The world economy is heading towards a black hole unless bold action taken • Hacker News Board

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

#131

Post by bd_at_rivenhill » Sat, Oct 01, 2011, 4:22 AM UTC

Estragon wrote: post #116

rwmj wrote: post #107

Earlier quoted context omitted.

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).

- Credit markets seized up because no one could tell who was insolvent. - Massive outflow of foreign capital from the US as investors realized what a mess the US financial system must be in. I'm in favor of letting a bank like Lehman Bros collapse despite that. The most important thing for day-to-day economic health is to make sure no one loses retail deposits, and Lehman Bros wasn't even in that business. But what s…

The most important thing for day-to-day economic health is to make sure no one loses retail deposits

You're ignoring the money market here. I just looked up some numbers, and Forrester research peged the amount of deposits at FDIC insured banks at $6.9 trillion at the end of 2007 (http://www.forrester.com/rb/Research/industry_essential_us_r..., although the number of insured dollars is probably a fair bit lower than that due to limits on the size of insurable deposits), while the Institutional Money Market Funds Association gives $3.6 trillion in money market funds. Money market funds are marketed as being equivalent to bank deposits (down to the ability to write checks against them) and many retail investors don't understand that they aren't insured.

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

#132

Post by bd_at_rivenhill » Sat, Oct 01, 2011, 4:31 AM UTC

Estragon wrote: post #117

scarmig wrote: post #80

On one hand, I really hate the Economist. It's a magazine that thinks an ideology, a smart tone, and providing the only decent coverage of world events widely available makes for a compelling magazine. Even if that coverage is ridiculously biased and not really knowledgeable about facts on the ground. On the other, it's perhaps the pre-eminent mouthpiece for the ruling Anglo-American elite, and it's comforting that t…

Greece's failure will only destroy banks that France and Germany aren't interested in preserving. They can play the zombie-bank game for a long time. Also, I really disagree that this crisis has evolved from idiocy. It's more a matter of misaligned incentives. Many of the people who have caused this mess have already profited handsomely from it.

Greece's failure will invite a sustained speculative attack on Spain and Italy which would probably require coordinated actions between European and non-European (i.e. American and Chinese) governments to stop.

I agree that the crisis is a matter of misaligned incentives, but I include politicians and bureaucrats from pretty much every country in the set of those who have directly misaligned incentives (i.e. not just indirectly misaligned by campaign contributions from wealthy bankers), so I have very little faith in the ability of regulation to solve the problem.

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

#133

Post by bd_at_rivenhill » Sat, Oct 01, 2011, 4:47 AM UTC

yequalsx wrote: post #47

TomOfTTB wrote: post #28

Earlier quoted context omitted.

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…

Raising taxes does work since the tax level in this country is quite low. It has a long way to go to catch up to France, Germany, etc. If raising taxes to the level of Germany would cause such a massive outflow of capital (which could be taxed at the exit point) then why does Germany have so much capital? Wouldn't the same thing happen to Germany? The current tax burden as a percent of GDP in the U.S. is low by U.S.…

If raising taxes to the level of Germany would cause such a massive outflow of capital (which could be taxed at the exit point) then why does Germany have so much capital?

You're missing the fact that there are significant cultural differences between Germans and Americans. Germans seem to consider this tax rate a reasonable price to pay in order to maintain their desired social contract. Americans (especially the wealthier ones) would decide that they are getting screwed by a corrupt system and would start looking for a way to get out of paying. Funny thing is that the Germans are starting to act like Americans when it comes to paying to bail out Greeks, Italians, etc. so I suspect it boils down to Germans trusting other Germans more than Americans trust other Americans.

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

#134

Post by bd_at_rivenhill » Sat, Oct 01, 2011, 4:53 AM UTC

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.

The US government is able to borrow at a low rate because there are few good alternatives: the Euro and the Yen are both terrible choices, the Pound is not particularly good either, the Australian market is too small to absorb significant inflows, and the Chinese market is not open to foreign investment. As the Chinese open their currency over the next few years and present it as an alternative reserve currency to the dollar, the free ride will start coming to an end and the US will need a significant devaluation in order to keep from choking on the higher rates. It would be better to have the debt under control when that happens.

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

#135

Post by ez77 » Sat, Oct 01, 2011, 12:17 PM UTC

jessedhillon wrote: post #128

ez77 wrote: post #126

Earlier quoted context omitted.

Are you going to answer my point, or just the degree of relevance of my citation? You presented Argentina's dire situation as a consequence of its currency crisis, when in fact devaluation (i.e., the "currency crisis") was a great relief. One, by the way, Greece is unable to do unless it abandons the Euro. One, by the way, Argentina was unable to do by law during nine years [1]. Did you read craig's short comment? It…

My point is that default, or any other sort of fuck-the-system type of approach (e.g. let the largest banks become insolvent) is not a serious option. First, the time for such a thing has passed; second, even if it were now the time for it, give me expensive stimulus and bailout every day of the week. Sovereign debt and deficit spending are not what's killing us -- 70% of GDP is half what Argentina's debt was and it'…

I can't believe you don't look for a long-trend indicators, let alone (again) when you feel entitled to throw around terms like "stupid". Default didn't yield social chaos; rather, it was seen by most political factions as the only way to end it.

You see, Argentina's unemployment [1] and poverty [2] rates soared during Menem's worship-the-system 90's. These rates happened to peak, respectively, in 2001 and 2002, basically around the time Argentina defaulted, among many other measures.

Now, with a discipline as complex as economics, given all the variables floating around, it is hard to conclude rigorously that defaulting contributed to reversing this trend, but it sure is harder to claim the opposite!

[1] http://www.wolframalpha.com/input/?i=argentina+unemployment+...

[2] http://www.wolframalpha.com/input/?i=argentina+poverty+rate+...

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

#136

Post by jessedhillon » Sat, Oct 01, 2011, 4:07 PM UTC

ez77 wrote: post #135

jessedhillon wrote: post #128

Earlier quoted context omitted.

My point is that default, or any other sort of fuck-the-system type of approach (e.g. let the largest banks become insolvent) is not a serious option. First, the time for such a thing has passed; second, even if it were now the time for it, give me expensive stimulus and bailout every day of the week. Sovereign debt and deficit spending are not what's killing us -- 70% of GDP is half what Argentina's debt was and it'…

I can't believe you don't look for a long-trend indicators, let alone (again) when you feel entitled to throw around terms like "stupid". Default didn't yield social chaos; rather, it was seen by most political factions as the only way to end it. You see, Argentina's unemployment [1] and poverty [2] rates soared during Menem's worship-the-system 90's. These rates happened to peak, respectively, in 2001 and 2002, basi…

Without agreeing with your interpretation of the facts, how do I tell you that I don't give a fuck about Argentina for the purposes of this conversation?

Not only that, you've conceded the only point I had about it:

it is hard to conclude rigorously that defaulting contributed to reversing this trend

You're having a conversation with yourself at this point. Please follow more closely the points being made before following any compulsion to chime in.

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

#137

Post by ez77 » Sat, Oct 01, 2011, 10:25 PM UTC

jessedhillon wrote: post #136

ez77 wrote: post #135

Earlier quoted context omitted.

I can't believe you don't look for a long-trend indicators, let alone (again) when you feel entitled to throw around terms like "stupid". Default didn't yield social chaos; rather, it was seen by most political factions as the only way to end it. You see, Argentina's unemployment [1] and poverty [2] rates soared during Menem's worship-the-system 90's. These rates happened to peak, respectively, in 2001 and 2002, basi…

Without agreeing with your interpretation of the facts, how do I tell you that I don't give a fuck about Argentina for the purposes of this conversation? Not only that, you've conceded the only point I had about it: it is hard to conclude rigorously that defaulting contributed to reversing this trend You're having a conversation with yourself at this point. Please follow more closely the points being made before foll…

A brief recap of your enriching comments:

  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 [...]
  I don't give a fuck about Argentina for the purposes of this conversation [...] 
  [...] follow more closely the points being made before following any compulsion to chime in.

Maybe you should spend more than 30 seconds on a topic (and give a fuck about it) before giving in to your compulsion to chime in. In particular if you feel like being arrogant and isulting at the same time, calling others' ideas "stupid". Well done...

