|
Korean Job Discussion Forums
"The Internet's Meeting Place for ESL/EFL Teachers from Around the World!"
|
| View previous topic :: View next topic |
| Author |
Message |
akcrono
Joined: 11 Mar 2010
|
 Posted: Thu May 16, 2013 1:56 am Post subject: Austerity's academic backing dying |
 |
|
| Quote: |
Four years ago, the mystery was how such a terrible financial crisis could have taken place, with so little forewarning. The harsh lessons we had to learn involved the fragility of modern finance, the folly of trusting banks to regulate themselves, and the dangers of assuming that fancy financial arrangements have eliminated or even reduced the age-old problems of risk.
I would argue, however�self-serving as it may sound (I warned about the housing bubble, but had no inkling of how widespread a collapse would follow when it burst)�that the failure to anticipate the crisis was a relatively minor sin. Economies are complicated, ever-changing entities; it was understandable that few economists realized the extent to which short-term lending and securitization of assets such as subprime mortgages had recreated the old risks that deposit insurance and bank regulation were created to control.
I�d argue that what happened next�the way policymakers turned their back on practically everything economists had learned about how to deal with depressions, the way elite opinion seized on anything that could be used to justify austerity�was a much greater sin. The financial crisis of 2008 was a surprise, and happened very fast; but we�ve been stuck in a regime of slow growth and desperately high unemployment for years now. And during all that time policymakers have been ignoring the lessons of theory and history.
It�s a terrible story, mainly because of the immense suffering that has resulted from these policy errors. It�s also deeply worrying for those who like to believe that knowledge can make a positive difference in the world. To the extent that policymakers and elite opinion in general have made use of economic analysis at all, they have, as the saying goes, done so the way a drunkard uses a lamppost: for support, not illumination. Papers and economists who told the elite what it wanted to hear were celebrated, despite plenty of evidence that they were wrong; critics were ignored, no matter how often they got it right. |
http://www.nybooks.com/articles/archives/2013/jun/06/how-case-austerity-has-crumbled/ |
|
| Back to top |
|
 |
stilicho25
Joined: 05 Apr 2010
|
| Posted: Thu May 16, 2013 2:45 am Post subject: |
|
|
Um, we were still supposed to regulate banks a couple years ago, we just didn't.
Glass-Stiegel separated banks from investment which I think is necessary, but as Obama has not actually put it back in force, I don't see that we are in any better position than we were in 08.
Frank-Dodd is just more toothless gnawing on the nether regions of the finance industry. |
|
| Back to top |
|
|
akcrono
Joined: 11 Mar 2010
|
| Posted: Thu May 16, 2013 2:50 am Post subject: |
|
|
| stilicho25 wrote: |
Um, we were still supposed to regulate banks a couple years ago, we just didn't.
Glass-Stiegel separated banks from investment which I think is necessary, but as Obama has not actually put it back in force, I don't see that we are in any better position than we were in 08.
Frank-Dodd is just more toothless gnawing on the nether regions of the finance industry. |
Kind of off topic, but the regulations in D-F still exists, and while nowhere near as good as G-S, were pretty much the only thing that could get passed while republicans had any influence. Even after it was passed, republicans continued to try and remove it. Romney even ran on the platform of repeal with nothing to take its place. Remember, Obama is not a dictator and cannot just pass any legislation he wants. |
|
| Back to top |
|
|
stilicho25
Joined: 05 Apr 2010
|
| Posted: Thu May 16, 2013 3:16 am Post subject: |
|
|
sorry Akrono, I don't buy that. Demos had a solid majority in the house and senate when Obama was first president. This should have been priority number one. At first I thought it was just incompetence, or a different set of priorities, but the posts that kuros put up about crony capitalists moves on the part of the administration make me suspicious that Dodd Frank was put in place to reassure the public enough to get the con game moving again.
I think its on topic, as if we are talking about austerity versus stimulus, I would argue we haven't seen either. Most of the stimulus went to banks who rather than spending it on investment into industry, played weird shell games.
