The cause of our crises has not gone away

leveller2911

Rinoa wrote: »

We are recovering from recession, unemployment has started to peak before the inevitable fall later this year and the housing market has returned to stability. Any comments you make now are unsustainable on the back of unsustainable arguments.

Am I missing something here?.....I don't know, I turn my back for one moment and the worlds changed:rolleyes:

System

People seem to think the "unsustainable policies" actually NEED to be unsustainable.

julieq

HammerSmashedFace wrote: »

In almost all instance Cleaver your above statement would be true, however don't the pursuit of temporary polices have a temporary effect ?

The application of a defibrillator is a temporary action, but it has a long term effect. That's what stimulus is for. Stimulus is not life support.

purch

That's a clever answer.

Wish I'd thought of it :cool:

HammerSmashedFace

julieq wrote: »

The application of a defibrillator is a temporary action, but it has a long term effect. That's what stimulus is for. Stimulus is not life support.

Ah Julie, a good analogy, however the defib has been on now for nearly 12 months, yet if it's turned off, the patient still dies. The only long term effect this defib has had is bury this generation and the next in an amount of debt that is possibly never going to be repaid.

JP45

HAMISH_MCTAVISH wrote: »

On all three counts, the policies that have been enacted have been broadly successful. The banks did not fail. Asset prices recovered quickly, further strengthening the banks. Genuine growth is returning, consumer spending is recovering, manufacturing is improving, unemployment is FAR better than expected, and than it was in previous recessions.

Agreed, but the problems that remain and the challenges that lie ahead are still daunting. As Martin Wolf recently commented in the FT:

In an article published in the FT this week, Arvind Subramanian of the Peterson Institute for International Economics, argues that economics has redeemed itself by rescuing the world economy from the crisis. I agree, but only up to a point. Many economists argued that the measures were unnecessary, or even harmful. Moreover, these extraordinary interventions have not returned the patient to health. They have merely prevented him from dying. We now must heal five chronic conditions, instead of survive last year’s brutal heart attack.

First, we have the ongoing force of the balance-sheet recession in the US, UK and a number of other significant high-income countries. It is overwhelmingly likely that the highly indebted parts of the private sectors of these countries will seek to lower their indebtedness and raise savings over an extended period.

Second, we have, quite rightly, substituted public sector borrowing for private sector borrowing, on an unprecedented scale, for peacetime. This can continue for some time, but not forever, as the US and UK come to look like Italy, but without Italy’s healthier private sector finances.

Third, despite modest – and, quite possibly, temporary – reductions, the US, UK, Spain and other erstwhile bubble economies continue to have large structural current account deficits, with substantial offsetting surpluses in China, Germany, Japan, the oil exporters and several other countries. Yet, so long as these external deficits continue, the countries concerned must be running ongoing financial deficits in either the public sector, or the private sector, or both. In other words, the domestic balance-sheet problem is likely to become not better, but worse, without global rebalancing.

Fourth, the surplus countries – China, most openly – show little or no interest in making the needed policy changes. Instead, they continue to argue as if it were possible for the Earth to run a surplus with Mars. Somehow a way must be found – ideally, co-operatively – to wean the surplus countries from their addiction.

Finally, the financial system remains damaged. Not only does it still own vast quantities of the “toxic assets” its “talented” employees created, but the world is not addressing the structural causes of the crisis. In some ways, the oligopolistic banking system that has emerged from the crisis is riskier than the one that went into it.

The underpinnings of our global economy and so of our globalised civilisation remain dangerously fragile. Instead of patting ourselves on the back for a job well done, now that a limited recovery has begun, we need to sustain the effort to return the world economy to vigorous health. That will require much co-operative intellectual and policymaking effort. But, first, we must eschew perilous complacency.

And it's that last point - perilous complacency - that concerns me more than anything and that I think underlies the views expressed in the OP by John Kay and Simon Johnson on the apparent lack of will to bring about any fundamental reform of the financial services industry.

http://www.ft.com/cms/s/0/c58f64c6-f4af-11de-9cba-00144feab49a.html

julieq

HammerSmashedFace wrote: »

Ah Julie, a good analogy, however the defib has been on now for nearly 12 months, yet if it's turned off, the patient still dies. The only long term effect this defib has had is bury this generation and the next in an amount of debt that is possibly never going to be repaid.

Well if it's never going to be repaid, why worry about it?

kabayiri

JP45 wrote: »

And it's that last point - perilous complacency - that concerns me more than anything and that I think underlies the views expressed in the OP by John Kay and Simon Johnson on the apparent lack of will to bring about any fundamental reform of the financial services industry.

It's this complacency issue which interests me.

You'd think that the Banking crisis just over a year ago would have been a wake up call.

Since that time there have been many commentators expressing discomfort at the high levels of individual and corporate debt.

Wasn't this time an ideal opportunity to reset the mindset of the populace?

I'm sure many people still think that 2010 onwards will be pretty much like 2009, but with slightly dearer petrol etc.

I just feel it was an opportunity missed.

HammerSmashedFace

julieq wrote: »

Well if it's never going to be repaid, why worry about it?

I'm not worried, I already understand and have excepted the fact that economic collapse is almost inevitable, my views are well known.

Thrugelmir

HAMISH_MCTAVISH wrote: »

The banks did not fail.

But are far from "fixed". As some seem to believe.