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The world economy is heading towards a black hole unless bold action taken

economist.com

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Re: The world economy is heading towards a black hole unless bold action taken

#31

Post by guelo »

dmfdmf wrote: post #12

I agree with OstiaAntica. This Economist article is a thinly veiled call for more debt and more inflationary spending. Who stands in the way of "recovery" ? The obstinate Germans (who learned the lesson of hyperinflation last century) with the only sound Euro economy, i.e. they will be paying for the bailouts. In the USA its the Tea Party and the few Republicans with a spine who recognize that the problem is the mass…

Can you please explain your theory of how massive cuts to government and the ensuing massive layoffs of government workers, and the government buying less stuff from businesses, is going to fix the economy? Please take into account in your explanation that the US is able to borrow at record low rates right now.

Re: The world economy is heading towards a black hole unless bold action taken

#33

Post by wtvanhest »

mcphilip wrote: post #10
silverbax88 wrote: post #9

That article has almost zero factual content to back up it's assertions. This kind of nonsensical ravings really grate me. Don't write something like 'witness the increasingly dark economic backdrop' or 'America’s economy is still limping along' without some hard numbers. This article attempts to support those statements with broad general commentary like 'summer slump in share prices and consumer confidence suggest…

This is an online version of an article in the Leaders section of the Economist magazine. The articles in that section are mostly short summaries of topics discussed in greater detail in the relevant subsections of the issue. For instance, the same print issue as this 'nonsensical raving' has a much more detailed summary of the euro crisis in the Briefings section if you're looking for the gory details alluded to in…

Then for future reference, link to that article. The one posted was a gigantic waste of time and had no information.

Re: The world economy is heading towards a black hole unless bold action taken

#34

Post by TomOfTTB »

yaks_hairbrush wrote: post #29
dmfdmf wrote: post #12

I agree with OstiaAntica. This Economist article is a thinly veiled call for more debt and more inflationary spending. Who stands in the way of "recovery" ? The obstinate Germans (who learned the lesson of hyperinflation last century) with the only sound Euro economy, i.e. they will be paying for the bailouts. In the USA its the Tea Party and the few Republicans with a spine who recognize that the problem is the mass…

How is the US government debt the problem? I just don't see it. Government debt certainly didn't cause the problem, we can still borrow at a 2% rate, and there's been little evidence of inflation.

I'm in the middle here. U.S. and State debt is a huge problem IMHO but I agree that private debt is a bigger problem (given it dwarfs public debt by a large margin).

But the one point where I think you're clearly wrong is using interest rates or lack of inflation as measurement sticks. As long as the U.S. holds the reserve currency we have the whole world trying to prevent our currency from collapsing. That means giving us whatever interest rate we want and pegging their currency to ours.

I suspect we'd see a major collapse in the dollar if the world decided to abandon it as the reserve currency.

Re: The world economy is heading towards a black hole unless bold action taken

#36

Post by jamesaguilar »

TomOfTTB wrote: post #28
yequalsx wrote: post #24

Earlier quoted context omitted.

The are numerous examples of countries having a larger debt to GDP ratio than the United States who recovered nicely from such debt ratio. In the U.S. taxes are around 24% GDP which is quite low relative to the rest of the industrialized world and quite low relative to our recent past (50 years). Raising taxes will counteract any hyper inflationary forces. Increasing the debt for the U.S., given that the borrowing ra…

With all due respect raising taxes that high is a straw man. I'd be all for raising taxes if it worked but it doesn't. Nation states are competitive entities and they compete for the world's resources. If the U.S. dramatically raises taxes on the rich then emerging countries like Hong Kong see an opportunity and lower their tax rates. Then you start to see capital flee the U.S. for overseas. That's why per capita tax…

> With all due respect raising taxes that high is a straw man.

How high? And how is it a straw man? A straw man is a false argument that someone uses to make another person's position seem weak in a debate. I don't see that happening here. (Except maybe in your post. You're making it seem like the person you're responding to is in favor of doubling or tripling the tax rate or something, when in reality he probably supports a moderate increase.)

> That's why per capita tax receipts have stayed fairly consistent over time . . .

Your link shows the opposite. Per capita tax receipts have grown 250% over the last sixty years according to that chart.

> I don't think we can raise taxes to the point where it would get us out of this mess

How high do you think that is? Right now receipts are well south of 20% of GDP. Currently revenue would have to be doubled, but outlays typically increase and revenues decrease during a recession. If you look at the non-recession tax rates that would be needed to close that gap in, e.g., the Bush years, it would have only taken a 5-10% increase, which hardly seems as outrageous as you're making it out to be.

Re: The world economy is heading towards a black hole unless bold action taken

#37

Post by naeem »

The scariest part of all this, is that for the first time in the past century, we no longer have any options. Less regulation, more regulation, centralization, de-centralization, it's all been tried. We're out of options, and the policy makers and central bankers have clued in (Bernanke's recent speeches have been dreadful to listen to).

Maybe, just maybe, things are going to go really, really badly this time around. Maybe.

Re: The world economy is heading towards a black hole unless bold action taken

#38

Post by dmix »

sliverstorm wrote: post #21
anigbrowl wrote: post #14

Earlier quoted context omitted.

letting the banks fail, recapitalizing new banks, and basically rebooting the financial system Please tell us how that works in practice rather than in theory. I really, really want to know how you just 'reboot' the financial system without massive disruption to retail banking or the payments system. How do you 're'capitalize a new bank? If you just mean create new banks, who is running these banks? I mean, I'd like…

Oh, it's not a big deal, you just need everbody to go without money and food for a few years while you get the things off the ground. No sweat.

It's not as black and white (ex suffering or no suffering).

It's possible there will be much more suffering as a consequence for not acting now - by letting the core problem persist.

It could have major implications that last for decades versus a few years of hardship.

Most complex problems can't be fixed from constantly patching the top surface. They need to be broken down and rebuilt into something better.

Re: The world economy is heading towards a black hole unless bold action taken

#39

Post by Retric »

guelo wrote: post #31
dmfdmf wrote: post #12

I agree with OstiaAntica. This Economist article is a thinly veiled call for more debt and more inflationary spending. Who stands in the way of "recovery" ? The obstinate Germans (who learned the lesson of hyperinflation last century) with the only sound Euro economy, i.e. they will be paying for the bailouts. In the USA its the Tea Party and the few Republicans with a spine who recognize that the problem is the mass…

Can you please explain your theory of how massive cuts to government and the ensuing massive layoffs of government workers, and the government buying less stuff from businesses, is going to fix the economy? Please take into account in your explanation that the US is able to borrow at record low rates right now.

And also note that inflation is next to non existent right now. A few years of 3% inflation would do more to fix the housing market than all government assistance put together at this point in time.

PS: I still think we should cut government spending by around 30% AND remove the home mortgage tax deduction but both of those need to be slow changes or they are going to cause a great deal of harm.

Re: The world economy is heading towards a black hole unless bold action taken

#40

Post by learc83 »

blackhole wrote: post #35

I am continuously amused by people vehemently arguing about topics they have almost no expertise in and thinking whatever insane batshit theory they have is better than a PhD doctorate's advice.

When it comes to economics, you can find a set of PhDs to support whatever wild theory you happen to fancy.
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