Krugman's a Keynesian ass whose economic theories created this mess. Didn't he recently say we need another bubble? He's stating the obvious, and suggesting a policy that won't be implemented so he looks good when the unavoidable Depression accelerates. We have two choices: Spend like crazy and destroy the currency, or cut like crazy and destroy the economy. It's as simply unavoidable as that. Where was this genius Krugman 5 years ago when Austrian Economists were sounding the alarm? Krugman should be fired. Any economist that did not predict this crisis, and historically supported policies that created this crisis should be fired and ignored.
. June 29, 2010 SouthAmerica: Reply to Misthos Paul Krugman is right about recognizing that we are descending into a new Great Depression, but here is the best explanation of what is at the core of our economic and financial problems. In a Nutshell: The truth is the world is overdue for a new economic depression. Historically we had a depression in the world once every 55 to 60 years. The last world depression was over 60 years ago. A Russian economist, Nikolai Kondratieff, published a study in 1926 showing that a very long-term economic cycle existed. His major premise was that capitalist economies had a pattern of long wave cycles of boom and bust. The bust cycle repeated itself approximately every 60 years. If you had read Kondratieff's paper in 1926, you would have known that an economic depression was around the corner. Nikolai Dmitriyevich Kondratiev (1892-1938) was a Russian economist, who was a proponent of the New Economic Policy (NEP) in the Soviet Union. He was executed at the height of Stalin's Great Purge and "rehabilitated" fifty years later. He proposed a theory that Western capitalist economies have long-term (60 years) cycles of boom followed by depression. These business cycles are now called "Kondratiev waves", or grand supercycles. In 1924, after publishing his first book, presenting the first tentative version of his theory of the major cycles, Kondratiev travelled to England, Germany, Canada and the United States, and visited several universities before returning to Russia. A proponent of the Soviet New Economic Policy (NEP), Kondratiev favored the strategic option for the primacy of agriculture and the industrial production of consumer goods, over the development of heavy industry. Kondratievâs influence on economic policy lasted until 1925, declined in 1926 and ended by 1927. Around this time, the NEP was dissolved by a political shift in the leadership of the Communist Party. Kondratiev was removed from the directorship of the Institute of Conjuncture in 1928 and arrested in July 1930, accused of being member of an illegal and probably non-existent âPeasantsâ Labour Partyâ. As early as August 1930, Soviet Premier Joseph Stalin wrote a letter to Prime Minister Vyacheslav Molotov asking for the execution of Kondratiev. His last letter was sent to his daughter, Elena Kondratieva, on 31 August 1938. Shortly afterwards, on 17 September during Stalin's Great Purge, he was subjected to a second trial, condemned to ten years without the right to correspond with the outside world; however, Kondratiev was executed by firing squad on the same day it was issued. Kondratiev was 46 at the time of his execution and was only rehabilitated almost fifty years later, on 16 July 1987. ***** We are in a business cycle, but not the usual business cycle that most people have in mind. We are in one of these grand supercycles also known as "Kondratiev waves"; capitalist economies have long-term (60 years) cycles of boom followed by depression. We have reached the depression area of the cycle. Nikolai Kondratiev, published a study in 1926 showing that a very long-term economic cycle existed. His major premise was that capitalist economies had a pattern of long wave cycles of boom and bust. The bust cycle repeated itself approximately every 60 years. If you had read Kondratiev's paper in 1926, you would have known that an economic great depression was around the corner. Kondratiev identified four distinct phases the economy goes through during each cycle: 1) Inflationary growth, 2) Stagflation, 3) Deflationary growth, and finally 4) Depressionâfalling prices, falling stock prices, falling profits, debt collapse. As the stock market and banking system is collapsing, a number of corporate scandals emerge such as Enron, WorldCom, Global Crossing, Adelphia Communications, Arthur Anderson, Bear Stearns, Lehman Brothers, sub-prime scandal, hedge fund scandals, Bernie Madoff scandal, âGoldman Sachs the Pillage Peopleâ scandal, Citigroup scandal, Merril Lynch scandal, AIG scandal, and many others. And many other financial institutions went out of business and its pieces were absorbed by a number of American institutions that are not in sound financial shape themselves. As the debt load reaches new highs in the economy, the result is a record-breaking number of personal and corporate bankruptcies including General Motors (GM), and Chrysler as it