Austerity (like in England) means giving the banks what they want, plus cutting infrastructure.
Both of these are just bad attempts at keeping a rotten system going. I would love either an FDR style keynesian approach, or prudent fiscal management laid along the lines of hayek or mises. We are not going to see either as long as these oligarchs are in power. |
|
| Back to top |
|
|
akcrono
Joined: 11 Mar 2010
|
| Posted: Thu May 16, 2013 3:36 am Post subject: |
|
|
| stilicho25 wrote: |
Austerity (like in England) means giving the banks what they want, plus cutting infrastructure.
|
I think this might be the problem here, as that's not what austerity means.
| stilicho25 wrote: |
sorry Akrono, I don't buy that. Demos had a solid majority in the house and senate when Obama was first president. This should have been priority number one. At first I thought it was just incompetence, or a different set of priorities, but the posts that kuros put up about crony capitalists moves on the part of the administration make me suspicious that Dodd Frank was put in place to reassure the public enough to get the con game moving again.
|
The democrats never had a super majority in the senate, which is why several things never got passed, such as a single payer option in health reform. And if you think Dodd-Frank was a shill passed by the banks, you should read the story of how it got passed.
| stilicho25 wrote: |
I think its on topic, as if we are talking about austerity versus stimulus, I would argue we haven't seen either. Most of the stimulus went to banks who rather than spending it on investment into industry, played weird shell games.
|
Bank regulation is not either austerity or stimulus. And this is where the stimulus cash went
Maybe you're thinking of monetary stimulus from the fed (QE and such), which pretty much went to banks (or the federal government), but that's not really talking about the ill effects of austerity.
| stilicho25 wrote: |
Both of these are just bad attempts at keeping a rotten system going. I would love either an FDR style keynesian approach, or prudent fiscal management laid along the lines of hayek or mises. We are not going to see either as long as these oligarchs are in power. |
I agree, and in my opinion, getting the money out of politics is the first and most important step in achieving less corrupt government. |
|
| Back to top |
|
|
Kuros
Joined: 27 Apr 2004
|
| Posted: Thu May 16, 2013 4:36 am Post subject: |
|
|
Yes, austerity is wrong.
A stimulus bill half full of ineffective tax cuts still isn't justified, though. Also, debt has a price, despite Krugman's rants. |
|
| Back to top |
|
|
akcrono
Joined: 11 Mar 2010
|
| Posted: Thu May 16, 2013 5:14 am Post subject: |
|
|
| Kuros wrote: |
Yes, austerity is wrong.
A stimulus bill half full of ineffective tax cuts still isn't justified, though. Also, debt has a price, despite Krugman's rants. |
Anyone who reads Krugman knows that even he concedes debt has a price, just not as high as some of the deficit hawks claim.
| Quote: |
| Now, the fact that federal debt isn�t at all like a mortgage on America�s future doesn�t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don�t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an overindebted family might suggest. |
http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 |
|
| Back to top |
|
|
bucheon bum
Joined: 16 Jan 2003
|
| Posted: Thu May 16, 2013 5:59 am Post subject: |
|
|
akcrono, is there anytime you DON'T defend the Dems and leftist establishment? It's like you're the DNC mouthpiece for Dave's. I suppose this board was missing an Obama apologist until you arrived, so thanks for filling in that "void".
Fact of the matter is Obama is a poor leader who doesn't know how to get legislation passed. Did Bush have a super majority? No, I don't believe he did. Clinton managed to get bills passed even though he had a republican house to deal with after 1994. Reagan had to contend with a Democrat led house. And of course there is LBJ, who was probably the closest to a genius in getting bills passed...
In short, Obama just doesn't know how to play the game.
