Tuesday, July 31, 2012

gyro gear loose fantasy of the moment "plugging better expectation formation and expectational feedback mechanisms into existing models"

ie
            rep agent learning ...just more "reason" to change prices slowly

price stickiness in the end only shoots left too ....

stickiness is  about  price and wage adjustment  inefficiency ...obviously
as in
"price stickiness   causes relative prices to go awry,
  which in turn causes resources to be misdirected"
MT


soooo

the way to avoid that is what ?

 minimize necessary  adjustments

that suggests steadiness which after a certain amount of ranging around
over optimal steady rates
usually settles on a real low rate because
 that also reduces necessary  absolute  adjstments
and as average steady state price level change rises
and necessary  absolute price adjustments  rise with it
 well the damn system might not scale well
might increase its dispersion of actual market prices from optimal market prices

so you settle down to
the creditors dream result a steadsy state rate
 just enough above zero to avoid the mythic deflation suck***
-----------------------------------------------------------------------

****the deflation suck is postulated to dwell  down there
 where japans price system wobbled along
FOR TWENTY YEARS!
but that's off topic
------------------------------------------------------------------

what's on topic is simple

never drive the  price change requirement thru serious ups and downs

it causes  the system to miss some higher output thru better allocation

this follows
simply because adjustments miss optimal dead lines
the ones  necessary  for optimal output
and with  a system of ever erratic and perhaps ever  faster coming
   and bigger adjustments .....

but avoiding these inefficiencies  comrades 
translates into perma-slack

we need to mobilize not rationalize
that is task one
keep the production system at full utilization
even if this means price change rates fly around like a bumble bee

thesis
in a market economy
 based in part on relative price signals
we lose more from idling capacity then from  misallocating it

from slack  then from the inevitable miss pricing
  that results from lots and rrapid  jar-ings
                         of  the system
                                 by the emergence of ever new  optimal targets
                                                          for  relative and absolute prices 

"autonomous individuals use their powers to promote exchange and cooperation"....right

Monday, July 30, 2012

b4 any resolution cuz marty demands satisfaction from club med first








simple

 ECB BUYS UP
as much of the outstanding stock of
             CLUB MED SOVEREIGNS
as necessary to get rates back into the sustainable range

but cuz marty is quietly boiling over at the thought of such louche pratices by the ECB

find below
marty's ' tactic'-fully stated blast and counter proposal:

"is that what the ECB should be doing?"

"While any central bank must be able to conduct open-market operations to manage liquidity in financial markets, selective purchases of individual country bonds that bear high interest rates because of current and past fiscal profligacy is both unnecessary and dangerous."

we really could stop there and will so far as blasting goes

counter proposal:

" A better rule for the ECB would be to conduct open-market operations by buying and selling a “neutral basket” of sovereign bonds, with each country’s share in the basket determined by its share in the ECB’s capital."
holy moses

who in their right mind would want to

 "reduce pressure on the governments of Italy, Spain, and other high-interest countries to make the politically difficult decisions that are needed to cut long-term fiscal deficits.... An ECB policy that artificially reduces their sovereign borrowing costs would make these steps even more politically difficult."

fact narrative:
" The peripheral eurozone countries became over-indebted in the last decade because the bond market failed to provide a signal that debts were too high."


fortunately
" That has now ended...bond investors no longer treat all eurozone sovereign debt as equal."
restating the obvious :

" an ECB program to limit interest-rate differentials would eliminate this important signal."


but how about this crooked angle


" ...the ECB risks finding itself in the politically dangerous position of deciding whether a country’s fiscal actions are tough enough to be rewarded with lower interest rates. "


"The ECB would thus cross the threshold from monetary policy to fiscal policy"

that is why one reads marty ...to get at the sophistry

the ECB isn't NOW dictating fiscal policy marty ?

------------------------

then comes the upside down cake taker :

" Germany  might not continue to accept the default risks implied by large ECB purchases of high-risk sovereign bonds."

risk to who and conveyed to them  how  martnik ?




" Germany already faces large financial risks, owing to the ECB’s balance sheet and the Target2 balances at the Bundesbank that are generated by international flows of deposits to German commercial banks. "

is this the risk  net fund flows  might head  back toward club med ?

 i see that might not get a big "do it " from the german bankers now on the receiving end that would then be on the losing end

but mary what about the german woikers ? are they more at risk
with a ECB  going toward a  med bail ?

" As the risks accumulate, it is not inconceivable that Germany might conclude
 that, despite the potential impact on its exchange rate, it would be better off
returning to the Deutsche Mark"

yup better a soaring revaluation then all these added risks


.
.

side bar  zinger

", ECB officials’ recent statements , by reversing the decline of the euro’s value, may have blocked the market response that is needed to shrink current-account imbalances and boost GDP in the eurozone."

get it ?

germany could take a reval

the  entire zone couldn't
ya ya ya

the damn corral fucks with every member nations options

that was the fucking point from day 1 !

there is no way but the MNC way


the MNCs are the only Gods
  and ECB  is their.....errrr .... enforcer


zone bull session

Crash of the Bumblebee, by Paul Krugman, Commentary, NY Times: Last week Mario Draghi, the president of the European Central Bank, declared that his institution “is ready to do whatever it takes to preserve the euro” — and markets celebrated. ... But will the euro really be saved? That remains very much in doubt.
First of all, Europe’s single currency is a deeply flawed construction. And Mr. Draghi, to his credit, actually acknowledged that. “The euro is like a bumblebee,” he declared. “This is a mystery of nature because it shouldn’t fly but instead it does. So the euro was a bumblebee that flew very well for several years.” But now it has stopped flying. What can be done? The answer, he suggested, is “to graduate to a real bee.”
Never mind the dubious biology, we get the point. In the long run, the euro will be workable only if the European Union becomes much more like a unified country. ...
But ... a United States of Europe won’t happen soon, if ever, while the crisis of the euro is now. So what ... could turn this dangerous situation around? The answer is fairly clear: policy makers would have to (a) do something to bring southern Europe’s borrowing costs down and (b) give Europe’s debtors the same kind of opportunity to export their way out of trouble that Germany received during the good years — that is, create ... a temporary rise in German inflation... The trouble is that Europe’s policy makers seem reluctant to do (a) and completely unwilling to do (b).
In his remarks, Mr. Draghi ... basically floated the idea of having the central bank buy lots of southern European bonds to bring those borrowing costs down. But ... German officials appeared to throw cold water on that idea. In principle, Mr. Draghi could just overrule German objections, but would he really be willing to do that?
And bond purchases are the easy part. The euro can’t be saved unless Germany is also willing to accept substantially higher inflation... — and so far I have seen no sign that German officials are even willing to discuss this issue...
So could the euro be saved? Yes, probably. Should it be saved? Yes, even though its creation now looks like a huge mistake. For failure of the euro wouldn’t just cause economic disruption; it would be a giant blow to the wider European project, which has brought peace and democracy to a continent with a tragic history.
But will it actually be saved? Despite Mr. Draghi’s show of determination, that is, as I said, very much in doubt.

    Doctor Who said...
    1) First of all, the ECB can THEORETICALLY increase aggregate demand and inflation in the periphery by buying large amounts of GIIPS bonds (in practice bond purchases on such scale are probably well beyond the ECB's mandate).
    2) However, the effects of such bond purchases on core countries is not clear. On the one hand, exports to the periphery will increase; but, on the other hand, nominal interest rates in the core are likely to increase as well because of higher expected Eurozone-wide inflation. Therefore, for the core countries, the effect of the ECB's intervention will be small, or maybe even contractionary. As a result, purchases of GIIPS bonds will improve the economic situation in the periphery countries, but at the cost of preserving the existing structural imbalances. If the ECB could control core interest rates by buying German and French bonds, the ECB's intervention would be more effective, but such scenarios probably lead us to the land of economic fantasy.
    3) Of course, fiscal policy would be a much more effective way to increase inflation in the core countries, but that option is probably not politically acceptable since many core countries are already close to full employment (e.g. Germany, Austria, the Netherlands).
    4) Since it may be difficult to produce large inflation differentials between the core and the periphery, and since nominal wages in the periphery are still low compared to the core, the Eurozone is right to put so much emphasis on productivity gains in the periphery.
    5) Yes, the Eurozone is probably pushing austerity measures a bit too far, and yes, it probably should do more to limit nominal interest rates in the periphery (by the way, that’s the EFSF/ESM job, not the ECB’s), but its overall strategy makes sense and has a reasonable chance of success.

    Doctor Who said in reply to Doctor Who...
    P.S. Germany is willing to accept a slightly higer inflation rate(maybe around 3-4%), which should be enough, assuming low inflation and sustained productity gains in the periphery.

    beezer said in reply to Doctor Who...
    Why is it assumed interest rates will suddenly spike along with inflation if the Eurozone essentially pulls out a pro-growth agenda that includes direct transfers?
    Can someone point to somewhere where that's actually happened? Not in the US. Not in Japan. Not in Great Britain.
    Even Krugman seems to assume spikes in rates and inflation.
    I believe the problem is always the same: unemployment. Put it down and you thrive. Let it fester and you fail.

    beezer said in reply to beezer...
    As a follow on: What we're always forgetting is that in human activity, particularly its social activities, perception creates the future.
    Ask yourself what is the impact of unemployment on perception?
    How would that perception change if we, through our government's power, hired millions of unemployed people?
    Would the millions hired and the millions who benefit from that surge in demand, give a crap if someone called it 'socialism?'

    beezer said in reply to beezer...
    There is never a lack of capital. Perceptions that capital is insufficient are just that, perceptions.
    There is never a lack of labor. Perceptions that labor is insufficient are just that, perceptions.
    There is never a lack of work to accomplish. Same as above.
    It is entirely our perceptions that suppress investment, create high unemployment, and fail to accomplish obviously needed work.

    Darryl FKA Ron said in reply to beezer...
    Public perceptions affect the outcomes of the democratic process and to dismal ends when the political bull horn is allowed to fall into the hands of same vested interests that have benefited from misplaced incentives on the allocation of capital and resources. The misguided opportunity cost decisions continue to pile up as long as those distorted incentives remain in place and when the pile does topple over it may also destroy more than it creates. We can only hope enough of those perceptions change in time to avert a disaster. The vested interests do not want to be crushed under the pile.

    paine said in reply to Darryl FKA Ron...
    more high altitude bombing
    "The misguided opportunity cost decisions continue to pile up as long as those distorted incentives remain in place and when the pile does topple over it may also destroy more than it creates"
    this is the road to mellonville
    purge the rot talk
    and i know that is not your view
    wouldn't you agree wit this :
    we have a "pressing " mobilzation problem
    not a "pressing " allocation problem
    get back to full throttle first
    then address imbalances
    like our import gap
    our distribution of the tax burden
    and the revenue gap
    health cost
    our twin debt ratio problems
    household and federal
    our house lot value crater
    our ...blah blah blah

    Justin Cidertrades said in reply to beezer...

    "
    problem is always the same: unemployment. Put it down and you thrive. Let it fester
    "
    Perhaps! Is there a larger problem? Does unemployment rest on the shoulders of Atlas? Or on the foundation of energy shortage? Can you print bonds? Bunds? Summer Olympic Tickets?
    You cannot print up bunch of barrels oil. You can't print natural gas. Try as you may, energy, not central banker is the limiting factor of the EE, Eurozone Economy. Eurozone leaders should now stop stalling then allow propped up prices on everything to find their natural place in the dry-hole-zone. Deflation could break a few banks, humble a few billionaire politicians then allow workers to return to work, allow energy conservation to progress and allow life to go on.

    Darryl FKA Ron said in reply to Justin Cidertrades...
    "allow energy conservation to progress and allow life to go on."
    Even a blind nut finds a squirrel now and then :<)

    paine said in reply to Darryl FKA Ron...
    a squirrel scurry up the wrong tree

    paine said in reply to Justin Cidertrades...

    "You cannot print up bunch of barrels oil. You can't print natural gas. Try as you may, energy, not central banker is the limiting factor of the EE, Eurozone Economy."
    that's nothing but green ghost
    hobby horse riding

    peak
    "peak oil "talk
    hit us in the new year 2006
    now we have prospective glut
    ------------------
    we need a good dose of "Deflation ?"
    spoken like a true petty rentier
    sitting in his comfy chair
    that
    or a sadistic bug torturer

    paine said in reply to beezer...
    good stuff

    Lafayette said in reply to Doctor Who...
    The ECB has only one mandate. It is price-stability.
    In consummate hubris, no one ever thought the Euro would require a more stalwart defense - even of its own existence.
    The ECB could do little, by means of monetary policy to directly influence employment - which was supposed to be managed by each nation by means of internal fiscal policies or employment regulations.
    This was necessary since many governments had already instituted legislation to "protect" employment. Which proved futile as Western European Unit Labor Costs lost the competitive battle with both China and the admission of eastern (ex-Iron Curtain) countries into the EU.

    paine said in reply to Doctor Who...
    "Mr. Draghi could just overrule German objections, but would he really be willing to do that"
    yes if and when necessary
    the ECB will buy up as many club med sovereigns as necessary
    clue in?
    the markets will see the draghi put as de facto
    default insurance
    yes rate stability is not assured unless its assured
    and why would the EB do that
    this whole exercise here
    has been and will continue to be
    about controling member states' fiscal policy
    ahem
    from the un stormable heights of the ECB
    ----------------------------
    inflation will follow in germany only if the zone gets a green light to fiscal driven recovery
    that i don't see
    anymore then the greenbackers and silver nuts prevailed here
    between 1866 and the run up to WWI

    paine said in reply to paine...
    the draghi put isvery diferent from the grenspan put
    its only about sovereign asset markets
    of course neither put
    was about
    job markets
    heaven forbid

    anne said in reply to paine...
    I can assure you that the European Central Bank will not put German institutions or citizens at risk through monetary operations without express consent of the German government. Undermining German support for the Eurozone would be foolish in the extreme or impossible with German government resistance.

    paine said in reply to anne...
    anne
    the ECB is the zone agent
    of international corporate capital
    including of course those holding bets on club med
    sovereign price moves
    this includes the "real " german general will
    but only as a local ..a powerful local but a local none the less

    the real insight comes if you let your mind break the iron chain of reifed model links
    between asset prices and job markets
    there is no reason to expect product price inflation in germany just because club med sovereigns are "rescued"
    and we see their "prices soar as rates tumble and fiscal budgetary prospects improve
    only serious euro deval against "agressively managed " currencies of major zone trading partners can can boost product prices
    once the zone's member state fiscal injectors
    are shut off
    as they are now and may remain
    even after de facto reescue

    anne said in reply to paine...
    there is no reason to expect product price inflation in Germany just because club med sovereigns are "rescued"
    and we see their "prices soar as rates tumble and fiscal budgetary prospects improve"
    only serious Euro devaluation against "aggressively managed" currencies of major zone trading partners can can boost product prices
    once the zone's member state fiscal injectors
    are shut off
    as they are now and may remain
    even after de facto rescue
    [Then the Euro is rescued, but not the recession best economies. Understood, and realistic for the German government to agree to at this point.]

    paine said in reply to anne...
    yes
    no relief in such a rescue
    for the "recession beset"
    club med economies

    paine said in reply to Doctor Who...
    "bond purchases on such scale are probably well beyond the ECB's mandate"
    u confuse intent with outcome here and then get both wrong
    the ECB is by design independent
    its mandate price stability
    that is an intentionally loose and broad mandate
    like say
    keeping the peace

    paine said in reply to paine...
    the outcome of the zone's institution has had a profoundly unanticipated outcome
    this club med crisis puts the whole set up on trial
    trial for the zone's life
    doing what is necessary
    will be necessarily done

    but
    when ’tis done, then
    ’twere well It were done slowly

    beezer said...
    How to create another 2 billionaires, or another 2,000 millionaires, or another 4,000 half millionaires? Or some combination thereof.
    Hire another 7 million people.
    There's a little more than 400 billionaires out of a working population of roughly 147,000,000 million people.
    It's entirely a problem of perception.

    paine said in reply to beezer...
    beezer maybe you tie asset markets
    too tightly to job markets
    if you think of job markets as capital leasing markets for human capitals "not for sale "
    then you create implicitly
    a rise in these "peculiar capital's shadow values
    ie their scheinvert
    by lifting effective product demand
    and allowing that to pass thru to higher "lease payments " to the peculiar "production factor"
    called labor

    paine said in reply to paine...
    but i doubt any of these increased lease fee streams will push a PV up past the billion mark
    unless pure uniqueness rents or winner take all structures are the order of the day
    ball game stars
    like A rod
    hollywood screen stars
    like clooney
    and of course
    heroic captains of industry
    like mitt machine gun mouth romney
    oh ya and welch's jack juice