happened in the United States. (They also had major bankruptcies and bank failures in Europe.) We saw the collapse of symbols of American capitalism such as General Motors (GM), Chrysler, and the US government was forced to nationalize the real estate industry in the United States with the US government takeover of âFannie Mae and Freddie Macâ. It is no secret, and the Financial Times (UK) had a front-page article on June 28, 2010 on another moving part of this very complex financial and economic system - âStatesâ budget crises threaten to âdestroy social fabricâ of the USâ. Today we have a major economic and budget crisis in many states around the United States, and very fast they are becoming basket cases including California, New York, New Jersey, Illinois, Michigan, and many others. Believe me, when I say to you that the new global economic depression is underway - and it is right on schedule. Sure we have had massive US government intervention in the market place in the last 2 years to keep the US economy afloat a little longer, and the only reason the financial institutions are reporting any earnings (artificial earnings) is because they changed the accounting rules to help the financial institutions manufacture their fake earnings â if they all apply market to market accounting rules then their earnings sink like the Titanic â and some of these institutions probably would be driven out of business. It is like living in the world of illusion at the highest degree. ******* I would like to add to the above âPerfect Stormâ also the observations that Alvin Toffler made about the US economic system on his book "Revolutionary Wealth" âBrazil and the New Economic Miracle.â Written by Ricardo C. Amaral Brazzil â Friday, 23 April 2010 http://www.brazzil.com/component/co...racle-the-us-has-a-lot-to-learn.html#comments Quoting from the above article: â¦The Global Clash of Speeds In December of 2006 I read a very interesting new book "Revolutionary Wealth" by Alvin Toffler. He said a lot of insightful things in his book and in chapter 3 "The Clash of Speeds" - he said the following: "The countries with the key economies in today's world - the United States, Japan, China, and the European Union - are all heading for a crisis that none wants, that few political leaders are ready for, and that will set limits on future economic advance. This looming crisis is a direct result of the "de-synchronization effect," an example of how we mindlessly deal with one of the deepest of all the deep fundamentals: Time. Nations all over the world today are struggling at different rates of speed to build advanced economies. What most business, political and civil leaders have not yet clearly understood is a simple fact: An advanced economy needs an advanced society, for every economy is a product of the society in which it is embedded and is dependent on its key institutions. If a country manages to speed up its economic advance but leaves its key institutions behind, it will eventually limit its potential to create wealth. Call it the Law of Congruence. Feudal institutions everywhere obstructed industrial advance. In the same way, today's industrial age bureaucracies are slowing the move toward a more advanced, knowledge-based system for creating wealth...In all these countries, key public institutions are out of step with the whirlwind of change that surrounds them." Anyway, the book has 500 pages and one of the things that he mentioned in his book and I did not forget, is that the most extraordinary thing today is that we still can function at all here in the United States - he shows with many examples how everything is getting completely out of sync. Not only here inside the US economy, but it is amazing that the US still is able to do business with countries from around the world when everybody is moving at different speeds. By the way, one of the points that Alvin Toffler makes in his book is that the American legal system is completely out of sync with the reality of what is happening inside the United States, and around the world. For years futurists such as Alvin Toffler and John Naisbitt have lectured the rest of us that the end of the industrial age also means the end of "mass production" and "mass labor." What they never mention is what "the masses" should do after they become redundant. .
SouthAmerica - I agree with a lot of your macro historic points and on the Kondratieff cycle in general. We are at an historic watershed. But as for Krugman, here is what he wrote in 2002: "To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. " - Paul Krugamn, 2002 http://www.nytimes.com/2002/08/02/o....html?scp=4&sq=krugman mcculley bubble&st=cse So the question is, are these catastrophic macro cycles as unavoidable as the planets' rotation around the sun? Or does humanity merely assume a greater level of arrogance every few decades, and assumes we can manage economies, but in the end, we merely create a level of destruction we would not have ordinarily experienced had we not meddled in the first place?
