G20: Profound And Complete Disappointment For The US Treasury

By Simon Johnson

Early Friday I went through the G20 communique for the Wall Street Journal; a marked up copy is available on-line.

It is hard to imagine how the summit could have gone any worse for the US Treasury and the president.  The spin machine is now working overtime – and you’ll see big efforts to get more positive stories over the coming week – but on all fronts the outcome is very bad.

  1. There was no substantive progress on anything to do with exchange rates.  The “indicative guidelines” to be agreed next year are just a way to kick the can down the road.  The Chinese are digging in hard on their exchange rate; this is headed towards a mutually destructive trade war.
  2. There was less disagreement at the summit regarding the “regulation” of global megabanks – but only because this had been gutted so effectively by the bankers’ lobby and officials who bought their specious arguments.  There is nothing here that will prevent or limit the impact of another major worldwide financial crisis.
  3. On IMF governance, over which there was substantial fanfare in advance, it turns out there has been a major step backwards.  The Europeans have apparently signaled they are no longer willing to give up the job of Managing Director – they have always controlled this job and this is a major reason why IMF legitimacy remains weak.  Unless and until an emerging market person gets this position, no one (outside of Europe) will want to rely on the IMF in an emergency.  As a result all countries will want to “manage” their exchange rates – to the extent they can – along Chinese lines, aiming for a significant current account surplus (so as to build up foreign exchange reserves).  See point #1 above for the likely consequences of that.

130 thoughts on “G20: Profound And Complete Disappointment For The US Treasury

  1. Ahead of the G20, America launched QE2 with the attitude “heads we win, tails you lose”. Is it any wonder that the developing world is pushing back?

    A huge economic confrontation is brewing.

  2. I am afraid I don’t see the failure on any of the counts you cite.

    1. is clearly irrelevant, since the US did not come there to negotiate the terms of QE2. It will dump dollars on the market and nothing can prevent this. Trade surplus nations will have to address this in their domestic monetary policy or end up like Japan. Finally, exchange rate pressure will not stop the US trade deficit, because the US trade deficit is caused by American companies exporting jobs, not foreigners exporting goods.

    2. There has never been any US intention to seriously regulate the banks. You know this, so does everyone else.

    3. Since the next big outbreak of currency crises will likely be centered on Europe, it makes sense that the lightning rod for the response should be a European.

    All in all, I would call this a very successful gathering…

  3. Really. What was the point of this post? The US wins when nothing is agreed — always. The other nations are only negotiating the terms of their surrender.

  4. Simon, I think you’ve managed to propel yourself an hour into the future (it’s (9:16 NYC time right now, but this was posted at 9:49 a.m. So that means we can see the future via baselinescenario!

    Be that as it may, it seems like there’s a lot of public non-action going on, but I get the sense there’s a lot of maneuvering behind the scenes to allow the $ to drift lower and for China to raise interest rates strengthen their currency vis-a-vis the $ and euro.

    Neither side has any desire to be seen as caving in. Both sides — the US and China — want to be able to save face. This is a set piece in a game that has decades, maybe centuries, to play out.

    This is still a transitional period, and the future could break either way. It is almost a foregone conclusion the U.S. is in decline, and China’s ascendant. This is not necessarily the way things will work out. In the history of the world there has never been so potent a mix as free and open society coupled with capitalism as we’ve seen here in the U.S. Nor has an ascent from poverty and illiteracy of the type or scale engineered in China ever been witnessed.

    China appears to have successfully harnessed the innate capacity for human beings to reorder their environment and build things, as well as innovate. They have yet to contain the rampant greed that comes in the first flush of success, which, if not subdued, will poison their part of the planet even more than it now is, and lead to the most massive out migration the world has ever seen. And they still are not free in the sense post-Enlightenment societies, particularly American, understand the concept. There, there is a concentration of power among super-elites and control over government — and its monopoly on the use of force — that still forcibly compels people to accept diktats from the top or risk death. That’s about as serious as it gets. But it will not have the power to summon people to risk their lives in its defense.

    Here in America, we are at serious risk of degenerating into a cartel-dominated economy that uses government — still the only legitimate entity with a monopoly on the use of force to compel conformity with its laws — as an extension of its will. We have progressed far beyond capitalism, not in the way Marx envisioned but more in the way Hayek did. We are in a transition in which super-elites are consolidating power, as can be seen by the people they’ve successfully installed in government at all levels. This needn’t be the way we end up, but if our society evolves along these lines we most certainly will be eclipsed. Few will be willing to make the sacrifices previous generations have willingly made to support the cartels. If anything, the natural inclination will be to rebel in the manner of our forefathers.

