Notes Jan 24

January 26, 2009 § Leave a comment

Raw notes with a few comments. Including obama on 30 hours and liu on consequences, and good quotes from adam smith.

Soros on the economy. He dares to include the 29′ depression as possibly something the current situation is worse than. But he still hedges the language. I do think it is worse,because we do not have an economy to fallback on. We consumerized ourselves out of productive capacity.

 
 

Soros advocated using bailout money to recapitalize banks, but said the $350 billion would not be enough. He said such a move would take more than the entire $700 billion.

The bursting housing bubble “acted like a detonator that exploded a much larger bubble,” he said.

“The economies of the world are falling off a cliff. This is a situation that is comparable to the 1930s. And once you recognize it, you have to recognize the size of the problem is much bigger,” he said.

Soros said the United States needed “radical and unorthodox policy measures” to prevent a repeat of the Great Depression of the early 20th century that include recapitalizing banks and writing down the country’s accumulated debt.

Also, he said, it should create more money to offset the collapse of credit and then rapidly pull that cash out of the system when inflation emerges. The government would have to be very nimble in the timing of such moves, he said.

“If they are successful…the deflationary pressures will be replaced by the specter of inflation and the authorities will have to drain the excess money from the economy almost as quickly as they pumped it in. Of the two operations the second one is going to be, politically, even more difficult than the first,” he said.

(Reporting by Lisa Lambert, editing by Martin Golan)

  Pasted from <http://www.reuters.com/articlePrint?articleId=USTRE50I4XZ20090119

I consider Liu one of the most helpful writers.

2009 – The Year Monetarism Enters Bankruptcy

By

Henry C.K. Liu 

The Fed under Greenspan and Bernanke had violated the basic rules of both monetarism (money supply management) and Keynesianism (demand management).

Pasted from <http://henryckliu.com/page178.html

2009 – The Year Monetarism Enters Bankruptcy 

Henry C.K. Liu 

The fact remains that central banks cannot repeatedly use easy money to fund serial economic bubbles without cumulative consequence.

With runaway “supply-side” voodoo economics keeping wage income in check during the boom phase in corporate profits, the resultant overcapacity from demand lag resulting from low wages shuts off investment opportunities for productive expansion and forces the excess money supply into speculative manipulation of debt, giving birth to restructured finance and sophisticated, circular hedging of risk. 

On the inaugural language by presidents A great graphic.
http://www.nytimes.com/interactive/2009/01/17/
washington/20090117_ADDRESSES.html?hp

For excellent Kay Borner links on graphics and data.

http://cns.slis.indiana.edu/presentations/

For very good market graphics

http://dshort.com/

Another wonderful reading of Wealth of Nations

“Adam Smith On State Expenditures and Interventions”

Gavin Kennedy:

Adam Smith On State Expenditures and Interventions, by Gavin Kennedy: A correspondent asks:

I’m still puzzled as to where Smith draws the line with regard to government intervention. In Book V, Chapter I, he talks about justice, defence and public works but it seems that he has a wider application for the state in market matters. I’d be very interested to hear your viewpoint on this.

To which I replied:

Yes, it is widely believed, even by some top academic economists, especially on Blogland, that Adam Smith favoured small government, often represented by the phrase, the ‘night watchman state’, which in fact was coined in the late 19th century by a firebrand socialist.

I have posted this list from my book, Adam Smith: a moral philosopher and his political economy‘ (2008, pp 247-48, Palgrave Macmillan):

  • “The Navigation Acts, blessed by Smith under the assertion that ‘defence, however, is of much more importance than opulence’; (WN464)
  • Sterling marks on plate and stamps upon linen and woollen cloth (WN138-9)
  • Enforcement of contracts by a system of justice; (WN720)
  • Wages to be paid in money, not goods;
  • Regulations of paper money in banking; (WN437)
  • Obligations to build party wars to prevent the spread of fire; (WN324)
  • Rights of farmers to send farm produce to the best market (except ‘only in the most urgent necessity’);(WN 539)
  • Premiums and other encouragements to advance the linen and woollen industries’; (TMS185)
  • ‘Police’, or preservation of the ‘cleanliness of roads, streets, and to prevent the bad effects of corruption and putrifying substances’;
  • ensuring the ‘cheapness or plenty [of provisions]’; (LJ6; 331)
  • patrols by town guards, fire fighters and of other hazardous accidents; (LJ331-2)
  • Erecting and maintaining certain public works and public institutions intended to facilitate commerce (roads, bridges, canals and harbours); (WN723)
  • Coinage and the Mint; (WN478; 1724)
  • Post office; (WN724)
  • Regulation of institutions, such as company structures (joint stock companies; co-partneries, regulated companies); (WN731-58)
  • Temporary monopolies, including copyright, patents, of fixed duration; (WN754)
  • Education of youth (‘village schools’, curriculum design); (WN758-89)
  • Education of people of all ages (tythes or land tax) (WN788);
  • Encouragement of ‘the frequency and gaiety of publick diversions’; (WN796)
  • The prevention of ‘leprosy or any other loathsome and offensive disease’ from spreading among the population; (WN787-88)
  • Encouragement of martial exercises; (WN786)
  • Registration of mortgages for land, houses, and boats over two tons; (WN861, 863)
  • Government restrictions on interest for borrowing (usury laws) to overcome investor ‘stupidity’; (WN356-7)
  • Laws against banks issuing low-denomination promissory notes; (WN324)
  • Natural liberty may be breached if individuals ‘endanger the security of the whole society’; (WN324)
  • Limiting ‘free exportation of corn’ only ‘in cases of the most urgent necessity’ (‘dearth’ turning into ‘famine’); (WN539)
  • Moderate export taxes on wool exports for government revenue; (WN 879)

Jacob Viner concluded, unsurprisingly, that Adam Smith was not a doctrinaire laissez-faire advocate.

[From Viner, J. 1928. ‘Adam Smith and Laissez-faire’, In ‘Adam Smith, 1776-1928: Lectures to Commemorate the Sesquicentennial of the Publication of Wealth Of Nations, p 53, August M. Kelly, Fairfield, NJ; I provided the references to Wealth Of Nations.]

…The pure theory of markets, such as neoclassical economics and general equilibrium as much that it is meritorious, but it is a theory not a description of how markets actually work.

The players in markets are real human beings, not variables that operate within narrow confines of deterministic mathematics. … The message is clear: start with the history, how things arrived at their present day circumstances and arrangements, and observe how they operate, drawing on lessons of how they worked, more or less, well in the past and what that teaches us selectively about what works and what doesn’t, assemble general principles that seem to be of practical benefit to assumed goals, and apply them to current events and trends.

Of course, everything depends on the selection and the objectives. …Smith’s objective function was how an economy, the State, and the people, could spread opulence from commerce to the nation, especially the poor majority, drawing on how nations remained stable (justice and the distinction of ranks), became prosperous (the desire of people to ‘better themselves’) given as much freedom to do so (Liberty) without it degenerating into monopoly, restrictive protectionism, and opulence for a minority using their political influence over the State, while leaving the poor as they had been left throughout all history as serfs, slaves, and penurious labourers.

Smith believed that a commercial society was the best opportunity for continual growth and the spread of opulence, and showed in his critique of mercantile political economy, as it had operated since the 15th century and was operating up to the Fall of Rome in the 5th century, what changes might be made by the legislature to let commerce do its work as speedily as was practicable in the real world and not in some kind of impossible utopia.

He was not an ideologue. His understanding of history demonstrated what was possible among real men as they were, not ideal ‘guardians’ of public interest who usually made everything worse than it need be.

Hence, his proposals for ‘public works and public institutions’, which were written in is inimitable style, were apparently quite modest (the incorrect ‘take’ on them by laissez-faire ideologues), though they added to a level of state expenditure that was actually quiet ambitious, with separately argued cases for the items listed by Jacob Viner in 1928 above, which together extended the agenda of appropriate expenditure by a classical liberal state (and even one ran by quite illiberal personnel).

 
 

Pasted from <http://economistsview.typepad.com/

economistsview/2009/01/adam-smith-on-state-expenditures-and-interventions.html>

Good agricultural economics site.

http://greedgreengrains.blogspot.com/

And

We learned this week that malicious hackers managed to install spying software on the computer network of Heartland Payment Systems.

http://www.elabs7.com/c.html?rtr=on&s=fj6,dlmu,dv,l572,6f6d,39gs,jrlg>

, the sixth largest payment processor in the U.S. It could go down as one of the biggest credit card theft schemes on record, but you may have missed the news, coming as it did on the day of Barack Obama’s inauguration

And Obama says in the inaugural

For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies. It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours. 

Pasted from <http://www.cnn.com/2009/POLITICS/01/20/

obama.politics/index.html

I think this is extremely important as it goes to the heart of GardenWorld possibilities. It raises the issue of where did the leisure promise go, and how can we distribute work?

More liu

2009 – The Year Monetarism Enters Bankruptcy

By

Henry C.K. Liu

Pasted from <http://henryckliu.com/page178.html

The Fed under Greenspan and Bernanke had violated the basic rules of both monetarism (money supply management) and Keynesianism (demand management).

Pasted from <http://henryckliu.com/page178.html>


2009 A. J. Horn Lecture: FUELING THE FUTURE

Tuesday, January 20, 2009.  7:30 PM.

Kresge Auditorium

Free and open to the public.

Pasted from <http://events.stanford.edu/>

This was a panel, and ok, but with enthusiasts for each tech.

More liu

 

2009 – The Year Monetarism Enters Bankruptcy  

By 

Henry C.K. Liu 

 
 

The fact remains that central banks cannot repeatedly use easy money to fund serial economic bubbles without cumulative consequence  

With runaway “supply-side” voodoo economics keeping wage income in check during the boom phase in corporate profits, the resultant overcapacity from demand lag resulting from low wages shuts off investment opportunities for productive expansion and forces the excess money supply into speculative manipulation of debt, giving birth to restructured finance and sophisticated, circular hedging of risk. 

 

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