World Recession Spreads Through Asia, ECB Still Holds Rates Steady - Page 3

laurentius · July 11, 2003, 19:02

DanS: Bull, he does everything wrong. The global capitalism needs urgent reforms and GwB is just taking it backwards. It's really about not realising USA is not an isolated remote island somewhere but one of the main engines of our global economy. He should give his adamant support for the UN and really try to develope the global economy. As any european knows it's still very difficult to eg. buy anything online from the us. Now I'm not blaming everything on the US, but GwB just isnt helping at all, his foreign policy is just too much tied up with internal affairs. As US foreign policy has always been...

Kidicious · July 11, 2003, 19:08

Quote:

Originally posted by laurentius
DanS: Bull, he does everything wrong. The global capitalism needs urgent reforms and GwB is just taking it backwards. It's really about not realising USA is not an isolated remote island somewhere but one of the main engines of our global economy. He should give his adamant support for the UN and really try to develope the global economy. As any european knows it's still very difficult to eg. buy anything online from the us. Now I'm not blaming everything on the US, but GwB just isnt helping at all, his foreign policy is just too much tied up with internal affairs. As US foreign policy has always been...

If the US is the engine of growth then he should do everything he can to grow the US economy falling short of creating barriers to access to our market. This is the first time that I've heard that complaint about people in the US not being able to buy things online from Europe.

DanS · July 11, 2003, 19:13

The global capitalism needs urgent reforms and GwB is just taking it backwards.

A lot of reform is being done, and would be done regardless of what the US said or did. China and India continue to open up. Some European countries are reforming, if perhaps slowly.

his foreign policy is just too much tied up with internal affairs

This isn't true. We're doing our best to liberalize trade, for instance.

laurentius · July 11, 2003, 19:21

Maybe I didn't phrase it right. US is one of the main engines of our global economy. It means that it's not the only one and since there are others we need a basic set of rules. I know we have WTO-for that but you know USA and EU arent exactly playing fair. Not to mention China, Korea and Japan. What we really need to do is to decide are we going to release our markets totally to capitalism or should we let our goverments have some power over economic issues. It has become clear that we can't go on like thisand both the ways need strong international cooperation.

Also, japan may need our help in the future. It's good for us they do well. I don't know so much about US economy but I reckon it's quite dynamic and strong despite some recent setbacks..

Kidicious · July 11, 2003, 19:24

laurentius,

I wouldn't count on as much global cooperation as you have in Europe. Not gonna happen.

laurentius · July 11, 2003, 19:25

Well, at least we have to hope it will. I really see only bad scenarios if we continue like this.

DanS · July 11, 2003, 19:32

Also, japan may need our help in the future. It's good for us they do well. I don't know so much about US economy but I reckon it's quite dynamic and strong despite some recent setbacks..

During the Clinton administration, we railed against the Japanese policies every time we met with the Japanese. The Bush administration has decided to say "they know that we think they're screwing up their economy, no need to be high-handed" and leave it at that.

I agree that we would all be better off with a healthy Japanese economy.

What we really need to do is to decide are we going to release our markets totally to capitalism or should we let our goverments have some power over economic issues.

Well, the US has already done much of this unilaterally, the steel and agricultural stuff notwithstanding (neither is a large part of the US economy, after all).

The US can only lead by example--to show that it pays to open up an economy. We can't force anybody to do what they need to do.

But anyway, more than half of the world's people are living under governments that are liberalizing their economies. We are going the right direction!

laurentius · July 11, 2003, 19:38

DanS: are we? As a leftist I'm not so sure about it

DanS · July 11, 2003, 19:57

Well, what would you want the US to do or say?

I don't agree that capitalism is suffering some sort of crisis. More like it's entering a golden age.

laurentius · July 11, 2003, 20:05

Dan, Even I don't have ALL the answers and right now I'm too tired and/or drunk to answer. I do think that you will find the answer to your Q from my earlier posts. it's 3 am here and after 3.5 litres of beer I am relly getting sleepy.

Also I must be able to drive tomorrow morning Hope you understand...

DanS · July 11, 2003, 20:11

OK, you get a pass, this time.

By the way, why would China be the ones to pick up the pieces from the Japanese implosion? Who has the biggest economy, after all.

Kidicious · July 11, 2003, 22:27

What I find interesting is that there seems to be three camps today. The mainstream camp is the neo-classical camp (Aglo-Saxon Turbo-Capitalists as HO puts it). Like DanS, they believe that free market globalization is leading capitalism into a new golden age. I think you can include a subgroup of Supply-Siders to this group. Then you have the old Austrian School saying that monetary policy is causing disruptions to the market. Like Colon, they say that attempts to fine tune the economy makes capitalism unstable. And then you have a few communists like myself saying that capitalism is unstable and doomed to eventual failure that it won't be able to recover from. The group that seems to be missing is the Keynesians. There are some of them, but they are few and far between. I remember in the 70s when our president Nixon said, "We are all Keynesians now." Wow are we far from there now! What's going to happen if the global economy collapses? Will there be any Keynesians then or will the Austrian School win out? What will be the consequences? Interesting.

Colon™ · July 12, 2003, 13:00

Quote:

Originally posted by Kidicious Only lower interest rates can drive growth or slow it down. Increased money supply can cause inflation eventually if the economy doesn't pick up, but why are you worried about inflation?

Money supply growth + money velocity growth = nominal output growth = real output growth + inflation.

Does that ring a bell? It might haven't crossed your thoughts yet, but a CB lowers interests rates exactly by stimulating money supply growth. Or at least by attempting to do so.

Quote:

That's what I'm talking about. The're too high.

Compared to what?