Edit: For the record, you have conceded in the points of substance, particularly considering the minutiae you are addressing and all that you are surprisingly leaving out. You stated earlier:

    I know what did happen --default, followed by an IMF-imposed austerity program, led to 50% poverty.

And yet poverty went down right after default and devaluation ("currency crisis"), as shown clearly in the two plots given above. Do you get that? If the rate in question (i.e., poverty) goes down after your chosen event (i.e., default), it's plain nonsense to claim said event pushes the rate up! Talk about the complexity of the "mixed yield" of simultaneous default and devaluation if you will, but just don't bring up stats because they will destroy your point, counselor.

This is what you have been in this thread: an arrogant, cocky lawyer who gets his most vital piece of evidence hilariously backwards.

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

#138

Post by jessedhillon » Sun, Oct 02, 2011, 2:18 AM UTC

ez77 wrote: post #137

jessedhillon wrote: post #136

Earlier quoted context omitted.

Without agreeing with your interpretation of the facts, how do I tell you that I don't give a fuck about Argentina for the purposes of this conversation? Not only that, you've conceded the only point I had about it: it is hard to conclude rigorously that defaulting contributed to reversing this trend You're having a conversation with yourself at this point. Please follow more closely the points being made before foll…

A brief recap of your enriching comments: 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 [...] I don't give a fuck about Argentina for the purposes of this conversation [...] [...] follow more closely the points being made before following any compulsion to chime in. Maybe you should spend more than 30 seconds on a topic (a…

Have you ever read about the Argentine crisis, or is your knowledge limited to Wolfram Alpha's graphs and Googleable factoids?

The fact is that this was a thread about how Argentina's crisis provides evidence supporting the positive benefits of allowing economic collapse. The initial post was intensely stupid in that it reduced the complex effects of economic collapse to a simple if-this-then-that causation. The only relevant point is causation, which I argued was not the case, and which you conceded -- despite you neither having made the original point, nor any attempt whatsoever to defend it.

You don't seem to be arguing the initial point, or the counter point. You only want to talk about Argentina, without taking a moment to understand the context in which it was mentioned. So congratulations on nailing me for reversing the order of the austerity program and the default -- great job, I feel really dumb for failing to correctly order a sequence of events related to a tangential point.

Here's what you have been:

Two guys are arguing on the street, and during that argument one of the guys mentions the name of a sports team. A drunk, walking by, happens to be a fan of that team. Despite not knowing in what context that team was mentioned, or whether it was mentioned positively or negatively, the drunk gets in a fight with one of the men. And not necessarily the one who uttered the team's name.

You're the drunk.

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

#139

Post by ez77 » Sun, Oct 02, 2011, 4:32 PM UTC

jessedhillon wrote: post #138

ez77 wrote: post #137

Earlier quoted context omitted.

A brief recap of your enriching comments: 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 [...] I don't give a fuck about Argentina for the purposes of this conversation [...] [...] follow more closely the points being made before following any compulsion to chime in. Maybe you should spend more than 30 seconds on a topic (a…

Have you ever read about the Argentine crisis, or is your knowledge limited to Wolfram Alpha's graphs and Googleable factoids? The fact is that this was a thread about how Argentina's crisis provides evidence supporting the positive benefits of allowing economic collapse. The initial post was intensely stupid in that it reduced the complex effects of economic collapse to a simple if-this-then-that causation. The only…

It's a shame we need to get to depth 10 to get some substantial discussion. I meant no offense and basically have been trying to tell you (among other things) that your use of "stupid" is just asking people to chime in!

I was born and raised in Argentina, though this should not matter, nor does it need to be "disclosed". I knew what the WolframAlpha plots would look like because I have lived the situation. Look, Argentina has been an exceptional country for many reasons (mostly bad), and it's not a too-big-to-fail state such as the US or Italy, so clearly its experiences need not apply to other countries.

In that respect, I do not agree with crag's suggestion that anything applicable to Argentina in 2002 could be applied to the rest of the lot in 2011. The thing is, though, that instead of raising your valid points about simplistic causation, etc., you mistakenly pointed (and in a snarky way) to Argentina's "currency crisis", i.e., devaluation, then to default, in turn linking them to social distress. Please convince yourself: in Argentina things got way better after default, devaluation and big spending, which took place at the same time. Argentina's real currency collapse can be found here [1] (with relatively little unemployment and poverty, by the way). There was no IMF-imposed austerity after the default: most of that austerity was recommended in order to meet debt obligations up to 2002, and leaving that cycle was the whole point of the default! Even though Kirchner was smart enough to pay the IMF debt, following the steps of Russia and Brazil, just to get them off his back, there was no state austerity after the default.

As for my first link, I thought (mistakenly) you implied that Argentina had gotten worse since the default, and I provided a recent article with a snappy reply. Not very constructive, I admit and concede.

Beer in hand, I salute you!

[1] http://en.wikipedia.org/wiki/Hyperinflation#Argentina

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

#140

Post by ez77 » Sun, Oct 02, 2011, 8:46 PM UTC

jessedhillon wrote: post #138

ez77 wrote: post #137

Earlier quoted context omitted.

A brief recap of your enriching comments: 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 [...] I don't give a fuck about Argentina for the purposes of this conversation [...] [...] follow more closely the points being made before following any compulsion to chime in. Maybe you should spend more than 30 seconds on a topic (a…

Have you ever read about the Argentine crisis, or is your knowledge limited to Wolfram Alpha's graphs and Googleable factoids? The fact is that this was a thread about how Argentina's crisis provides evidence supporting the positive benefits of allowing economic collapse. The initial post was intensely stupid in that it reduced the complex effects of economic collapse to a simple if-this-then-that causation. The only…

(Yes, sorry, I'm loving this.) As Katie Couric said, "not to belabor the point", I feel you are still not seeing when crucial point of this however tangential thread. You say

So congratulations on nailing me for reversing the order of the austerity program and the default -- great job, I feel really dumb for failing to correctly order a sequence of events related to a tangential point.

Well, it's not a minor point to this thread, though this thread sure is, I agree, completely inconsequential in absolute terms: reversing the order means that the culprit could be the austerity measures, not the fuck-the-system default, which happened right before the first derivative changed signs!

Let me repeat that you have referred almost interchangeably to default, devaluation and an austerity program, which is really confusing. The first two are easily marked on a timeline: December 2001 and January 2002. By now I don't know what austerity measures you refer to, but again all this would take you very far from your statements linking default and/or devaluation and poverty. So, however tangential this thread is, it is based on the core of your original statements. Currency crisis and/or default did not, in any conceivable way, lead to the inception of cardboard collectors, nor to the 50% poverty rate. These issues had been building up steadily for a decade by the time the default happened, and this is not an interpretation or factoid.

As an aside (not countering any point!) be aware that for countries like Argentina big-government initiatives and fuck-the-system approaches go almost hand in hand, because comply-with-the-system plans means that you have to put aside a lot of your GDP to pay outrageous debt interests (forget about capital), leaving you little money to spread. I mean, look at the US debt ceiling fight the world witnessed last August. With a fraction of that spectacle any Third World country would have been left paying >30% annual rates, while the US is not (yet?) susceptible to speculation and still pays its cozy 3%. Fair or not, don't expect countries to behave the same "serious" measures under such a varied array of conditions. [No references for all this data. Feel free to grill me with factoids.]

As a final note, a few comments on:

Have you ever read about the Argentine crisis, or is your knowledge limited to Wolfram Alpha's graphs and Googleable factoids?

Have you? Should it ever matter in a debate? I'm presenting facts based on Wolfram Alpha, and you on Wikipedia. Why should we consider them factoids and not facts? Because we don't dig all the way for primary sources? We are both supporting our points with factoids, then. So? Should we support them with "reason alone"? Incidentally and ironically, you seem to have never read about Argentinean economics in depth: nobody with the lightest acquaintance of contemporary Argentinean economics could have honestly been unaware that poverty was, for almost a decade, sharply on the rise up to the default, and make the basic mistake of saying "look! default led to poverty". But boy, do you have a hard time accusing others!