    One could make the case the U.S. and China are converging on a similar point — vis-a-vis the way our respective societies are organized — in the not-too-distant future. God help us all.

  5. Excellent post Mr. Johnson! Really stirring the fire in my early morning belly about which comes first…write, or tea, and crumpets? I suppose a quick response is due. The Chinese yaun does float freely even though the rest of the world cannot interfere in their monetary system. We’ve always allowed it to ride our coattails, too float our boat so to say…but now it’s somewhat morphed into an anchor? Now it seems the great Mountain (America) must come to Mohammed (China), and one thinks the U.S. will win out…when all the while it was China playing (know thy adverary as if it were thyself) along with greedy American MNC’s – stringing them along with the smell of fresh carrion marinated in fool’s gold! No…China is correct in telling the U.S to flag-off, and will give us (our corrupt politicians, and banksters reason to stir the masses, fomenting ???) our way, thus turning internally for domestic (building out inland infrastructure Phase II – 5 year implementation initiative) consumption to bolster its GDP, all the while the rest of the G-7 will squabble about who, “to pin the tale on the donkey next”…without shooting themselves in the foot first. Thankyou, Simon, and James :-)

  6. The following exchange is from the from the second link in the post:

    Mullins: Are the Chinese accurate in saying the US is doing just what it is accusing us of doing?

    Johnson: No, they’re not. There are legitimate and less than legitimate ways of handling your economy and there are long standing rules and norms about this. What the Chinese have been doing, I’m afraid to say, most of the last decade in respect to their exchange rate is not generally considered acceptable.

    Why then, if what the US is doing with QE/ZIRP, if that ‘is’ considered acceptable, is the US finding it so difficult to get support in the condemnation of Chinese manipulations? The US tries, and it tries, but no support forthcoming.

    Why then too, so little mention of the fact that dollar carry-trades are up by ten times normal so far this year. And, that it is this ‘spillover’ effect, that is driving up the currencies of 2nd tier nations. The Fin Mins of nearly every applicable nation have gone on record saying that the US is manipulating its currency and yet economists insult our intelligence with the likes of:”legitimate and less than legitimate ways…”, what nonsense.

    And, always as if the US has nothing other than altruistic foreign policy. Dollar hegemony alone is the most manipulative economic practice in the history of global trade. Add to that our long history of manipulating markets with subsidies. And manipulating the elections of foreign government officials, and all of the sneaky trade arrangements with nations like Israel, El Salvador, Colombia, etc., arrangements that violate the very essence of the Bretton Woods frameworks intention of restricting jingoism; and at some point this ‘finger-pointing’ at China becomes a national embarrassment.

  7. Charley, he’s probably just another Republican who would rather see the entire country crash and slide into the Atlantic rather than see this President do anything right.

    YOUR FORMER LEADER LEFT THE COUNTRY IN SHAMBLES! ITs not going to fix itself in 2 years.

  8. Thank you, Charley. They are just picking and prodding to do anything to destroy this man. The only time the Republican-minded of America agree on is that they don’t want to call this Black President “Boss”.

  9. Exactly ….

    and to the author: quite amazing you talk about the lack of progress concerning exchange rates, without mentioning that the US just dumped 600 billion dollars on the market, when the G20 agreed just weeks ago to not manipulate currency in any such way. You talk out of context. and when has the US sought to regulate banks, if anything they are the greatest opponent to it. And last not least, to give the role of managing director to the US is pathetic. They are failing over and over again to manage their own banks appropriately – how do you think they’d handle a much bigger responsibility.

    in one word: we don’t need articles like this! Honestly!

  10. One area where there appeared uniform consensus was that in international affairs President Obama would shine. He casted only the most pallid presence during his trip overseas; truly his luster has faded.

  11. I have to laugh at all the incorrect presumptions made in the above comment by markets.aurelius. First, Democracy is over rated as a tool for good governance. Ask the 80% of the Indian population living on less than $1.00 a day how democracy is working out for them. Second. The Chinese accounted for approx. 40% of the global trade for all known history. What we are seeing is a return to normal. The last century was an anomaly in global economic history.