Kidicious · July 12, 2003, 13:08

Quote:

Originally posted by Colon
Money supply growth + money velocity growth = nominal output growth = real output growth + inflation.

Yes, but lower interest rates are needed to increase velocity. The point is that increased money supply may lower rates, but unless rates are lowered people will not spend more.

Another point is that you can have a larger money supply with a smaller output and not have inflation. When people start spending you can decrease the money supply.

Quote:

Originally posted by Colon
Compared to what?

They just need to be lower to stimulate growth.

Colon™ · July 12, 2003, 13:08

BTW those Anglo-Saxon Turbocapitalists are just Keynesians in disguise. We are the real deal.

DanS · July 12, 2003, 13:31

BTW those Anglo-Saxon Turbocapitalists are just Keynesians in disguise.

This can't go without a response.

Keynes would go far, far beyond the modest actions taken by the Anglo-Saxon Turbocapitalists in trying to control the economy. Keynes is about far more than futzing with the interest and tax rates.

HershOstropoler · July 12, 2003, 13:38

Quote:

Originally posted by Kidicious

Boy you and HO. There really are a lot of you aren't there. I don't think the danger of bubbles is nearly as bad as the danger of recession.

Uncle Alan gives you both in abundance.

But I'm not surprised by a whacko Leftie being a fan of Greenspan. It's a strange, strange world.

"Only lower interest rates can drive growth or slow it down."

So let's say lower interest rates don't increase aggregate credit and money supply, where exactly is extra demand coming from? Hardly velocity.

Azazel:

"IIRC, Japan has a budget deficit. in the same time, Japan suffers from Deflation. why can't the government just print some money, and take care of both problems?"

That's essentially what they (and the Fed) are doing, just a bit more elgantly.

Dan:

They are operating from the same assumptions about the power of the nannystate.

Also, if you look at the manipulation of the mortgage market or the fed-engineered bailouts, the anglosaxons have a lot of other tricks up their sleeves.

DanS · July 12, 2003, 13:45

Yes, the mortgage market is manipulated to give us a better result. I don't deny that. However, all central banks manipulate the financial sector to some degree. Whether in aggregate the Anglo-Saxon sphere is worse than others, I don't know.

Az · July 12, 2003, 13:46

Quote:

"IIRC, Japan has a budget deficit. in the same time, Japan suffers from Deflation. why can't the government just print some money, and take care of both problems?"

That's essentially what they (and the Fed) are doing, just a bit more elgantly.

Since the deflation continues, and the deficit is still there, why not stem on a pedal a bit more?

HershOstropoler · July 12, 2003, 13:51

Quote:

Originally posted by DanS
Yes, the mortgage market is manipulated to give us a better result. I don't deny that.

Better results through government manipulation. You're one bloody commie - looking for a job at GOSPLAN?

HershOstropoler · July 12, 2003, 13:54

Quote:

Originally posted by Azazel
Since the deflation continues, and the deficit is still there, why not stem on a pedal a bit more?

Well they tried new spending packages again and again - it didn't work. I think doubling the deficit to what, 20 % of GDP, would also just create a blip. But I think "deflation" is not the problem, which will get me ridiculed by angry Enron shareholders.

Kidicious · July 12, 2003, 13:57

Quote:

Originally posted by HershOstropoler
So let's say lower interest rates don't increase aggregate credit and money supply, where exactly is extra demand coming from? Hardly velocity.

I'm confused. If lower rates don't result in increased aggregate credit then demand must be decreasing. I'm not sure what you are getting at. I'm not saying that increased money supply doesn't increase output, but that it only does so when interest rates are lowered, ceterus parabus.

Az · July 12, 2003, 13:58

Did their increase in spending follow an increase in the, ahem, production of cash, as I said? because otherwise, esp. if most of the money was raised internally, this would mean little.

HershOstropoler · July 12, 2003, 14:07

Kid: I have no idea what you are trying to say. But maybe this will end the issue anyway: "that it only does so when interest rates are lowered" - and the ECB has lowered interest rates, and money supply is reacting more strongly than in the US. The reason is that we pretty much maintained economic balance, while the US economy is ****ed from one end to the other.

Kidicious · July 12, 2003, 14:16

Quote:

Originally posted by HershOstropoler
and the ECB has lowered interest rates, and money supply is reacting more strongly than in the US.

Show me.

Kidicious · July 12, 2003, 14:17

Do you mean that the money supply has increased more in the EU than in the US or that output has increased more in the EU?

Kidicious · July 12, 2003, 14:35

Does the ECB even keep track of the economic growth of the EU? I can't find the stats at their website.

Colon™ · July 12, 2003, 14:42

Quote:

Originally posted by Kidicious
Yes, but lower interest rates are needed to increase velocity. The point is that increased money supply may lower rates, but unless rates are lowered people will not spend more.

And as I've told you over and over again, corporate bond rates and govt bond rates are lower in the Eurozone than in the US. Obviously there are other factors.

From May's report of monetary developments in the eurozone: "On the asset side of the consolidated balance sheet of the MFI sector, the (non-seasonally adjusted)
annual growth rate of total credit granted to euro area residents increased to 4.9% in May, from 4.7% in
April."

Quote:

Another point is that you can have a larger money supply with a smaller output and not have inflation. When people start spending you can decrease the money supply.

Rephrase please.

Quote:

They just need to be lower to stimulate growth.

Credit availability isn't the sole determinant of growth.

Kidicious · July 12, 2003, 14:42

According to the European Commision the European Union's economy grew by 0.1% in the first quarter. Wow HO, that monetary policy of yours is doing wonders.

Colon™ · July 12, 2003, 14:44

Quote:

Originally posted by Kidicious

Show me.

*KUCH*