fpb: (Default)
[personal profile] fpb
- get every major economy in the world to indulge in an unprecedented debit-based spending spree.

Date: 2009-03-04 09:01 am (UTC)
From: [identity profile] fpb.livejournal.com
This has been brought to you by the "I don't want to lose friends by telling them directly just how illiterate and foolish their Obama-worship is" service. Next: why the Republican party has gone insane and seems keen to lose any chance of electability for the foreseeable future.

Date: 2009-03-04 11:22 am (UTC)
From: [identity profile] stigandnasty919.livejournal.com
This is, i'm afraid, the problem with democracy. Any government which now adopts a policy of tightening their belt and living within their means (strange foreign concepts today) would see such a lowering of living standards and loss of employment that they would have no chance of re-election. They also run the risk of civil disorder and vastly increased crime.

Better then, some seem to think, to spend and pass the debt on to future generations in the hope that you can reduce the number who lose their jobs today and keep the living standrds of those who don't high enough to elect you next time out.

We, in the west, have been living well beyond our means for years and despite what Mr Brown has said in the past, there is no way to avoid boom and bust in that situation.

Nobody, from any political party, seems to be prepared to accept that. We either live with the boom and bust ecconomy or change some very fundamental things about our society.

Date: 2009-03-04 03:15 pm (UTC)
From: [identity profile] fpb.livejournal.com
I am worried that it might lead to something worse than boom and bust: a permanent weakening of our countries' productive capacity which would leave them permanently impoverished and incidentally leave millions pretty much outside the range of proper economic activity. The last great depression was only relieved by the Second World War; we cannot have such a relief today, and indeed we should not want it. But unless people wake up and realize that saving, investment and work are the life-blood of a healthy economy and that debt is at best a necessary evil and by no means ever your friend, we shall keep digging our own graves in further depth. And I do not think so ill of the average person as you do. What most people in Europe especially hanker for is a clear and responsible statement of fact, and what they hate about their political class is their wishy-washiness. What made Churchill's speeches compelling, convincing, and unanswerable, was that he said the worst and said it first. ("We must be careful not to assign to this deliverance the character of a victory. Wars are not won by evacuations.") This made people feel that he had a clear idea of the worst and still could see a way ahead. When politicians today try the same game, they come across as irresponsible cheerleaders. I feel fairly sure that a man or woman willing to tell the truth and to call on his/her fellow-citizens to commit themselves to saving, hard work, and clearing debt, would get great support. But where is a man of such moral stature to be found?

In the end, I suspect that the problem may be in my great bugbear, the party system. IN order to rise in a party, you have to start as someone else's factotum. By the time you are called upon to lead instead of follow, you are apt to have the follower's mentality branded on you. This, incidentally, is one area in which the American political system is superior to most of ours; the existence of an enormous amount of responsible, decision-taking, directly elected offices of state - from mayor to sheriff to governor to DA - means that a lot of professional American politicians have practice in personal responsibility even before they reach the national stage. Not that this has saved us from groupthink and irresponsibility, but it is something we need more of. The next Santa Claus must NOT come from the ranks of Santa's little helpers.

Date: 2009-03-04 03:32 pm (UTC)
cheyinka: A sketch of a Metroid (Default)
From: [personal profile] cheyinka
I think that's why governors tend to be preferred to Congresscritters for President over here, because they haven't spent the last however-many years following the rest of their party around in Congress like lemmings* desperately in search of a cliff.



* yes, I know lemmings don't really commit mass suicide, or at least not more often than other migratory animals

Date: 2009-03-04 03:34 pm (UTC)
From: [identity profile] mentalguy.livejournal.com
That's a good and terribly insightful point (or pair of points, really). Regarding the latter, though -- I don't think it's so much that the party system brands people with the follower's mentality as that it works to exclude those who don't have it.

This was illustrated rather clearly during the last election cycle: early on, when Obama and McCain each showed signs that they might have some small measure of leadership potential, large factions within both parties rather nakedly attempted to push them out.

