(no subject)

[johnny9fingers]

Well, Lehman Bros have gone.
The world still turns, but the world's economy looks to be totally fucked.
Those who've followed this blog over the last few years will know that I've been Cassandra-ing about a coming crisis in late capitalism for some time: I rather hoped it wouldn't be quite as huge as it now seems to be.
The big questions now are how big will it actually get?
What will we learn from it?
What regulatory systems will we put in place to limit such things happening again?

Has de-regulation done us any good?

Now that the banks have found structural ways around some of the bad debt (buy up another bank, transfer all the bad debts to the newly purchased bank, and then let it go to the wall, which seems the banking equivalent of the Lloyds re-insurance scandal of the 80's) how will the regulators deal with this?

Well.... Richard Wright has died.
I'm still shitting blood.
Life ain't fun really, excepting for love that is. Thank the gods for love.
 

Comments

Richard Wright - The Floyd's keyboard man ?

[ankh156.livejournal.com]

He played some nice organ parts - mostly on an L100.

Thatcher and Reagan (and ultimately, Milton Freidman) are responsible for this vogue of letting the market decide everything. It's sheer madness. I didn't want it, and I don't want to face the consequences of it now. I don't think it ever did me any good (I was never cynical enough to 'cash-in'), and now it's about to do me a lot of bad. I hope all those (rich) bastards who rode it hard and high all this time fall from a great height and hit the ground very hard indeed.

Have you been for diagnosis ?

Re: Richard Wright - The Floyd's keyboard man ?

[johnny9fingers.livejournal.com]

I have a Flexible Sigmoidoscopy booked for the 9th of Oct.

Fingers crossed.

Some banks however appear to be haemorrhaging even more than I am.

[pastorlenny.livejournal.com]

I'm not sure what makes the current ills symptomatic of "late stage" anything. Seems like just garden-variety greed, speculation, and bubble-bursting to me -- albeit with some serious consequences. But there are still plenty of places for exploitative capital to go, no?

[johnny9fingers.livejournal.com]

Don't know how much exploitative capital there is left in the system at the moment. Worse, as about now we should be putting some aside for the reconstruction of Zimbabwe.

[towith.livejournal.com]

The current "crisis" isn't the fault of any one group or person. You have central banks setting the interest rate low. Regulators restricting the market. Lenders speculating wildly. Investors trying to ride the wave for as long as possible. Homeowners trying to raise the price of their homes. We should be welcoming a crash as an attempt to start afresh.

[johnny9fingers.livejournal.com]

Oh, I agree it's systemic, though I'm not certain I'd be welcoming of a crash, even if we can start afresh: too many victims when it's quite this large.

[towith.livejournal.com]

By attaching the tax-payer to the problem it can only create more victims. If we leave it alone the worst banks will go under. Unwise investors will lose their shirts. Overly excitable homeowners will be foreclosed and the innocent ones will have their mortgages bought. There needs to be serious repercussions or this will only happen again.

Remember that housing is only around 5% of the market. The economy is running pretty well otherwise. Technology and medical sectors are business as usual. Basic materials had an amusing boom. The only real loser is capital goods, but that's exciting as it looks to be an excellent time to buy shares in construction.

[johnny9fingers.livejournal.com]

I'm impressed by your refutation of Keynesian economics.

Though it worked for FDR.

[towith.livejournal.com]

It worked so well the economy didn't reach it's previous height until a decade after he died.

[johnny9fingers.livejournal.com]

I think there may have been a small conflict in Europe that rather got in the way.
Some monetarists have criticised his 'New Deal' as maintaining a high level of unemployment....but few businesses were actually expanding through the great depression. One wonders if there are idealogical reasons for certain economists criticism of FDR's economic policies?

[towith.livejournal.com]

Raw material businesses which were then nationalized, like steel. It's amusing as nationalizing and bailing out are essentially the same animal, yet most of know nationalization to be a poor decision.

One wonders if there are idealogical reasons for certain economists criticism of FDR's economic policies?

Are we traipsing into ad hominem? There are philosophical reasons. We could go into the merits of truth over sophism if you wish.

[Edit]

As for small conflicts, according to Keynes and FDR that should have been a boom for industry. Imagine all the money changing hands.

