looking back, anyone can see that we've been spending our money on the wrong things. Only if you've drunk the Neoclassical Kool-Aid. Unless you believe that people saw this crisis coming (more should have, but it was rather clear they didn't), believe that people try to smooth consumption over their whole lifetime http://www.discussworldissues.com/fo...milies/lol.gif, and make several other assumptions...

Let's just say, I don't consider the fact that consumers who thought they were rich spent a lot of money on goods they wouldn't have spent if they knew they were poor a failure of the goods market. The problem lies in the illusion of wealth that cheap credit and the housing bubble.

VetLegion, horses**t. The Government did not set the credit rates or use other mechanisms to set the price of money. The Bush admin didn't even manage the money supply very well, unlike the three admins before it. The deregulated banks managed credit rates, created instruments to "increase" apparent liquidity and corresponding capital, and increased apparent "churn" by lending to each other, all the while "hedging" all the loans well beyond the ability of the insurance companies (AIG) to pay. http://www.discussworldissues.com/fo...lies/angry.gif http://www.discussworldissues.com/fo...milies/mad.gif

Six of one, half dozen of the other. The former caused the latter.

All of what I said above is easily confirmed by a little web research.

Polytubbies seem generally averse to research in any of its forms.

Research from other people with your unjustified optimism. That doesn't seem worth much to me.

I've seen the horrible failure of totally centralized planning. Trust me, you do not want to go there. In fact, I suspect it may be one of the principal causes for the failure of the "communist" countries.

You need to ask yourself why they did that. Most of the bankers making the decisions knew that eventually the thing would bust but it was in their best interest to keep making the investments that were going to make the thing go bust because otherwise they would lose out on the profit that all the others were making.

The money appears to be flowing into bonds.

http://research.stlouisfed.org/fred2/data/DBAA.txt

And into commercial paper. Here's the financial company series.

http://research.stlouisfed.org/fred2/data/CPF3M.txt

And the non-financial company commercial paper series.

http://research.stlouisfed.org/fred2.../CPN3M?cid=120

"The sun will come out tomorrow..."

Come on everybody! Sing it with me!

GM posts $9.6B quarterly loss. Oy.

-Arrian

Also one could, on the corollary to the USSR going from nowhere to defeating Hitler, one can say Nazi Germany went from nowhere under crippling reparations to almost conquering Europe using a planned economy.... but let's forget about the cost of life to accomplish that (as we forget about the costs Stalinism had on the people).

It would have happened, it just would have taken longer and been more painful.

And while we didn't devote as much to the military, it's because we didn't need to devote as much to our military. We've only been invaded once and attacked once. We fought WWI and WWII on someone else's soil. Russia and the USSR fought it on their own soil.

What do you mean lose of life, the Jews? That held them back. They would have been even more powerfull if they didn't commit genocide on the Jews.

The Nazi's could have done so much more without lose of life.

I assume you have a basic understanding of history, and are aware that they didn't actually start killing the Jews in large numbers until well after they had recovered their economy, right? During the earlier years it was work camps, not mass slaughter [but work camps with little care to whether the workers died or not].