Date: 2009-03-04 04:03 pm (UTC)
From: [identity profile] fpb.livejournal.com
I am convinced, following Matt Towery, that McCain was deliberately sabotaged by the Republican establishment exactly because he had this funny habit of thinking with his own head. And when he actually called in - instead of Mitt "The Man of A Thousand Faces" Romney, the establishment blue-eyed boy - a woman who had actually stormed the height of her local party by driving out the old sleazy deal-makers, that was it. The Republican establishment was very willing to spend one or two terms in opposition, so long as they REMAINED the Republican establishment, rather than risk the success of two insurgents, that would risk a serious clean-up of the party. Even my mother, who hates Bush II with a passion, cannot understand why Lehmann Brothers was allowed to go to the wall. I would not be surprised if the answer turned out to be: to sabotage McCain's campaign - which had caught up with Obama by then, and which never recovered from that blow.

Date: 2009-03-04 04:12 pm (UTC)
From: [identity profile] stigandnasty919.livejournal.com
Could not disagree with you any way. Except in that I doubt if the public would vote for someone calling for them to work hard and pay off debts they could. I must be more cynical than you. :)

That being said, the Party System and the complete lack of any form of morality in business/finance would be my great bugbears about the world we live in. World Finance is a game of Poker where the players use someone else's money and get paid extra for cheating.

Date: 2009-03-04 04:56 pm (UTC)
From: [identity profile] fpb.livejournal.com
The one good thing about the party system is that if Mr Work-Hard-Pay-your-Debts got as little as 30% of suffrages, it would be practically impossible to make a government without him, and he could - assuming he had a backbone, which was my first assumption in imagining him - make the central features of his program part of the program. And if he were isolated, nonetheless his position of leader of an effective opposition would do much to prssure matters in the right direction. Do you really think that not even 30% of the electorate can be convinced of commonsense?

Date: 2009-03-04 05:22 pm (UTC)
From: [identity profile] mentalguy.livejournal.com
Hm, I wonder if that is more true of a parliamentary system than of e.g. the US.

Date: 2009-03-06 03:45 am (UTC)
cheyinka: A sketch of a Metroid (Default)
From: [personal profile] cheyinka
Much more true, I would think. We don't "make a government" - one party has the majority, no matter what, at least so far - so the best we could do is hope to elect Mr. Work-Hard-Pay-Your-Debts as president, and if he only got 30% of votes, that wouldn't be happening.

Date: 2009-03-06 04:02 am (UTC)
From: [identity profile] fpb.livejournal.com
But then you have to postulate another candidate who gets 70%.

Date: 2009-03-06 05:02 pm (UTC)
cheyinka: A sketch of a Metroid (Default)
From: [personal profile] cheyinka
Yeah, that's true, but even if Mr. WHPYD had 49.5%, he still wouldn't get elected or have any influence on Mr. Business-As-Usual.

Date: 2009-03-06 05:03 pm (UTC)
From: [identity profile] fpb.livejournal.com
ON the other hand, unlike countries where elections last a month or two, he would have had two years to impress the country with his message.

Date: 2009-03-06 09:53 am (UTC)
From: [identity profile] stigandnasty919.livejournal.com
I afraid I think that Jam today is better than Jam tomorrow is at the heart of most voting decisions so Mr Work-Hard-Pay-your-Debts would struggle to get 10% of voters, never mind 30%. He would be ridiculed by the other parties and the press and the business community.

I also suspect he would have to be a socialist and accept the limitations that puts on an economy. Modern capitalism depends on economic growth. Economic growth only occurs when there is increased debt. For it is the debt that creates the growth.

I was recently asked by my daughter (12) what money was, what each note represented. She had been told in school (by a teacher - an RE teacher it has to be said) that each five-pound note represented a tiny bit of gold held in the Bank of England. My daughter's solution to the current economic problems was simple - find more gold, (or make it - chemistry is not her strong point) then there will be enough for everyone.

Spurred on by my complete inability to explain properly why that would not work I tried to find a better explanation. I heard it on Radio 5 one morning at about 5:30am. An economist was asked where money goes when an economy shrinks. His answer, it doesn't go anywhere, it never really existed.

