Economics isn't what it used to be

[Dari]

It used to be that, with high inflation, you would take your money out of the bank and spend it. Now, because of deflation in Japan, the government is seriously considering charging people for keeping their money in the bank. Ostensibly, this is meant to force the banks to lend money to companies instead of keeping it with the Bank of Japan (Japan's central bank). Given how banks in America are loathe to lend to small and medium-size businesses (while the capital markets are the playground for the big boys) and deflation is a serious threat here, I can see that happening here. I guess the Japanese can always put their money under their futon (since delation is good for those with money and bad for those who owe money)...

 

[JS80]

Sounds like Economics is working. All that's happening now is showing how human manipulation is futile. Sometimes you need to let shit crash and have a catharsis.

 

[Nemesis 1]

Economics is a tool of the decievers . When are you going to comprehend this .

 

[Dari]

Sounds like Economics is working. All that's happening now is showing how human manipulation is futile. Sometimes you need to let shit crash and have a catharsis.

I agree. However, Japan's bubble burst 20 years ago. A correction should not last this fucking long.

 

[JS80]

I agree. However, Japan's bubble burst 20 years ago. A correction should not last this fucking long.

How can the market correct if the BOJ is constantly pumping money into the system?

Plus it's nearly impossible to change an entire people's culture (with regards to Jap's lack of spending and high savings rate).

 

[Dari]

How can the market correct if the BOJ is constantly pumping money into the system?

Plus it's nearly impossible to change an entire people's culture (with regards to Jap's lack of spending and high savings rate).

The Japanese economic problems have nothing to do with 'spending and high savings rate'. The country is getting older. That means people are spending more. If their saving rate was the problem, they would've had these problems for 50 years, not 20. The truth is, the Japanese economy has a rigid labor market not unlike the European Union where there are those with permanent jobs and those with part-time contracts. Hence, because of deflation, the younger people are insecure about their future and choose to save their money. If the government had let the bad firms go out of business and relax startup-crushing regulation, then the economy would be much more competitive.

So, you may be right that government may have wasted money on useless (construction) projects, but their saving rate has little to do with their problems. It runs much deeper.

 

[JS80]

The Japanese economic problems have nothing to do with 'spending and high savings rate'. The country is getting older. That means people are spending more. If their saving rate was the problem, they would've had these problems for 50 years, not 20. The truth is, the Japanese economy has a rigid labor market not unlike the European Union where there are those with permanent jobs and those with part-time contracts. Hence, because of deflation, the younger people are insecure about their future and choose to save their money. If the government had let the bad firms go out of business and relax startup-crushing regulation, then the economy would be much more competitive.

So, you may be right that government may have wasted money on useless (construction) projects, but their saving rate has little to do with their problems. It runs much deeper.

I agree with all you're saying. But my point is that it's all useless and futile. To think that government manipulation can somehow magically cure Japan's woes, well to me is Obamadumb.

What they really need to do is go out and purchase & colonize some open land somewhere.

 

[StageLeft]

I would just put the money in a safe. or safety deposit.

 

[Hacp]

I agree with all you're saying. But my point is that it's all useless and futile. To think that government manipulation can somehow magically cure Japan's woes, well to me is Obamadumb.

What they really need to do is go out and purchase & colonize some open land somewhere.

Actually, it can. The solution is to cut taxes, reduce spending, and pay down the debt. Also, don't forget to bust the unions.

 

[sandorski]

"The Market" is not an Entity, assuming it is just happens to be the first error of Modern Economics.

 

[JS80]

Actually, it can. The solution is to cut taxes, reduce spending, and pay down the debt. Also, don't forget to bust the unions.

That's a given, but we all know "government manipulation" goes the opposite of what you just listed.

 

[MotF Bane]

"The Market" is not an Entity, assuming it is just happens to be the first error of Modern Economics.

No, the assumption that the government and its central banks can adequately predict and control market situations is the first error of modern economics.

 

[sandorski]

No, the assumption that the government and its central banks can adequately predict and control market situations is the first error of modern economics.

Predict, perhaps not. Control, definitely, to a certain extent.

