Ralph Nader has made IMHO an excellent contribution to the discussion of what can be done to prevent future crises on Wall St such as the current one.
Here are seven avoidance indicators which outline what Washington is not doing to prevent another round of greed and misdeeds by the Wall Street few against the innocent many throughout the country.
via Nader: Seven Steps the Obama Admin is NOT Taking to Fix the Banking Crash, Why Not?.
I will comment further at LCC Global Perspectives Conference, but
All the idols of capitalism over the past three decades crashed. The assumptions and presumptions, paradigm and prognosis of indefinite progress under liberal free market capitalism have been tested and have failed. We are living the end of an entire epoch: Experts everywhere witness the collapse of the US and world financial system, the absence of credit for trade and the lack of financing for investment. A world depression, in which upward of a quarter of the world’s labor force will be unemployed, is looming. The biggest decline in trade in recent world history – down 40% year to year – defines the future. ...The ‘market’ as a mechanism for allocating resources and the government of the US as the ‘leader’ of the global economy have been discredited. (Financial Times, March 9, 2009) All the assumptions about ‘self-stabilizing markets’ are demonstrably false and outmoded. The rejection of public intervention in the market and the advocacy of supply-side economics have been discredited even in the eyes of their practitioners. Even official circles recognize that ‘inequality of income’ contributed to the onset of the economic crash and should be corrected. Planning, public ownership, nationalization are on the agenda while socialist alternatives have become almost respectable.
With the onset of the depression, all the shibboleths of the past decade are discarded: As export-oriented growth strategies fail, import substitution policies emerge. As the world economy ‘de-globalizes’ and capital is ‘repatriated’ to save near bankrupt head offices – national ownership is proposed. As trillions of dollars/Euros/yen in assets are destroyed and devalued, massive layoffs extend unemployment everywhere. Fear, anxiety and uncertainty stalk the offices of state, financial directorships, the office suites the factories, and the streets…
via Atheo News: World Depression: Regional Wars and the Decline of the US Empire.
I will have more to say on Tuesday at the LCC Global Perspectives Conference, but it’s not pretty. The planet’s in trouble.
Both the IMF and World Bank are now forecasting an outright fall in global output in 2009, with a larger contraction than previously forecast in the advanced economies and sharply lower expected growth in the emerging world. I am not sure that even Nouriel Roubini was forecasting an outright fall in global output a year ago. Anything below 2% is generally considered a global recession.
The most visible manifestation of the scale of the downturn continues to come from Asia — with the sharp fall in Asian exports to the world mirroring the sharp fall in global demand. Japan’s exports are now down 50% from last February. The IMF is now forecasting a 6% of GDP contraction in Japan in 2009. That is a contraction of magnitude as emerging economies experience during their crises.
via Brad Setser: Follow the Money » Blog Archive » “This is unquestionably the worst global economic crisis since the 1930s”.
China believes the developing world should have a stronger say in how the international financial system is run
via G20 must look beyond the needs of the top 20 | Wang Qishan – Times Online.
Anatole Kaletsky indicts the modern economist profession for the current crisis in the Prospect:
Was Adam Smith an economist? Was Keynes, Ricardo or Schumpeter? By the standards of today’s academic economists, the answer is no. Smith, Ricardo and Keynes produced no mathematical models. Their work lacked the “analytical rigour” and precise deductive logic demanded by modern economics…. If any of these giants of economics applied for a university job today, they would be rejected. As for their written work, it would not have a chance of acceptance in the Economic Journal or American Economic Review….
….The truth is even worse than this rhetorical question suggests: not only have economists, as a profession, failed to guide the world out of the crisis, they were also primarily responsible for leading us into it.
via Features: ‘Goodbye, homo economicus’ by Anatole Kaletsky | Prospect Magazine April 2009 issue 157.
I have long shared held the views expressed by Kaletsky. Perhaps that’s why I’m not in some research school and writing in the major Econ journals. Alas, it appears that economists (the current reigning crop of “leading mainstream academic economists” are rather thin-skinned. Kaletsky’s critique was generally not well received by the PTB in the profession. Witness Mark Thoma and more Thoma and yet more Thoma and Krugman. Methinks they doth protest too much. They take great offense at the Kaletsky’s supposed attack on “math”, when in fact Kaletsky is attacking the methodology and thinking that limits itself only to math, that will not question assumptions, and then raises the math outcome to the status of “truth”. Economics left the study of the real economy and real people behind in the era 1950-1980. It fell into the grip of MMMM ( modern math model mania).
Some of my own thoughts and reactions to Thoma’s reaction to Kaletsky below the fold: