The dumbest article ever written

[wayneL]

Background: Anatole Kaletsky is the worst economic writer in Britain:

Feb 5 08
The US is currently facing a mid-cycle slowdown rather than a full-blown recession. One way or another, the credit crunch is likely to end within the next month.

Mar 21 08
There is a persuasive argument that the US economy is not even in recession, since growing exports are compensating for much of the weakness in housing and consumer spending. And better still, a period of much stronger growth lies ahead only a few months ahead.

Once the stimulus from the tax rebates runs out at the end of the year, the US economy will receive another shot of adrenalin from low interest rates.

The implication of this cleverly designed combination of fiscal and monetary stimulus is that decent growth is virtually guaranteed from the summer onwards.

May 5 08
So, the sky did not fall in. It is increasingly likely that the US economy will not experience even a minor recession as a result of the credit crunch last year. Even more important than the relatively benign statistics is the news from the financial markets. Signs that the worst of the banking crisis may be over appeared to be confirmed by rallies in financial markets worldwide last week.

Jun 16 08
Why does anyone still think that the US economy is in recession? The troubles in US banking and construction have been almost exactly offset by gains in America's booming international trade. There is a world of difference between a dislocation confined to only one or two parts of the economy, such as housing and finance, and a generalised economic decline.

If there were going to be a US recession in response to the credit crisis, it would have started by now. So let me stick my neck out and say without qualification - the US economy is out of the woods.

Sep 20 08
n America, by contrast, an outright recession would be avoided if financial stability could be quickly restored. The worst of the housing slump there appears to be over, consumer confidence is rising and a gradual economic recovery should soon be under way.

...and now the coup de grace!!

http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article5469589.ece

Punish savers and make them spend money
Near-zero interest rates and even a tax on bank deposits are necessary to force those with cash to use it productively
Anatole Kaletsky

The battlelines are drawn. On one side we have the Labour Government and the Liberal Democrats, the Bank of England, the US Federal Reserve Board and the vast majority of Keynesian economists in every country - plus Barack Obama. On the other side, the Tory Opposition, the German Socialists, the European Central Bank, the Church of England and the vast majority of Marxist economists in every country - plus the British public. The question, of course, is what to do about the recession. Specifically whether the way out is “to spend, spend, spend or to save, save, save” - as David Cameron has so clearly put it...

...The next logical step, although it may be politically controversial, would be to do the opposite of what the Tories suggest. Instead of reducing taxes on interest payments, the Government could tax all bank deposits and other risk-free savings.

WTF????

Read the comments section at the bottom. He cops a slating.

 

[chops_a_must]

Re: The dummest article ever written

"The dummest article ever written"

Definitely one of the dumbest articles I've read.

 

[Sean K]

Re: The dummest article ever written

Sure the dates of those articles weren't all Apr 1?

Geepers creepers!

 

[Stormin_Norman]

either tax savings or create massive inflation so there is no incentive to save.

not saving is what causes this problem. its interesting its a proposal to solve it.

ffs - let the markets sort it out and stop stuffing them up. stoopid governments.

 

[Bushman]

either tax savings or create massive inflation so there is no incentive to save.

not saving is what causes this problem. its interesting its a proposal to solve it.

ffs - let the markets sort it out and stop stuffing them up. stoopid governments.

Aye - inflation is just one big indirect tax after all. At least they would be the first government that would be upfront with their intentions. Ha ha.

 

[prawn_86]

Im no moentary economist like Norman but here are my simple thoughts on where spending has got us:

Who encourages saving? CHINA

Who has a huge surplus? CHINA

Who funds a heap of the Western govs? CHINA

Who could destroy the Western economy/demand what they want? CHINA

IMO Cre doin a 'backdoor listing' as such and are purchasing up all the assets of western coys and eventually they can demand what they want as they will already own everything.

Saving and living within our means is the answer, if other countries do it why can't Western ones?

 

[aleckara]

Saving and living within our means is the answer, if other countries do it why can't Western ones?