But back to your original post. It isn't just academia that's showing austerity is failing. It is also real life events such as Japan's first quarter growth
| Quote: |
| (Reuters) - Japan's economy expanded at a rapid clip at the start of the year, the first hard evidence that Prime Minister Shinzo Abe's sweeping stimulus is beginning to rouse consumers and businesses into action even as risks loomed in the horizon. |
| Quote: |
"Personal consumption was really strong and exports did better than expected. Stock gains and expectations for higher salaries are driving consumption now," said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo.
The Cabinet Office data -- which covers the first full quarter since Abe's return to power in late December -- is viewed as the first comprehensive report card on his plan to revive the world's third-largest economy. |
Be interesting to see if Abe can pass any reforms now. And where was this Abe the first time he was PM? |
|
| Back to top |
|
|
akcrono
Joined: 11 Mar 2010
|
| Posted: Thu May 16, 2013 7:13 am Post subject: |
|
|
| bucheon bum wrote: |
akcrono, is there anytime you DON'T defend the Dems and leftist establishment? It's like you're the DNC mouthpiece for Dave's. I suppose this board was missing an Obama apologist until you arrived, so thanks for filling in that "void".
Fact of the matter is Obama is a poor leader who doesn't know how to get legislation passed. Did Bush have a super majority? No, I don't believe he did. Clinton managed to get bills passed even though he had a republican house to deal with after 1994. Reagan had to contend with a Democrat led house. And of course there is LBJ, who was probably the closest to a genius in getting bills passed...
In short, Obama just doesn't know how to play the game.
|
Ah, so you're in the leadership(tm) camp? All Obama needs to do is show "leadership"(tm) and somehow the republicans' notorious intransigence will magically evaporate? And of course, his attempts to reach out to them, to provide compromise after compromise, and campaign for reform don't count as leadership(tm). Here's a question no one's been able to answer before: exactly what could Obama have done to get a deal? What specific behavior qualifies as leadership(tm)?
And I have plenty of problems with the democrats, but all the complaints about them I've seen here apply equally to the other side. They're not problems with the democrats, they're problems with the system.
| bucheon bum wrote: |
But back to your original post. It isn't just academia that's showing austerity is failing. It is also real life events such as Japan's first quarter growth
| Quote: |
| (Reuters) - Japan's economy expanded at a rapid clip at the start of the year, the first hard evidence that Prime Minister Shinzo Abe's sweeping stimulus is beginning to rouse consumers and businesses into action even as risks loomed in the horizon. |
| Quote: |
"Personal consumption was really strong and exports did better than expected. Stock gains and expectations for higher salaries are driving consumption now," said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo.
The Cabinet Office data -- which covers the first full quarter since Abe's return to power in late December -- is viewed as the first comprehensive report card on his plan to revive the world's third-largest economy. |
Be interesting to see if Abe can pass any reforms now. And where was this Abe the first time he was PM? |
I find Japan interesting as well. Looks good so far, but it's early. We'll see in a couple years. |
|
| Back to top |
|
|
Titus
Joined: 19 May 2012
|
| Posted: Thu May 16, 2013 2:54 pm Post subject: |
|
|
| bucheon bum wrote: |
In short, Obama just doesn't know how to play the game. |
I half agree. Obama doesn't seem to enjoy being POTUS. I assume he got carried away with all the wonderful praise and dreams of power and then when he got it realized that it wasn't his thing.
| Quote: |
| Anyone who reads Krugman knows that even he concedes debt has a price, just not as high as some of the deficit hawks claim. |
Anyone who reads pre-WW2 economics knows that the real issue isn't the cost of debt but that the debt is completely unnecessary. The state can simply issue new equity.
The issue is private debt and not public debt. |
|
| Back to top |
|
|
akcrono
Joined: 11 Mar 2010
|
| Posted: Fri May 17, 2013 6:04 am Post subject: |
|
|
| Titus wrote: |
Anyone who reads pre-WW2 economics knows that the real issue isn't the cost of debt but that the debt is completely unnecessary. The state can simply issue new equity.
The issue is private debt and not public debt. |
Good point, especially since it's private sector deleveraging that is causing the prolonged slump. |
|
| Back to top |
|
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