    Lafayette said...
    RAISON D'ETRE
    {For failure of the euro wouldn’t just cause economic disruption; it would be a giant blow to the wider European project, which has brought peace and democracy to a continent with a tragic history.}
    Well put, PK. You have put your finger on what most Europeans feel is the "raison d'ĂȘtre" of the EU - so riven over the centuries has it been by war.
    A common economic dependence brings the peace that has escaped Europeans for more than a century and a half since the demise of the Pax Romana.
    Which answers your next question. {But will it actually be saved?}
    Yes, of course, because it must be saved.
    And do not dismiss Draghi. He is Italian and quite used to the fecklessness of politicians. If push comes to shove, he will do his duty, rather than go down in history as the head of the ECB who failed at saving the Euro.
    History has more importance in Europe than the US - where history was five minutes ago and ancient history yesterday.
    Draghi's too proud to allow the collapse of the EuroZone to happen. We'd do well to worry more about an ineffectual Fed under Bernanke.

    havnaer said in reply to Lafayette...
    Even though he will do nothing, Draghi will convince himself and as many others as he can that he did everything possible to save the Euro.
    Like Bart Simpson, he will claim, "Its not my fault."

    Lafayette said in reply to havnaer...


    {Even though he will do nothing, Draghi will convince himself and as many others as he can that he did everything possible to save the Euro.}
    Sez U.

    Explain yourself instead of leaving cheaply sarcastic comments in a blog.

    Meaning hes a right dork just like the rest of them ... ? How so?

    To: synthese@hotmail.fr

    paine said in reply to Lafayette...
    "peace and democracy to a continent with a tragic...."

    pk has the causation reversed
    the end of seriously treatening
    inter european "nation state wars "
    under the pax americana
    allowed the formation
    of the european common market
    and later within that common market
    the morbid euro corral

    peace produced both democracy
    ---such as it is there today---
    and the market unification movement

    once the soviet kamp krumpled up
    the unified market trend like the third reich
    moved east

    paine said in reply to Lafayette...
    "History has more importance in Europe
    than in the US "
    come join me for a tour of "whites"
    in old dixie... my friend ...
    or any black folks' house anywhere
    or any native american settlement
    or chicano neighborhood or ....
    irish new englander or ...franco phonic new englander
    or italo-american or ...
    --------------------------
    nothing i hate more then a cheap shot goutcha laff
    but that line way too often goes unchallenged
    history here is bunk
    if you happen to be one of the few big winners

    Lafayette said in reply to paine...
    SAY IT ISN'T SO, JOE
    {history here is bunk}
    I give it much more importance than that.
    Franklin and Jefferson both came to France as ambassadors of the revolutionary government. Both were well appreciated by the French, who were royalists at the time. Jefferson came away with a scathing appreciation of the monarchy - with its Divine Right - and I sense that his dislike is seen fully in the Declaration of Independence.
    I particularly like the line "the pursuit of happiness". Whatever can that mean, "happiness"? It is too subjective, but the word "well-being" was yet to be invented.
    It took a while, another hundred years or so, but inevitably what took root in Europe was the notion of Social Democracy and more particularly of the Social Contract, which promises that a people may live with dignity. That is, the agreement made between a government and its people - whereby the former keep foremost in mind that they owe "well-being" to the latter. All of them, not just some of them.
    What talk have we of the Social Contract in the US, or even of Social Democracy? We've so far yet to come.
    Because most people cannot get their minds wrapped around anything else except jobs, jobs, jobs - as if living were still a matter of feeding oneself and finding shelter for their family and buying some clever gadgets/games.
    And that is where we have been stuck since 1776. Jobs, jobs, jobs - because we cannot lift ourselves notionally to a higher plane. That of the Social Contract and the promise of progressive reform of a nation.
    Jobs, jobs, jobs - is that all there is?
    Say it isn't so, Joe. Say it isn't so.

    paine said in reply to Lafayette...
    fair enough

    but i'd settle for jobs jobs jobs

    Fred C. Dobbs said...
    (This NOT just in, but perhaps worth noting.)
    Flight Of The Bumble Bee Is Based More
    On Brute Force Than Aerodynamic Efficiency http://www.sciencedaily.com/releases/2009/05/090507194511.htm
    "We decided to go back to the insect itself and use smoke, a wind tunnel and high-speed cameras to observe in detail how real bumblebee wings work in free flight," said Dr Richard Bomphrey of the Department of Zoology (Oxford), co-author of a report of the research published this month (May '09) in Experiments in Fluids. ‘We found that bumblebee flight is surprisingly inefficient – aerodynamically-speaking it’s as if the insect is ‘split in half’ as not only do its left and right wings flap independently but the airflow around them never joins up to help it slip through the air more easily.’
    Such an extreme aerodynamic separation between left and right sets the bumblebee [Bombus terrestris] apart from most other flying animals.
    "Our observations show that, instead of the aerodynamic finesse found in most other insects, bumblebees have a adopted a brute force approach powered by a huge thorax and fuelled by energy-rich nectar," said Dr Bomphrey. "This approach may be due to its particularly wide body shape, or it could have evolved to make bumblebees more manoeuvrable in the air at the cost of a less efficient flying style." ...