Because historically living within our means meant living in poverty and working hard for the bare necessities (most of CHINA). Doesn't leave much room for R&D, and the like. None of the developments that have made our lives easier would exist.

It meant wars over previous current resources, rather than making resources seem abundant by using future ones (debt). Since WW2 there really hasn't been too many wars fought on land. Before last century this was a common occurrence.

No one wants to live in poverty. The more people spend (as long as the money stays local) the more work is generated locally and prosperity is a function of work done, not of paper in people's bank accounts. However I don't agree with savers being penalised (myself included). Of course there isn't the amount of resources on the planet to fuel the work and therefore prosperity that people take for granted in the long run.

The only real problem is when there is a big hole in the ship (i.e a CAD).

Governments just like their voters don't want a drop in prosperity just to live 'within their means' even if this is the right thing to do. The majority wins at the expense of the responsible and intelligent, what's new?

 

[wayneL]

Because historically living within our means meant living in poverty and working hard for the bare necessities (most of CHINA). Doesn't leave much room for R&D, and the like. None of the developments that have made our lives easier would exist.

It meant wars over previous current resources, rather than making resources seem abundant by using future ones (debt). Since WW2 there really hasn't been too many wars fought on land. Before last century this was a common occurrence.

No one wants to live in poverty. The more people spend (as long as the money stays local) the more work is generated locally and prosperity is a function of work done, not of paper in people's bank accounts. However I don't agree with savers being penalised (myself included). Of course there isn't the amount of resources on the planet to fuel the work and therefore prosperity that people take for granted in the long run.

The only real problem is when there is a big hole in the ship (i.e a CAD).

Governments just like their voters don't want a drop in prosperity just to live 'within their means' even if this is the right thing to do. The majority wins at the expense of the responsible and intelligent, what's new?

I don't think living within your means, means not borrowing at all. But it does mean that any debt taken on is serviceable in good times and bad.

Buy a house on tick? Sure. But make sure you can pay the mortgage.

 

[prawn_86]

The only real problem is when there is a big hole in the ship (i.e a CAD).

Governments just like their voters don't want a drop in prosperity just to live 'within their means' even if this is the right thing to do. The majority wins at the expense of the responsible and intelligent, what's new?

So what happens when the CAD reaches a point where it is just ludicrous? I mean even now surely China and the other countries funding Western deficits don't actually expect to ever get their money back?

My theory is all debts will be wiped clean, followed by a decade or so of financial and economic wasteland, and then it will all start over again

I don't think living within your means, means not borrowing at all. But it does mean that any debt taken on is serviceable in good times and bad.

Buy a house on tick? Sure. But make sure you can pay the mortgage.

Well put

 

[Buddy]

Aayyee, as the local luds wud say, this lud's a bit of a tosser.

Here is an article where he eats a bit of humble pie. Well, sort of.
http://www.theaustralian.news.com.au/business/story/0,28124,24854214-5018029,00.html

In the 4th para he talks about not being under the influence. Well, all I can say is that in the very latest article he must have been on some powerful stuff.

 

[eladamrine]

I read in a Time article that Milton Friedman and some other economist wrote that the stock market crashes in history does not cause full blown depression. It is the seizure of credits which does the most damage and insolvency issues which are exacerbated by panic. But this time around, following Keynesian economics, the US government has swiftly responded with the injection of cash into banks and various companies to solve the current issue of liquidity and stimulate spending. It will be definitely interesting to see how this current economic turmoil pans out.

A little bit of mental masturbation, i wonder what the effect of the media's report about the economic conditions are on people's actions. Thriftiness is the enemy of recession, and thus what would happen if the media promoted a positive, false image of the economy?

 

[Bushman]

I read in a Time article that Milton Friedman and some other economist wrote that the stock market crashes in history does not cause full blown depression.

Housing market crashes are a different beast to stock market crashes as 'Joe Average' gets bent over and that ain't good for consumption.

 

[cuttlefish]

...and now the coup de grace!!

http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article5469589.ece



WTF????

