Saturday, April 4

bending all over?



16 comments:

ANNA-LYS said...

Wise words in an otherwise world!

Aggie said...

I agree. Walk the straight path with head held high ... and then others may follow.

jozien said...

Hi Zee, i had not been by for a few days, wonderful posts.
I keep close to home, my own life windy enough, it's just that i try to stay in the eye of storm.

susan said...

I'm simply not buying the story that he's so smart about everything else but needs a little helpful advice about the economy. His financial team was the first thing he announced last December and anybody with any sense knew where that was going to lead.

He's a student of Milton Friedman not Keynes and will not oppose the bankers. Now that people no longer have pitchforks do you suppose leaf blowers and weed whackers will suffice?

lindsaylobe said...

Hi Zee
Make straight their ways!!

Susan & Zee
Obama I think will eventually clean up those few very big banks technically insolvent, either by nationalization or replacement of top management.

His policies though don’t echo Milton Friedman; he favoured reliance on tax cuts, deregulation and tight monetary control whilst Obama’s increased government spending with lower interest rates is classic Keynesian applications for deflationary times- the reverse during inflationary periods.

Krugman I think is setting up his followers to expect Obama to fail since he contends prior decades of over spending are now consumed by a sudden saving curse. Consequently he wants Obama to spend far more on short term investment multiplier type government expenditure to stimulate the economy and reduce rising unemployment.
Obviously he doesnt expect that to happen.

I checked your recently released national government economic accounts to the end of February 2009 which revealed a remarkable turnaround to support Krugman’s argument.

In a nutshell from a nation of big spenders you’r now net savers, notwithstanding rising unemployment. You’re now saving much more than you spend- good and necessary to pay off debt but disastrous short term due to the sudden dislocation.

But back to the banking sector. It seems to me by the end of 2009, Australia, which is following very similar economic policies to Obama will be just one of a handful of countries where all of the major banks are privately owned. The trend towards net savers is happening everywhere. Australians are becoming savers again because of the economic slowdown and fears of a possible recession.

The crisis then in the short term world wide is not a crisis of lending but a crisis of a lack of spending and of dreaded deflation.

Best wishes

Robert V. Sobczak said...

That looks like a terrible accident. Hopefully everyone was fine!

Bettina said...

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference...

Part of one of my favourite poems by Robert Frost.

Zee said...

Hi Bettina - wie gohts?
That indeed is a very fine poem from Frost. I generally think he is pretty brilliant...

Zee said...

Robert,
it wasn't an accident - the towns snowplowdriver was drunk

Zee said...

Lindsay
Your analysis is thorough, as usual...
I am personally not as optimistic as you are, and my pragmatism dried up and gave place to skepticism.
In the US we made a habit to live above our means until "kingdom come" - and habits are hard to break.
Therefore I belive the present reduction in consumer spending is only a temporary "angst" thing; soon you will see obesity rule again.

Zee said...

What about raven beaks Susan?

Zee said...

Eye of the storm seems accurate Jozien. Perhaps we need to hijack a pirates speedboat to keep up.

Zee said...

You are an uncorrectable optimist, Age!

Zee said...

Anna-Lys, I am flattered!

lindsaylobe said...

Although the Dow may be exhibiting some dead cat bounces, once it stops no longer is anything pretty. For as we see the eventual return of a functional banking system, rising asset prices (rather than deflation)and households resume their consumtion rather than save so inevitably cycles do return. But as always some will be much wiser for a litle while afterwards-those swinging along in equilibrium.

Best wishes

Seraphine said...

but i like
bending
rools.