Friday, March 20, 2009

a more rational approach to a New Era in economics

Niall Ferguson makes sense to me:


There is something desperate about the way people on both sides of the Atlantic are clinging to their dog-eared copies of John Maynard Keynes’s General Theory. Uneasily aware that their discipline almost entirely failed to anticipate the current crisis, economists seemed to be regressing to macroeconomic childhood, clutching the multiplier like an old teddy bear.

The harsh reality that is being repressed is this: the Western world is suffering a crisis of excessive indebtedness. Many governments are too highly leveraged, as are many corporations. More importantly, households are groaning under unprecedented debt burdens. Average household sector debt has reached 141 per cent of disposable income in the United States and 177 per cent in the United Kingdom. Worst of all are the banks. Some of the best-known names in American and European finance have balance sheets forty, sixty or even a hundred times the size of their capital. Average U.S. investment bank leverage was above 25 to 1 at the end of 2008. Eurozone bank leverage was more than 30 to 1. British bank balance sheets are equal to a staggering 440 per cent of gross domestic product

The delusion that a crisis of excess debt can be solved by creating more debt is at the heart of the Great Repression. Yet that is precisely what most governments currently propose to do.

The United States could end up running a deficit of more than 10 per cent of GDP this year (adding the cost of the stimulus package to the Congressional Budget’s optimistic 8.3 per cent forecast). Nor is that all. Even before Barack Obama entered the White House, his predecessor’s administration had already committed $7.8 trillion in the form of loans, investments and guarantees. Now the talk is of a new “Bad Bank” to buy the toxic assets from the banks which, despite the $700 billion Troubled Asset Relief Programme, are still in deep trouble. No one seems to have noticed that there is already a Bad Bank. It is called the Federal Reserve System, and its balance sheet has grown by 150 per cent—from just over $900 billion to more than $2 trillion—since this crisis began, partly as a result of purchases of undisclosed assets from banks. .."

efficiency is the name of the game

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Thursday, March 19, 2009

A huge expense from the war on drugs

Reagan started the war on drugs and look at the incarceration rate zoom up. Intense probation is cheaper and has a lower recidivism rate than incarceration. But politicians want to appear to be "tough on crime" by making punishment more harsh. This is the result. Let's save money and get better results by switching from incarceration to intense probation for nonviolent drug abusers.

Wednesday, March 18, 2009

BBC explains how the bubble burst

This is one of the clearest explanations I've seen on why the economic system collapsed.

Tuesday, March 17, 2009

the Growth of the Home Garden

Home gardening is the cheapest way to get food other than stealing. It's a good skill to have and isn't that difficult. But note that it's becoming so popular, some seed companies can't keep up with the demand!

Thursday, March 12, 2009

Slow Money Alliance

A sustainable economy makes more sense in a growth economy, don't you think? I mean, there IS a limit to growth, as cyclic economic downturns should be showing us if we'd just listen. Plus, you can't grow forever (ignore google). Interesting ideas here.

Sunday, March 8, 2009

ex-Republican blames republicans for our mess

This is a very powerful article, not just from what it says but from who wrote it. Frank Shaeffer was deep inside the shaping of the current Republican party.

"You Republicans are the arsonists who burned down our national home. You combined the failed ideologies of the Religious Right, so-called free market deregulation and the Neoconservative love of war to light a fire that has consumed America. Now you have the nerve to criticize the "architect" America just hired -- President Obama -- to rebuild from the ashes. You do nothing constructive, just try to hinder the one person willing and able to fix the mess you created. "

Thursday, March 5, 2009

FINALLY! An article about spending less! Go!

Some wise ideas on how to save hundreds of billions of dollars from the federal tab. Why isn't SAVING money a bigger disussion point?

Monday, March 2, 2009

save money by reforming prison population

Here's one place to save money and get people productive instead of a drain. What happened to talking about the government spending less? I heard Obama once talk about cutting back on defense spending (Yay!). But come on. There's a lot of waste and dumb spending going on. Certainly we can do better by spending less than bailing out more?

Sunday, March 1, 2009

even the experts can't figure out this market

Warren Buffet, who's Berkshire Hathaway stocks have tumbled dramatically, tried to put a brave face on his missteps in not seeing the recession that has now hit us. I bought one share of Berkshire Hathaway and have seen it's value drop by about 1/3. I was trying to decide whether to keep the money as cash or put it in some solid investment. Oops.

So, everywhere you turn, you can find financial experts like Buffet who completely missed what's going on now. Even the experts don't know what's going on. And if that's the case then I think the prudent thing to do is to quickly move to simplicity, security, and oversight. Keep the system simple enough that humans can understand what's going on (no inventive crap like derivatives). Be convervative with investments and don't run after the Bernie Madoffs promising grand returns. And make sure there is government oversight of the economy.

Capitalistism has shown its soft underbelly. Now it needs to show that it can repair its weaknesses.