Read the comments section at the bottom. He cops a slating.

Holy cow! Quite unbelievable.

Its almost as though people have forgotten that when money gets borrowed there actually has to be a lender on the other side (even with fractional reserve banking ).

 

[Knobby22]

He is right!

The present policy is to discourage savings by lowering interest rates and bailing out lenders. He is making the next logical step!!

If it is right to punish savers by lowering interest rates in an attempt to rescue borrowers and 0% is the lowest possible you can go, then the only way you can go further is to have in affect have negative interest rates. This can be achieved by the use of the tax system and the money obtained can be used to help all the borrowers to pay their debts.

In affect it is happening already, taxes will rise to pay off government lending to rescue corporate lending.

This just shows how wrong the thinking is in GBR, the US and Japan at present.

The problem with the present finacial system is that everything is geared to helping borrowers (taxation system, government) against savers and if we continue this logic we will go back to the status quo. It won't be long before we repeat the same mistakes and end up in an even worse mess.

I think a little bit of deflation, encoragement to savers, reduction in tax breaks for negative gearing and a good clean out of the financial systems could give us another 25 years of prosperity. No votes in that!!

 

[mayk]

Holy cow! Quite unbelievable.

Its almost as though people have forgotten that when money gets borrowed there actually has to be a lender on the other side (even with fractional reserve banking ).

Just change the fraction. Instead of 10:1 make it 100:1 problem solved

 

[aleckara]

I don't think living within your means, means not borrowing at all. But it does mean that any debt taken on is serviceable in good times and bad.

Buy a house on tick? Sure. But make sure you can pay the mortgage.

But then the benefits of debt are only one off - i.e only one off increases in standards of living and often (not always) only for a short period of time. i.e if the debt level rises to 0% to 30% then you only get a once off boom in activity and then activity slows down again to pre debt levels ONLY if the debt stays at 30% (i.e never is repaid). Debt is not income, as much as governments have been using it to subsidise income and generate activity. You may pay off your mortgage ok, but if everybody paid off their 30% then there would be a contraction in the amount of money circulating. Doesn't really lean to sustained prosperity - paradise living. As my grandfather and grandmother once said to me "we live better than kings here" while watching his TV, and her using her "washing machine" to do her laundry. He used to sleep on dirt floors and had to grow his own food without electricity when he was a kid. And he is right, we do live better than they did. Besides the system relies on increasing debt/money creation to pay the interest bill on any debt as far as I recall.

I do agree with your sentiments. I'm just stating that governments do not share your view, nor do the majority of the population. They think they do, but when push comes to shove they don't want to pay the price - well not right now anyway. This is how I understand things to be - welcome any corrections if I'm wrong of course.

 

[chops_a_must]

He is right!

The present policy is to discourage savings by lowering interest rates and bailing out lenders. He is making the next logical step!!

If it is right to punish savers by lowering interest rates in an attempt to rescue borrowers and 0% is the lowest possible you can go, then the only way you can go further is to have in affect have negative interest rates. This can be achieved by the use of the tax system and the money obtained can be used to help all the borrowers to pay their debts.

Yes.

I was going to say this. Effectively what is going on now is exactly the same. What is proposed is just an overt way of doing what is being done now to bail out the ****ed in the ear property bulls, which really just points out how ****ed in the head it actually is.

 

[cuttlefish]

Just change the fraction. Instead of 10:1 make it 100:1 problem solved

Yep - this is the solution! Change the fraction by a multiple of 10 and gives the banks the ability to loan 10 times as much. And this solution can go on until 1/(infinity) - so there is no end to solving the problem this way - it can be used time and time again. Sorted!

 

[Bushman]

Yep - this is the solution! Change the fraction by a multiple of 10 and gives the banks the ability to loan 10 times as much. And this solution can go on until 1/(infinity) - so there is no end to solving the problem this way - it can be used time and time again. Sorted!

It already exists and goes by the name of 'securitisation'....

 

[Ageo]

Just another typical economic commentator with no idea.

But it was kinda funny wayne