. Misthos: So the question is, are these catastrophic macro cycles as unavoidable as the planets' rotation around the sun? Or does humanity merely assume a greater level of arrogance every few decades, and assumes we can manage economies, but in the end, we merely create a level of destruction we would not have ordinarily experienced had we not meddled in the first place? ***** July 2, 2010 SouthAmerica: Yes, these catastrophic macro cycles - grand supercycles also known as "Kondratiev waves" - are unavoidable and they are part of the adjusting system that are necessary to clean up all the distortions that have been accumulated over the years in the entire economic and financial system, and they serve to bring things into a more realistic level after the dust settles. For example: many trillions of dollars have gone up in smoke in the American stock market since January 2000. Business Week magazine of August 5, 2002 reported that since the Telecommunications Act was passed in 1996 to deregulate the telephone industry, investors have lost over US$ 2 trillion as the stock prices tumbled 95 percent or more from their highs. Quoting from âIt Takes a Pillageâ Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street. By Nomi Prins â book published in October 2009. "⦠Meanwhile, $ 50 trillion in global wealth was erased between September 2007 and March 2009, including $ 7 trillion in the U.S. stock market and $ 6 trillion in the housing market. In addition, the total amount of retirement and household wealth trashed was $ 7.5 trillion in pension plans and household portfolios, $ 2.0 trillion in lost income in 401 (k)s and individual retirement accounts (IRAs), $ 1.9 trillion in traditional defined-benefit plans, and $ 3.6 trillion in non-pension assetsâ¦" ***** I posted the following at the Elite Trader Economics forum on May 12, 2009: âThe US government is trying to do everything they can by artificial means to keep the US financial markets from falling into the Abyss. 1) They are pumping trillions of US dollars (real money and US government guarantees) to keep assets in the US artificially higher than they would be under normal free market circumstances. 2) They are changing accounting rules (mark to market) to keep massive losses from being booked into the P&L â and to keep investors who invested in banks and other financial institutions in the dark. In December 2007 I posted the following on the Elite Trader economics forum regarding the US pension funds system: A few years ago the Bush administration came up with a great idea about how to fix the pension system in the United States. Now talking about a complete lack of common sense that eventually it will cost trillions of US dollars and it will have a major impact in the future of retirement in the United States â some moronic people changed the rules regarding pension funds a few years ago and they started letting the pension funds invest US government insured money in hedge funds as a quick fixer up to the pension funds that were underfunded to start with. These fools let the pension funds invest in hedge funds in the illusion that these hedge funds above average returns would save the day for the pension funds. (The people involved in that kind of rescue plan for the pension plans are a bunch of morons who will cause the pension funds to lose even more money and be even in worse shape than before.) I will not be surprised to find out that the hedge funds lost a fortune in new pension money that were gambled in the current sub prime mess â I am saying new pension money because the pension plans lost 2 trillion dollars during the last telecom and dot.com meltdown. I wonder how much government insured pension money has been lost by the hedge funds in the current sub prime scandal? I used to believe that the free market and Wall Street were the best vehicles for allocating scarce resources â but today I know that all that it was just a bunch of bullshit - and all I have to do is look around and remember a few fiascos that have cost trillions of US dollars of mostly pension money that disappeared forever here in the US such as: the savings and loans debacle of the 1980âs, the telecom and dot.com meltdown of the year 2000 and the complete lack of common sense related to the latest sub prime scandal. There is one thing I know for sure these trillions of US dollar that have melted away are moneys that millions of Americans who still are working today are counting on that money in the future as part of the pension money to survive and they think that their money have been invested in a safe place. Millions of Americans are going to have a nasty surprise regarding their pension money in the coming years. Wall Street lost trillions in the dot.com fiasco, then they moved on and they raided the pension system of Americans. Then they took people from around the world for a ride with the sub prime scandal. Then they moved on and took the Foreign Sovereign Investment Funds for a ride. Then Wall Street started running out of suckers to take them for a ride and in the last year Wall Street finally started setting up its next victim to milk it to the bone â the US government.