Saving the World, Without U.S. Consumers - Room for Debate Blog - NYTimes.com

Saving the World, Without U.S. Consumers - Room for Debate Blog - NYTimes.com

If Americans don't start buying a lot of stuff again, can the world economy be saved? What's the global Plan B? What's China's role in all this?

These are fundamental questions at the summit of the Group of 20 industrialized and developing nations in Pittsburgh.


Shared via AddThis

Fighting poverty through microloan guarantees - Springwise

Fighting poverty through microloan guarantees - Springwise

A traditional microloan or donation of USD 100 delivers roughly that same amount to the entrepreneur in need, but providing a loan guarantee of the same amount can result in a much larger loan from a local bank, United Prosperity says as much as USD 666, in this case.

Shared via AddThis

The Ups, Downs and Wonders of Living in a Parallel Universe

In recent months economists, and even economics as a discipline, have received an unprecedented amount of negative publicity. They have been attacked by governments, bankers, unions, industrial corporations, and the press.

They have even been attacked by their own peers from the world of academia, possibly to divert attention from them. Economists have been accused of ineptitude for not predicting the current crisis and its magnitude.

Forecasting
Some have, of course, suggested that the dismal science was never intended to help predict where the economy was going to go in the future and that in fact it was established to help manage economies in a more efficient manner but, of course, those who have spent anything more than a few seconds with anyone considering themselves to be an economist would have experienced that the first thing they would do to prove their knowledge would be to make a prediction about some economic variable.

Predictions
The problem is that given the magnitude of information necessary to make any kind of prediction about anything that needs aggregate economic data it is literally impossible to make guess-timates that are even remotely accurate.

The recent bad economic news in the U.K. and the U.S. was a perfect example of that. Not only had the economists missed the first stages of the crisis they also misread or misinterpreted how the economy was recovering but, of course, it never stopped any of them from predicting that we have turned the corner as soon as we had all got used to the fact that the economy is in a bad state.

The Property Market
The same seems to be happening in the property market. Economists at major U.K. building societies have started suggesting the many people were sitting on mountains of cash waiting for a sign that the economy has turned a corner before starting their buying spree. Hence, they suggest cautiously that there is a chance that house prices in the U.K. could end 2009 in the positive territory.

Waiting for a Sign
The problem is that even if it was true that these investors were simply waiting for a sign of economic recovery before they started buying why have they started buying now? After all, the latest signs are that the economy is doing much worse than expected. Consequently, if anything, they should have delayed their purchases even further.

Mass Re-possessions
It seems that since building societies need house prices to rise in order to avert the risk of mass repossessions their economists somehow arrive at more than positive data. If prices do rise they can also reduce the amount of capital they need to keep against bad debts and hopefully increase the amount of mortgages they issue.

Unfortunately, the reality is that most people find it very hard to get mortgages, especially since few can afford the 20% or 25% deposits that most lenders demand. Add to that the ever increasing numbers of unemployed and you can get an idea of just how far from reality these predictions are.

A Parallel Universe
Based on the recent experience with economists, and those working for building societies in specific, it seems that they somehow live in a parallel universe to the rest of the world. Looking at useless data seems to give either a false sense of doom or growth.

It somehow seems as if they never actually have human contact with those who buy homes or spend money shopping. It is a wonderful cocoon to live in, completely oblivious to the rest of the world or they are trying to maintain the charade.

Published Reports
The only problem is that their outlandish predictions are actually published by leading news agencies. If the press stopped giving such predictions the amount of attention that they are, I am sure that they would also not feel compelled to publish data that while newsworthy are in no way related to what is happening in the real economy.

Perhaps it is time that the press also learn to ignore such predictions, like the rest of us have done for years.

Reaganism and Thatcherism: Damned Lies

They sold the US and the UK a handful of 'magic beans' an economic fantasy, based on greed and selfish monetarism and the participants were only too willing to believe in it, wear the mantle and sing the praises, until it went bad on them.

Exploiters exploited, consumers consumed, by their own self centred greed, how ironic!

Capitalism, Monetarism and Consumerism drives global warming, ecological exploitation, the destruction of habitats and cultural diversity and its other bi-product the imposition of overwhelming poverty, wherever it goes.

It is a predictable but fickle beast that positively imposes a minimum wage policy wherever it goes whilst threatening to withdraw employment entirely, all in the name of 'monetary profit' and gain. It is a simple inverse proportionate equation; a huge loss for many results in, or is equal to, a huge gain for very small group of the privileged few.

Reagan and Thatcher styled economics, was never intended to be the answer for sustaining the populus of the World, let's not keep making or defending this grave mistake, over and over again.

These people are not your friends, in any way. Simply ask yourself the question; 'Who gains from this?' and 'When I put my hand in my pocket and take it out again, what have I gained?' Just think about it.

(Image: Rex Features)

Schrödinger's cat and Economic Recovery

The White Tiger of Economic Recovery

I am currently re-reading one of my all time favourite books; Schrödinger's cat trilogy written by Robert Anton Wilson.

Schrödinger's cat is a thought experiment, often described as a paradox. It was devised by Austrian physicist Erwin Schrödinger in 1935.

It illustrates what he saw as the problem of the Copenhagen interpretation of quantum mechanics applied to everyday objects.

The thought experiment presents a cat that might be alive or dead, depending on an earlier random event. In the course of developing this experiment, he coined the term Verschränkung—literally, entanglement.

Quantum Economics
Thought experiments are still alive and well, we hope but unfortunately, this book is now out-of-print. I am fortunate enough to have an old copy, originally published in 1979. Whilst reading the book, I am continuously reminded of how little has changed since then. To illustrate this, I would like to provide you with a short extract from the book concerning economics.

"DR. Rauss Elysium had summed up the entire science of economics in four propositions;

1. Find out who profits from it?

This is merely a re-statement of the old Latin proverb - cui bono, a particular favourite of Lenin.

2. Groups never meet together except to conspire against other groups;

This is a generalisation of Adam Smith's more limited proposition 'Men of the same profession never meet together except to defraud the general public.' Dr. Rauss Elysium had realised that it applies not just to merchants, but to groups of all sorts, especially in the government sector.

3. Every system evolves and expands until it encroaches upon other systems;

Ths is just a simplification of most of the discoveries of ecology and General Systems Theory. (Does chaos currently exist in the gaps? Waiting for a systematic order to restore itself or is it a different order that we do not comprehend and categorise, interpret or dismiss as chaos? - KB)

4. It all returns to equilibrium eventually;

This is based on a broad Evolutionary Perspective and was the basic belief structure of the Invisible Hand mystique.

Dr. Rauss Elysium had simply recognised that he Invisible Hand, first noted by Adam Smith, operates everywhere but most vehemently in economics."

Summary

In his book Robert Anton Wilson describes the Invisible Hand as a secret society of powerful, egotistical and self-promoting individuals. In our life time this has been replaced by the altruistic support of a benevolent, stable and civilising uber-organisation of global proportions, promoting co-operation, synergy and harmony, allegedly. Discuss!