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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

#101

Post by bluedanieru »

anigbrowl wrote: post #94
jpdoctor wrote: post #46

Earlier quoted context omitted.

> I really, really want to know how you just 'reboot' the financial system without massive disruption to retail banking or the payments system. There will be massive disruption in any case. It can come in the format of recapitalization (Iceland) or inflation due to inflating their insolvency away (Latin America). > How do you 're'capitalize a new bank? OP meant recapitalize the failed banks. Short version: 1. Fire th…

Total time is probably 1 week for the BoA sized guys You're telling me the government could have rebooted BofA, AIG, Wells Fargo, CitiGroup and Chase (to name just the top 5 - http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#P... ) in the space of a week or two. I would love if that were possible, but I don't see how it is. Proposals like this were debated at some length back in 2008, after all, and I disti…

I distinctly remember them being decried as Communism, for understandable reasons.

Understandable that they are actually communist, or understandable that bankers and regulators would say any old bullshit to at least barely legitimize to the public massive transfers of wealth into their pockets?

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

#102

Post by arethuza »

anigbrowl wrote: post #89
theoj wrote: post #59

Earlier quoted context omitted.

Contrary to what some pundits would like you to believe, this is not new ground. A real estate bubble followed by a balance sheet recession has happened in at least 2 other places before: Sweden in 1992 and Japan in 1991. Different choices in these countries led to different outcomes. In Sweden, the government demanded steep losses from equity holders before it took over a large part of the financial system (unlike U…

I don't listen to media pundits. I'm asking the grandparent poster for specifics of how s/he intends a reboot of the entire financial sector because I think this is actually a rather hard problem. I have been through a real estate bubble followed by a recession before (in the UK, at the same time as the Swedish one). I think there are some definite upsides to the Swedish approach, but the people who keep bringing it…

Despite all of that, Sweden has been ranked as the third most competitive economy in the world by the World Economic Forum:

http://www.weforum.org/issues/global-competitiveness

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

#104

Post by jessedhillon »

anigbrowl wrote: post #89
theoj wrote: post #59

Earlier quoted context omitted.

Contrary to what some pundits would like you to believe, this is not new ground. A real estate bubble followed by a balance sheet recession has happened in at least 2 other places before: Sweden in 1992 and Japan in 1991. Different choices in these countries led to different outcomes. In Sweden, the government demanded steep losses from equity holders before it took over a large part of the financial system (unlike U…

I don't listen to media pundits. I'm asking the grandparent poster for specifics of how s/he intends a reboot of the entire financial sector because I think this is actually a rather hard problem. I have been through a real estate bubble followed by a recession before (in the UK, at the same time as the Swedish one). I think there are some definite upsides to the Swedish approach, but the people who keep bringing it…

Exactly.

Economic/political discussions on HN are painful because people who are capable of generating meaningful insights when the topic is technical are reduced to wishful thinking and trotting out tired, simplistic misrepresentations of economics.

Let the country's biggest banks become insolvent, then "reboot" them in a week? When you start proposing that the world's largest economy model itself on theoretical notions only tested in a country 3% it's size, ideologically oriented in a completely different direction, and founded on a radically different social contract, then you are not arguing anymore.

It's not an argument, in the sense of debate and intellectual exchange, it's dogma.

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

#105

Post by jessedhillon »

crag wrote: post #90
theoj wrote: post #59

Earlier quoted context omitted.

Contrary to what some pundits would like you to believe, this is not new ground. A real estate bubble followed by a balance sheet recession has happened in at least 2 other places before: Sweden in 1992 and Japan in 1991. Different choices in these countries led to different outcomes. In Sweden, the government demanded steep losses from equity holders before it took over a large part of the financial system (unlike U…

Lets not forget Argentina. Whose currency collapsed along with their central bank. They survived.

What a stupid thing to say. Have you ever read about the currency crisis?

This is from a Wikipedia article you could have found in 30 seconds; if you had, perhaps you would have changed your mind about posting, saving us all the pain of knowing that someone on HN is capable of posting such a glib, worthless comment:

Several thousand newly homeless and jobless Argentines found work as cartoneros, or cardboard collectors. The 2003 estimation of 30,000 to 40,000 people scavenged the streets for cardboard to eke out a living by selling it to recycling plants. This method accounts for only one of many ways of coping in a country that at the time suffered from an unemployment rate soaring at nearly 25%.

_Twenty-five-fucking-percent and people selling cardboard for a living_

Is this the example you crazy people aspire to when you pine about your pure free markets and how the economy should have been allowed to undergo massive correction?

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

#106

Post by kokey »

chernevik wrote: post #79

All HN threads attract posts with excess ratios of certainty to knowledge. On the technical stuff, the excesses are met with really knowledgeable rebuttal, driving up the denominator. People are afraid of embarrassment, so they write more carefully, driving down the numerator. The dynamic drives the overall ratio to something like one. On economics, everyone is really sure the other guy is crazy. They make posts that…

You say that with a lot of certainty. You must be crazy.

Jokes aside, you have a good point.

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

#107

Post by rwmj »

flourpower wrote: post #15
OstiaAntica wrote: post #8

"Bold" action by the politicians and the central banks created much of the current mess. If we'd just cleared the pipes by letting the banks fail, recapitalizing new banks, and basically rebooting the financial system, we'd be much further along. Instead, we got bailouts and crony capitalism and ad hoc intervention, and today the global system is in many ways in worse shape now than in 2008. (Banking is more concentr…

We shouldn't practice financial regulation like it's holistic medicine. Metaphors about cleaning the pipes and taking the pain should be weighed against the evidence we have about what happens when you let banks fail, and that didn't go very well when we did it with Lehman Brothers.

Out of interest, what bad stuff happened when Lehman Brothers collapsed?

Beyond a few thousand job losses (likely temporary, and about 0.01% of the US economy).

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

#108

Post by Tyrannosaurs »

learc83 wrote: post #40
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.

The great quote "Economists have successfully predicted seven out of the last three recessions".

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

#109

Post by ez77 »

jessedhillon wrote: post #105
crag wrote: post #90

Earlier quoted context omitted.

Lets not forget Argentina. Whose currency collapsed along with their central bank. They survived.

What a stupid thing to say. Have you ever read about the currency crisis? This is from a Wikipedia article you could have found in 30 seconds; if you had, perhaps you would have changed your mind about posting, saving us all the pain of knowing that someone on HN is capable of posting such a glib, worthless comment: Several thousand newly homeless and jobless Argentines found work as cartoneros, or cardboard collecto…

Do you think what happened was Argentina's worst-case scenario, given the magnitude of its crisis? Plenty of knowledgeble people [1] think crag's comment is not a stupid thing to say.

[1] http://www.nytimes.com/2011/09/02/opinion/argentinas-turnaro...

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

#110

Post by danmaz74 »

jbooth wrote: post #82
OstiaAntica wrote: post #8

"Bold" action by the politicians and the central banks created much of the current mess. If we'd just cleared the pipes by letting the banks fail, recapitalizing new banks, and basically rebooting the financial system, we'd be much further along. Instead, we got bailouts and crony capitalism and ad hoc intervention, and today the global system is in many ways in worse shape now than in 2008. (Banking is more concentr…

"Bold" action by the politicians and the central banks created much of the current mess. No, bold actions by financial instrument designers, sellers and buyers created much of the current mess. Agreed on the crony capitalism and ad hoc intervention, and the real shame is that the cowboys who got us here did great out of the deal, but let's lay the blame appropriately.

Moreover, excessive deregulation by the politicians allowed all that. But, it could be argued that eliminating the regulations was "bold action"...
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