    Fred C. Dobbs said in reply to Fred C. Dobbs...
    It has been said of Germany that there
    has never been an economic system they
    could make work (if they want to, and
    still arguable probably), if you want
    to think of Germany as some enormous bee.

    Fred C. Dobbs said in reply to Fred C. Dobbs...
    Err, 'could NOT make work', of course.

    paine said in reply to Fred C. Dobbs...
    given its
    "particularly wide body shape"
    to get to "more manoeuvrable in the air'
    requires "a less efficient flying style"
    sounds like ma nature's invisible hand
    trading off here to me
    rather then merely allowing the humble bumble
    to use simply
    " a show of brute force "
    now tell us:
    whats the benefit of that sexy wide body ?

    havnaer said...
    The problem with Draghi's remarks is that they are disingenuous. Time and time and time again, EU financial leaders issue statements promising to take action to keep the Euro solvent, and EVERY SINGLE TIME they don't fulfill their promise.
    These statements can only be construed as an attempt to pacify skittish investment Markets and investors into supporting the Euro.
    BTW, its been 5 days since Draghi made his pronouncement. What has he done since then?
    (and don't tell me "it's the weekend". When a Continent is on fire, you work overtime)

    paine said in reply to havnaer...
    look
    this is a well contrived
    ECB club med torture technique
    the point is to stay in the fairway here
    between
    on the one side
    overt back stopping declarations
    which would remove the fiscal pressure
    on the various club med transfer systems
    and
    on the other hand
    market panic
    the IMF plays this game when an emerging currency hits sudden stop international capital inflows
    however this is not scheme A
    where the credit source
    "holds the mine shaft together
    till the smart money can get out "
    nope
    i think everyone that matters knows the zone must survive
    and that means no fre fall panic in club med sovereigns
    the real counter move is the formation of a club med wide bargaining org
    ready to group default
    that and maybe that alone
    could get
    the nasty torture mules at the ECB's
    full attention
    unfortunately the june vote in greece
    looked like
    "the little people blinked"

    paine said...
    for some god damn reason or other
    the parallel between the post civil war US and the zone nowis over looked
    there was no transfer union to speak of back then aqnd we tied ..retied the dollar to gold
    check out dixie during that period
    it wasn't just the struggle between the race nations down there that turned our ante bellum
    export dynamo into a poverty sump
    if the parallel isn't clear to ya
    you ain't thinking about it much
    content pull out ?

    the protracted date range
    1866 to ......1936 !

    paine said in reply to paine...
    the "new south" is largely
    a post WWII affair
    ie
    post the transfer union
    but view the full complexity
    of the dynamic pattern
    sublimely horrific
    if u take a dixie stand point
    at any rate
    its a story mostly over now
    ...thank Goddess Clio
    consider the sun belt rust belt contrast
    time we reckoned up the full record ...no ?
    1866 - 1936
    one boundary two "countries"
    and three nations ...at least
    and the several states
    save military camps and a few pub works projects sovereign fiscal "isolates"
    without a currency to call their own

    ----------------------
    we had monetary union since 1789
    a transfer system since what ..
    surely not much before 1936

    anne said in reply to paine...
    the "new South" is largely
    a post WWII affair
    ie
    post the transfer union
    but view the full complexity
    of the dynamic pattern
    sublimely horrific
    if u take a Dixie stand point
    [Franklin Roosevelt and New Deal programs developed the South, which is seldom mentioned. Also, look to the integration of East Germany with West Germany and what amounted to a profound and successful development and anti-poverty program which is remarkably little credited and which is why I am always sympathetic to Germany in these times of criticism of Germany.]

    paine said in reply to anne...
    "Franklin Roosevelt and New Deal programs developed the South, which is too seldom mentioned"
    couldn't agree more
    unfortunately frank's attempts to build a perminent progressive base
    among "common" white southerners
    came up short
    the race division
    the two nations one region dilemma had to be ripped apart first
    which awaited the great society days
    and we're still sorting the fall out from that eh?

