Tag: economics

Consolidate Detroit

Washington should not approve any bail-out that doesn’t include consolidation. Clearly, America can’t support 3 functioning automakers. The government should take this opportunity to cut out at least some of the industry’s dead weight. Then next time, America will have to spend taxpayer money saving the jobs of only 2 lumbering, unprofitable firms instead of 3.

Pirate Bay

The popularity of the site didn’t go unnoticed in Hollywood. Like many other BitTorrent sites, The Pirate Bay also received several takedown notices. However, the way they responded to these was quite unique and some have become news stories in themselves. Threats from the entertainment industry didn’t stop at sending letters. In true Hollywood style, The Pirate Bay admins soon saw private investigators watching their every move. “They’ve sent private investigators after us, which is really stupid if you do something online. What are they going to find, that we are sitting behind our computers? I guess the private investigator that went after me in Gothenburg got to see a lot of good bars, a lot of late nights, but probably not a lot of evidence gathering.” Peter then noted that someone from the IFPI was actually at the conference, “still trying to find out what we’re doing.”

loved for the title alone. but in general, there is not nearly enough schumpeterian creative destruction. hopefully the current business climate will destroy a few obsolete industries.

American Dream a Biological Impossibility

He paints a disturbing picture of 21st century American life, where behavioral tendencies produced by millions of years of scarcity-driven evolution don’t fit the social and economic world we’ve constructed.

Our built-in dopamine-reward system makes instant gratification highly desirable, and the future difficult to balance with the present. This worked fine on the savanna, but not the suburbs: We gorge on fatty foods and use credit cards to buy luxuries we can’t actually afford. And then, overworked, underslept and overdrawn, we find ourselves anxious and depressed.

That individual weakness is reflected at the social level, in markets that have outgrown their agrarian roots and no longer constrain our excesses — resulting in the current economic crisis, in which America’s unpaid bills came due with shocking speed.

But with this crisis, comes the opportunity to rethink how Americans live, as individuals and as a nation, and build a country that works.

let the deconstruction begin

Deleveraging

You could read almost all of the voluminous coverage of the present crisis in the financial markets in the legacy media without ever encountering the essential term which describes what’s going on at the “big picture” level, understanding the underlying cause for the events in the news, or comprehending the magnitude of the problem and how protracted may be its consequences. The following chart encapsulates everything you need to know about the present situation. This is not a “mortgage crisis”, “derivatives crisis”, “credit crisis”, or any of the other terms bandied about describing aspects of the larger situation—it is a debt crisis and it always has been. The United States have experienced a multi-decade bubble market, rolling over from equities and real estate in the 1980s, to technology stocks in the 1990s, and back to residential real estate in the aughties, all driven by an unprecedented explosion of debt, as illustrated below.

“bailouts” as presently proposed and implemented make no difference whatsoever in this chart. They’re just a transfer of debt from the private account to the public account.

China bailing out US

The Chinese government could offer to lend up to $500b (from its current stock of $1800b) to the US government for the rescue of its financial sector. Its previous assistance – buying US bonds – was indirect and unconditional. Not so in this case. China’s loan offer would be direct to the US government to be spent in the current financial crisis. More important, it would come with strings attached. Tied aid, the preferred mode of operation of western donors since the postwar period, would now be embraced by China. What would be the nature of the strings – or “conditionality” as the US Treasury, a longtime practitioner of this art, has called it? Conditionality as imposed by the World Bank and International Monetary Fund was underpinned by an ideology that favored markets and globalisation. But there was also an assumption that either borrowing third world governments did not understand their benefits or the reformers there needed a “spoonful of sugar” to help overcome any internal opposition.

Of course the jingoism is such that the US would rather go down than accept this plan.