Much of the value of a country's economy is debt owed to that economy, by other countries, by its own people, by business. Effectively money that does not exist. So when debt levels reduce, the 'size' of the economy reduces with it. That is exactly what is happening now. Debt levels are reducing through the reduction in the level of credit available and the number of loans (toxic assets) which are not now expected to be repaid and are being written off.

That means less money to spend, because while the money owed does not exist we still manage to use it, and jobs disappear.

There are two solutions to a shrinking economy, we go down the route of Mr Work-Hard-Pay-Your-Debts and accept a reduced money supply. We would then have an economy which is stable and a little boring. Living standards would not increase but inflation would be, just about, defeated. Boring, dull, stable, safe.

Or we throw money at the problem, hoping, just hoping that we can keep the cogs going round long enough to get out of this, totally inevitable slump.

At the same time, however, we are creating the conditions for the next financial collapse.

Sadly, most people are going to prefer the jam today option and our kids and their kids will be paying for this mess.



Date: 2009-03-06 10:14 am (UTC)
From: [identity profile] fpb.livejournal.com
I disagree, but at this point I must either write a new post or let this one go completely over the top. Remember, the original idea was to mock the commonplace idea of how to get out of this crisis - which I have already criticized in depth a couple of months ago (though at the time I was hoping that President-Elect Obama would not be taken in by it). Just remember one thing: the most successful politiician in the history of this country was the man who promised "nothing but blood, toil, tears and sweat". In times of crisis, nothing can quite silence the man who tells the truth, tells it consistently, and refuses to be corrupted. Even Meg Thug's popularity, such as it was, was due to the perception that she would call a spade a spade.

Date: 2009-03-17 01:13 am (UTC)
From: [identity profile] fishlivejournal.livejournal.com
Your daughter's teacher wasn't completely wrong, merely using out of date information.
Once, nations were on the gold standard. It worked moderately well. However, gold isn't valuable in and of itself; so the value of gold fluctuates wildly, so the value of gold fluctuated. Now, we could have gone over to, say, the silver standard, or the wheat standard, or the oil standard. By going to the trade standard, the value of money is backed by *everything*, every resource that can be taxed. This protects the value of money from fluctations in the value of any one resource. This worked well until the financial sector grew so large.

Your daughter might be interested to know that during the Great Depression large numbers of unemployed Australians followed her advice, and panned the accessible rivers for gold. We had the second highest unemployment in the world - second only to Germany - and yet remained a stable democracy.

saving, hard work, and clearing debt

Date: 2009-03-17 01:01 am (UTC)
From: [identity profile] fishlivejournal.livejournal.com
For most people, saving, working and clearing debt requires having a job. For a significant minority though, saving and clearing debt requires firing people.

Date: 2009-03-04 03:19 pm (UTC)
From: [identity profile] mentalguy.livejournal.com
I'm afraid that, to the extent that this has to do with democracy, much of the problem is the character and disposition of the electorate. The voters ought to be scandalized at the prospect of handing on that kind of debt to their children and grandchildren; most don't really seem to be especially bothered by that. (Of course there is outrage about the unevenness of bailouts for those alive today -- hence the rallying cry, "Where's my bailout?")

Of course we live in a society which is disinterested in children at best, and actively hostile to them at worst. (This is reflected in birth rates.) Without concern for children, most people have little practical reason to care about the future economy, or the environment, or really anything else future -- they are simply running out the clock until the end comes.

We are witnessing the irrationality of the suicidally depressed on a civilizational scale. (Which, incidentally, has a great deal to do with Obama's appeal.)

Date: 2009-03-04 05:07 pm (UTC)
From: [identity profile] expectare.livejournal.com
Yes! The government "doing something" is more important than solving the problem.

Date: 2009-03-04 06:58 pm (UTC)
cheyinka: A sketch of a Metroid (Default)
From: [personal profile] cheyinka
i.e. "Something must be done! This is something! Therefore we must do this!"

Date: 2009-03-04 08:34 pm (UTC)
From: [identity profile] fpb.livejournal.com
Which reminds me that this is exactly one of the major crimes I charged Blair (and Brown) with in their disastrous mismanagement of British education, which has resulted in tens of teen-agers murdered by other teen-agers. That did not actually use to happen before, you know?

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