    anne said in reply to paine...
    for some --- damn reason or other
    the parallel between the post Civil War US and the zone now is over looked
    there was no transfer union to speak of back then and we tied...retied the dollar to gold
    check out Dixie during that period
    it wasn't just the struggle between the race nations down there that turned our ante bellum
    export dynamo into a poverty sump
    if the parallel isn't clear to ya
    you ain't thinking about it much
    [Clever.]

    paine said in reply to anne...
    thank u
    for once i agree fully
    with a me directed complement

    Sunday, July 29, 2012

    noah pine cone has noah notion of urgent remedies for structurally generated deficits





    no don't stare at this picture of  mr 'really really geeky' pine cone guy  ...read this :

    "A. If you have a high amount of debt but no deficit, you can pay it off without high inflation or rapid growth. It just takes a really long time. But it's perfectly possible.

    B. A high deficit does not require either inflation or growth to go up in the future. Why? Because you can cut the deficit."

    it leaps out at u doesn't it

    "you can cut the deficit "

    syre you can look at the baltic states ...
    or greece even

    the deficit cut prolly won't reduce the economy's tax bases
    enough to nullify let alone increase the deficit
    so cut away .....

    but what about all that slack you create ?

    you  simply wait out the structural source of the slack
    the built in deficiency in effective demand for domestic output

    if its say like greece too much importing at full employment
    youy get along on less then full employment or you cut wages and increase the real burden of existing debt
    but you are trying to pay it off aren't you

    the key here must be time frame

    "It just takes a really long time" applies just about everywhere

    yup you just gotta tough it out as you wait it out

    the sea always calms down some time or other ...am i right citizen ?

    ---------------------------------------------

    had enough ?

    well i haven't


    "So, here's a perfectly possible scenario:
    We temporarily run a high deficit. Then we balance the budget after that. "

    this is so under motivated he might as well say

    we temporarily drive back and forth across the median stripe for a while
    scaring the shit out of our passengers
                        on coming traffic and maybe even ourselves ..
                                                                  .then we stop doing that ...

    "We have a bunch of debt."
    and   Growth remains slow
    but inflation remains low."

    " Over time, we very slowly pay off the debt,
     without defaulting, growing faster, or causing higher inflation."

    or we fall  of the prudence wagon
        into another massive deficit spasm and ....


    -------------------------------


    look we can have a built in  chronic deficiency of effective demand

    gotta solve that ...eh ?

    who's to say how long that might take while running full employment budget deficits

    we can over save for almost ever maybe  christ sake
     or go so stale we invest too much over seas
       or buy too many foreign made trinkets and goo gaws and gadgets and stuff

      or ...

    Achilles Macris : for potus

    pk "imagine an E- zone with just germany and spain"

    the current situation looks like this:



    notice spain has serious slack  while  germany  is at the point where more demand would lead to ...WAGE INFLATION !!!!! 

    ----------------------------------------------------------

    "The current European strategy:
       internal devaluation
     Spain  cuts money  wages to  restore competitiveness "



    but cutting money wages is " resisted " strenuously

    plus deflation in spain only increases the real weight  of her debt load

    ---------------------------------------------------------------------

    so  pk best macro 

    "Aggressively expansionary monetary policy"

    " this  shifts the AD curves of both countries to the right. "

    " raising  output and employment in Spain,
     and creating  wage inflation  in Germany  "




    -------------------------------------------------

    note this assumption :

    "the ECB can determine nominal GDP for the euro area."

    bogus eh

    " Under liquidity-trap conditions, this is a very problematic assumption,
     and I don’t mean to drop my skepticism for other purposes."

    good

    " For right now, however, it’s useful"

    oh really ?

    "as a proxy for the whole range of possible expansionary policies
    the ECB might follow."

    rather characteristically pk prefers to make things  "happen" by assuming
     the near impossible !

    the ECB could no more kick off such a demand surge
    that wages and  prices  spiral in germany while spain recovers zippidity zip

     obviously this is a proxy for its opposite
    not monetary policy but fiscal policy
    as in
     germany cuts savagely  taxes on job class households
    and  guns  up transfer payments


    pk wants to avoid the real choice because he wants to  avoid
    the entailed fiscal deficit boom that suggests the  idiotic retort
     "  but pk  there's not enough debt space "
     that hassle however is the only road forward out there
    in the real market economies  of europe