â ***** ⦠Here is why the coming depression is a sure bet. I like to quote some information from one of my published books as follows: (Book published in May 2000 - Quoting from pg. 21) "Unrealistic Expectations. There is much evidence that human expectations tend to be linear. Most of the time, most people expect current conditions to continue for the indefinite future. It is almost an unnatural act for a man to leave home with an umbrella on a sunny day. Call it optimism, faith in the future, or just reluctance to see the party end, there is a presumption that the environment is stable. This is why cities are built on floodplains and fault lines. A similar presumption makes the gambler double his bet or the farmer plant additional crops on reclaimed land the year after a good harvest. Whenever prosperity exists, it is natural for people to expect prosperity to continue. For this reason, much of the history of human society is a record of astonishment. Time and again, people have marginalized their affairs, rendering themselves increasingly crisis-prone. They have gone into debt, extending claims on resources to an extreme that could be supported only if current conditions were sustained uninterrupted into the future. Time and again these hopes have been disappointed. Whenever prosperity has seemed permanent, some apparently minute change could produce astonishingly large nonlinear shifts in the organization of human society. The failure to recognize or anticipate these nonlinear transformations has been a common characteristic of almost all societies. â¦When the dynamic and nonlinear world adjusts itself to the linear thinking used daily by governments and other institutions such as corporations, banks, insurance companies, the church, and so on, the result can be sometimes catastrophic and can translate into unemployment, inflation, monetary devaluations, market crashes, world wars, civil wars, depressions, and even chaos. â¦Change is a fact of life, yet many people don't want to think about it because they feel threatened by it. So when change comes, it takes them by surprise. By then they can only react to it, and unless they're lucky, they suffer losses." ***** Now when you add to all the above plus the result from hurricanes such as Katrina, and many others, massive floods, massive earthquakes, tsunamis, civil wars, wars with no end in sight such as in Iraq and Afghanistan and many others, terrorist attacks such as on 9/11, massive financial fraud and financial distortions caused by the Bernie Madoffâs and the âGoldman Sachs the Pillage Peopleâ of the world, and much moreâ¦. And never mind the trillions of dollars of obsolete assets that still are being counted as assets by corporations, governments, and the private sector, and the massive financial loss caused from bankrupticies of all kinds from government insolvency to the private sector and so on⦠Once again: Yes, these catastrophic macro cycles - grand supercycles also known as "Kondratiev waves" - are unavoidable and they are part of the adjusting system that are necessary to clean up all the distortions that have been accumulated over the years in the entire economic and financial system, and they serve to bring things into a more realistic level after the dust settles. .
Correction: and the massive financial loss caused from bankrupticies of all kinds from government insolvency to the private sector and so on⦠**** Should read: bankruptcies .
. June 9, 2011 SouthAmerica: When I watch the news and stock market programs on CNBC, MSNBC, CNN, Bloomberg TV, and the mainstream media in general here in the United States, I find amusing that they can't figure out what is happening to the slowly collapsing U.S. economy, and its imploding labor market.
I'm sure some of them "don't get it". Others do but don't want to talk about the severity of the problem and there is no hope of fixing things without MAJOR changes in government, tax/social policies and business incentives. Government doesn't want to make any of those changes for its own self-interest... and won't talk about the true and dire nature of our mess.
South America is a typical Parasite as in Liberal Scum. However, his post does have a lot of valid points. Dr....."If you can't post something nice don't post at all". Typical stick your hand in the sand American Reply. "Lets all hold hands and sing dont worry be happy". Meanwhile, except for a few states, the rest of the country is going into the shitter faster than you can imagine. And now the idiots in DC want a "TAX HOLIDAY" for employers! R U FUCKING KIDDING ME....... CUT TAXES, CUT RED TAPE, CUT SPENDING YOU FUCKING FOOLS! "But as the dollar melts do you expect foreigners to sit on their hands and watch, or to continue to buy stocks and RE" FYI, China is dumping our debt fast. And yes, Foreigners are coming in and buying up Key Hard Assets, from OIL Fields, Mining, Infrastructure, farm land, etc. Man, I wonder what the heck most of you do for a living as It doesn't sound like your involved in the Financial World in any capacity.
There's a chapter in the book "Wealth, War & Wisdom" by Barton Biggs which discusses news mis and dis information (esp during wartime) and how world equity markets discounted the news. I thought this was interesting because all gov't have different methods of disseminating information (propaganda) and it made no difference.
Emrglobal: âSouth America is a typical Parasite as in Liberal Scum. However, his post does have a lot of valid points.â ***** June 9, 2011 SouthAmerica: Reply to Emrglobal Thanks for the compliments. Since you list your occupation as âLand Development/Real Estaeâ I assume you were trying to write: âLand Development/Real Estateâ Then I understand your frustration if you are trying to buy land in Brazil, and what I have been writing on that subject. The word that you were looking for is ânationalistâ and not âLiberal Scum.â .