[johnny9fingers.livejournal.com]

Thing is at the moment the bailing out has been done by a 'right-wing' government. Fannie Mae/Freddy Mac was a bail-out for the man-in-the-street. AIG may be a bail-out of a different kind.
Lehman's didn't get bailed out at all, and have gone to the wall. Possibly Goldmans and Morgans will go the same way.

Would help if I could spell ideological too.

WWII was a boom for industry: Keynes was right.

I don't reckon Philosophy and Economics mix too well. Pragmatic fudging seems to be the best we can manage. (Much like Hilbert's dream of a perfect unified mathematics falls over as soon as Russell's Set Theory Paradox hoves into view: and then the coup de grace is applied by Godel's Incompleteness I & II.)
But that's just my opinion.

[towith.livejournal.com]

I'll leave the wings on the bird. It's the actions they take which matters.

WWII was a boom for industry

I wonder what changed since your previous comment. Given that labour, focus and investment were being diverted, no it wasn't. It's the broken window fallacy.

Philosophy being the rational investigation of truth, knowledge, conduct... You know you're the second person this month to wave Godel under my nose, do I come across as someone with a phobia for names? Now if certainty is always at question, does it make more sense to make vast all-encompassing decisions or to defer to those on the ground floor?

[Edit]

Why do I keep remembering further points after posting? As for your Lehman comment.

[johnny9fingers.livejournal.com]

Nowt changed since my previous comment: Keynes ran our war economy - the manufacturing parts prospered but after the war the govt. found a small difficulty in meeting the costs of industrial production and had to call upon loans from the Americans, who were strangely in a better shape after FDR's economic policies. Weird that. Labour, focus, and investment were diverted, but the US had a certain....capacity that geared up to meet a new demand. War economies are however very different, as you point out.
I'd say decisions about policy should be made according to circumstances: for example, going to war against uncle Adolph seems rather a better move than going to war against Saddam. But that could be hindsight. However that doesn't mean going to war is always wrong or always right: a policy of war is not necessarily always a good thing.
Any system with more than three variables is inherently unpredictable (according to Chaos theory amongst others). The world economy is inherently unpredictable. But you are right, I feel, in assuming that certain forms of conduct are essential in such circumstances: we just disagree on what those particular forms of conduct should be.
I favour regulation and sound auditing, and when the market appears not to work, intervention of one kind or another. The nature of that intervention is of course debatable. I certainly don't feel that bailing out investment banks is necessarily a good thing: but also I think that allowing the economy to go 'tits up' without first trying to stabilise it would be a dereliction of good government, which is something the taxpayers vote governments in for in the first place.
Philosophy, alas, has limitations imposed by a non-philosophically inclined world. Just as logic has limits when dealing with the non-logical.
As for Barclay's....they'll end up with some good properties. But Morgan Stanley and Goldman's may yet lose their independence much like Lehman Bros.
Regulators hardly limited the market at all before the crash; now it looks like that will change: short-selling has been forbidden in the UK. Possibly bad for our economy, but it may be banned elsewhere too: so Goldman's and Morgan's may yet survive.
The entire Russian stock market has been closed for two days. That seems like a regulatory decision. And whether one agrees with it or not philosophically it's happened nevertheless.

More Champagne....I'm getting sober, which I could do with avoiding.

[towith.livejournal.com]

So many incomplete-thoughts.

What's that old cliche about insanity. Doing the same thing over and over and expecting different results. Who would think people born into governmental systems would end up voting in them. That hemorrhaging money into entangling alliances seems like a good idea while it is policy. And for those who dare disagree?

"whether one agrees with it or not philosophically it's happened nevertheless."

Brought swiftly into line without argument.

[towith.livejournal.com]

One wonders if there are idealogical reasons for certain economists criticism of FDR's economic policies?

Oh slightly related, you should check out this poll in my journal.

[winterlion.livejournal.com]

*fingers crossed* for you.

re: financials: I've been following discussions on CBC by economists. I've heard multiple comparisons against '29 - especially comments like "this is the worst that's been seen since the crash of '29". It does NOT look good for investors. The rest of us will most likely weather it through, as long as we tread as lightly as we can.

re: Richard Wright: May he do well in that great gig in the sky.

[johnny9fingers.livejournal.com]

Thanks for the crossed fingers. I appreciate it.

Do good things.