The default delusion: Inevitable & desirable

Generali

LauraW10 wrote: »

What a load of tosh is what you should be saying.

To quote Martin Wolf

Bedlam's point isn't that suffering is good, quite the reverse. They are saying that default will free populations from unsustainable debts and allow a rapid improvement in economic conditions.

I'm not sure how you can link the excellent Mr Wolf's article with what Bedlam are saying.

Kennyboy66

Generali wrote: »

Bedlam's point isn't that suffering is good, quite the reverse. They are saying that default will free populations from unsustainable debts and allow a rapid improvement in economic conditions.

I'm not sure how you can link the excellent Mr Wolf's article with what Bedlam are saying.

Perhaps the more relevant point is that the history of capitalism has been

1) Massive population increases, almost exponential.
1800 - 1 billion
1930 - 2 billion
1960 - 3 billion
2013 - 7 billion

2) War, wars, wars. Have generally been a great spur to productivity and invention.

3) A move from agrarian to industrial.

Point 3 is getting close to completion in most of the world.
Points 1 and 2 hardly seem desirable.

Generali

Kennyboy66 wrote: »

Perhaps the more relevant point is that the history of capitalism has been

1) Massive population increases, almost exponential.
1800 - 1 billion
1930 - 2 billion
1960 - 3 billion
2013 - 7 billion

2) War, wars, wars. Have generally been a great spur to productivity and invention.

3) A move from agrarian to industrial.

Point 3 is getting close to completion in most of the world.
Points 1 and 2 hardly seem desirable.

Don't you believe it.

Point 1 is slowing fast AIUI.

Wars happen but we seem to be returning to the older way of waging war where very few people actually die.

Point 3: you ain't seen nothing yet. As an example, in the early 60s, 1TB of data storage would have cost about 1 years GP (total world GDP). Today I can buy that same storage at lunchtime for the money I earned in the morning!

There are still billions of people that live in a system of subsistence farming or even hunter-gathering.

Science has a huge way to go yet: for example, what people know about gravity now is about the same as what Volta knew about electricity's impact on frogs' legs: there is an effect and a cause but goodness only knows what and why.

kabayiri

If you asked any decent Control engineer to design a control system for a Nuclear reactor, but done along the lines of 'financial regulatory controls' the results would be clear :-

- the engineer would be either fired or dead from radiation
- the resulting contamination from the blow up would spread for miles
- a moratorium on building any further plants like this would be imposed until an investigation lasting years had been completed.

I know nuclear plant safety is pretty important, and hence not left in the hands of a bunch of engineers alone. Regulation is key.

I suspect safety from the effects of 'global financial system instability' is also important. But hey, we are happy to trust the rocket scientists behind it still in their ivory towers.

Control systems can be imposed on anything, but they do need things like loose decoupling, effective negative feedback, a clear known reset/start status, and most importantly a clear understanding of how such systems will respond under stress conditions. We seem to think that a global financial control system needs none of this. How puzzling.

Degenerate

kabayiri wrote: »

Just make the announcement which should have been made in the crunch.

"Let the private banks fail"

Why the state should bail out private institutions is beyond me. Yes, savers would lose money, but then savers don't complain when their savings are earning interest do they?

Why people repeat this sort of simplistic tripe is beyond me. It demonstrates a complete and utter lack of understanding of what major bank bankruptcies would entail.

You might have a different viewpoint if it had been allowed to happen, and the next day you found out that your job just didn't exist any more, because the perfectly solvent company you worked for lost most of it's operating capital and had to cease trading. The deposit guarantee, even at it's increased £85K level, is hopelessly inadequate for all but the most piddling business accounts.

The banks were rescued because it was the cheapest option all round, end of story. The cost to UK taxpayers of letting them collapse would have been exponentially higher. If banks like RBS and HBOS had gone bankrupt it would have wiped out a significant chunk of the UK economy.

Now you could ask why the banks weren't fully nationalised, the shareholders weren't completely expropriated, and why all the executives and high-bonus traders who had been milking it didn't have all their assets seized and weren't investigated and possibly jailed for their actions. That would be a reasonable point for debate.

FTBFun

Generali wrote: »

Another great piece from Bedlam Asset Management:

http://www.bedlamplc.com/hres/potw%2089.pdf

Interesting bit on Argentina in that report - sheds some light on why Kirchner has been ramping up the rhetoric on the Falklands lately.

The_White_Horse

why can't the Govt start its own bank that guarantees all savings and gives say 0.5% above base rate and then let private banks compete and offer more desirable rates to attract money, but not be guaranteed. therefore, the consumer can stick with safe and boring, or take the risk to get the reward. that is up to them, but at least the Govt can let those banks fail.

CLAPTON

The_White_Horse wrote: »

why can't the Govt start its own bank that guarantees all savings and gives say 0.5% above base rate and then let private banks compete and offer more desirable rates to attract money, but not be guaranteed. therefore, the consumer can stick with safe and boring, or take the risk to get the reward. that is up to them, but at least the Govt can let those banks fail.

maybe try

http://www.nsandi.com/

however in my view, if ordinary private banks savings a/cs were not guarenteed, the run on the banks would start in 5 minutes time and by Monday every retail bank in the UK would be bankrupt.
Why would any sane person risk their life savings for a couple of percent in interest?

pqrdef

CLAPTON wrote: »

however in my view, if ordinary private banks savings a/cs were not guarenteed, the run on the banks would start in 5 minutes time and by Monday every retail bank in the UK would be bankrupt.

And then all the pensioners who rely on their bit of savings interest would be on the breadline.

CLAPTON

pqrdef wrote: »

And then all the pensioners who rely on their bit of savings interest would be on the breadline.

indeed so, which is (partly) why no government would withdraw the guarentee