 

[MotF Bane]

Predict, perhaps not. Control, definitely, to a certain extent.

Yes, because the efforts at controlling have done so well lately.

 

[Jhhnn]

Yes, because the efforts at controlling have done so well lately.

What efforts beyond feeble did the Bush Admin exercise in that regard? Or the FRB under Greenspan's leadership?

Markets are a lot easier to restrain on the way up rather than on the way down, particularly when they're in a tailspin...

 

[sandorski]

Yes, because the efforts at controlling have done so well lately.

It was letting go of control that resulted in this mess. Fail.

 

[MotF Bane]

What efforts beyond feeble did the Bush Admin exercise in that regard? Or the FRB under Greenspan's leadership?

Markets are a lot easier to restrain on the way up rather than on the way down, particularly when they're in a tailspin...

There ya go. You answered your own question.

 

[MotF Bane]

It was letting go of control that resulted in this mess. Fail.

There's a typical sandorski post, except Minus the Random Capitals.

 

[Jhhnn]

There ya go. You answered your own question.

Oh, please. What the Bush Admin and Greenspan's FRB did, in concert, was to promote the biggest asset bubble in the history of finance. They made absolutely no effort whatsoever to contain the manic and *obviously* unsustainable explosion in real estate prices. Hell, they did everything they could to send it to the Moon, Alice!

 

[Ozoned]

Oh, please. What the Bush Admin and Greenspan's FRB did, in concert, was to promote the biggest asset bubble in the history of finance. They made absolutely no effort whatsoever to contain the manic and *obviously* unsustainable explosion in real estate prices. Hell, they did everything they could to send it to the Moon, Alice!

Her you go you partisan dochebag. Make sure you watch the entire video.

http://current.com/items/89352211_the-video-democrats-dont-want-you-to-see.htm

 

[sandorski]

There's a typical sandorski post, except Minus the Random Capitals.

Correct. I'm right as usual.

 

[Zorkorist]

I was wondering what happened to Japan, as you don't hear of them in the tech trade like you do Taiwan and China.

Central Bank, you say?

Let me guess, besides jobs for life, they have universal health-care?

-John

 

[Zorkorist]

We big tourist trap nation. Please come and enjoy our Samurai, and take picture with our famous Geisha.

-John

 

[Zorkorist]

I see the U.S.' future...

Come visit us cause we will fuck you up. We're the absolute best! See this big ball of twine... fucking 9 feet around. Do that! Do that in your little old foreign village.

I hear in Marsipone... 'bout 50 miles up the road there they have an Alligator. An Alligator! Can you imagine how fucked up an Alligator can make you!?

Course, you will want to visit Washington D.C. The Washington Monument is fucking great. You will want to sit on it and spin.

America, Tourist Trap, in the footsteps (following) of Japan.

-John

 

[Jhhnn]

Righties are always quick to point the finger at the GSE's, as Ozoned did, above. What he fails to mention is that the hearings weren't about the loans they made or the securities they bought, but rather a bit of grandstanding wrt accounting practices. Whatever their sins, the GSE's were mild compared to their friends in banking. They were also compelled by the Bush Admin's HUD, the GSE's regulator, to wade deeply into subprime-

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html

The year before, Bush's regulators got together for this publicity pic-

http://economicsofcontempt.blogspot.com/2008/03/cutting-through-red-tape-with-chainsaw.html

With a little more explanation here-

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/22/AR2008112202213.html

Meanwhile, GWB made the "Ownership Society" a cornerstone of his re-election campaign, and Greenspan continued to tout the era of "self regulation" by bankers... held interest rates low, too...

I will grant that there were some counter currents in congress, and applaud the efforts of a very few republicans to make the GSE's more accountable, even if that ran counter to what the Whitehouse was doing. It's likely, however, that they'd have opposed better accounting by their free market banking buddies, which is really where this all starts and ends.

Oh, yeh- one of my favorite graphs-

http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html

Of course, nobody, particularly not regulators, had any idea it was a runup to a crash... Nah, couldn't be...

PS, Zorkorist- Taiwan went to universal healthcare in 1995...