  12. “A huge economic confrontation is brewing.” for sure! This begs two questions:

    1) Who’s the last one standing?
    2) Will it degenerate in military confrontation?

    Obviously, the order of the above questions must be changed, to generate the problem-space.

    One can inform the guesses to the above questions by going back to the conditions preceding WWI. Niall Ferguson did a good job few years back in a Foreign Affairs article.

    From a different perspective, the US is in a very weakened position for we’ve started pissing away social (and intellectual) capital since Clinton was a president–with the up and coming, that is, for the big boys never bought the US economic doctrine at retail prices.

  13. America is trying to solve problems by fiddling with the money supply and currencies instead of facing the obvious: China and Germany are investing substantially into R&D and innovation. Every 5 years China produces a Five Year Plan for its strategic industries. The last 5 year plan was just released: they are investing into electric cars, high end machine tools, environmental clean up, low carbon energy and biology. They have a strategic plan. America never produced a strategic plan for anything. America is the short term focused society which loves the fast gain. America’s biggest talent is the creativity of its people. That needs to be harnessed and there has to be a surge of new company creation, new technology development, R&D etc.You can’t make goods the rest of the world wants to buy if you don’t invest to invent those products first. America seeks the quick solution. There isn’t one. This is a 10 year retooling of the US economy.

  14. Unfortunately, while Rome burns, Emperor Nero fiddles.

    While the US politicians bicker and argue about currency manipulation, tax break expiration dates, and which programs NOT to cut, other countries are actually making massive cuts across the board combined with increased taxes in order to address their deficits and debt.

    The other countries (such as Britain and Ireland) are on their way (albeit in the very early days) to resolving their issues.

    The Americans can’t even decide where to start, and will continue to bicker while the country remains heavily divided over the issues.

    Unfortunately, this will hurt America much more than most people are ready to accept.

    American citizens have to end their sense of entitlement. Two years of unemployment, and unfunded medicare, medicaid, and social security have to come to an end, and soon.

  15. Very well said – I am more worried about the health of the planet with China and India on the march – they are
    going to leave US far behind in destroying the atmosphere and that too at lightning speed- As it is our earth is reeling under the weight of emissions – wait for 10 years – we will have horrendous hurricanes, wide spread droughts, excess rain in some places and what not.
    Isn’t the price too much to pay for greed, one up over the other – and bickering.
    Fighting over currency manipulations – trade agreements, jobs going to other countries will seen to be ridiculous a few years from now.
    We are fighting over the assets in the house whereas the house is burning.

  16. “Democracy is over rated as a tool for good governance.” I have to reluctantly agree with you on this, for democracy works in fair weather, but people ran away from it when deep tensions accumulated in the past. Just like free markets, democracy requires constant gardening and the western electorates seem to have given up on that–on the free markets front, at least in the US, the Government gave up long time ago.

  17. Years of living above above his income is now causing big problems for Uncle Sam, he no longer can afford to support his dependents. Not one senator or congressman would dare anger their constituency by raising taxes, so there is no recourse for him but to print up more money. Some say he would be able to survive if he fired all members of the US Congress and declared martial law. He then could live within his income and still live large.

  18. I think Obama did not want to officially declare China to be a currency manipulator and he could not get the backing of the large European countries to force China to correctly value it’s currency, so he decided that 2 could play at the same game. IMO QE2 is an indirect way to “help” China; if they won’t revalue their currency upwards then we will revalue our currency downwards, having the same effect. If this negatively impacts other countries then they should strongly support the US in future currency negotiations with China.

  19. A few questions on this thing seem in order.
    First WHO in USA will benefit most from a no change in anything
    Second Whom in USA would see profits etc go down if dollar lowered and yen/yaun brought into real world (Note Japan openly manipulating yen to support exports)
    Third, Those that are making profits in USA from current trade and currency situation are contributing to which party and support what changes?
    Forth Would those profiting most from current jobs and monetary disaster in USA tell their trading friends in Asia, “not to worry we got it covered?”
    Fifth Who was the ones that set up the economic disaster in USA and whom is now profiting from it and massive exports of jobs, plants and technology?

    So we can do all the intrigue of financial markets/theory/models, currency/financial manipulations, but suspect answers to above reveal obvious, but unstated issue and cause. Just good ole “Follow money trail 101” stuff.

  20. Why would China, or anyone else for that matter, take the US’s economic policy seriously when the Republicans who just won a landslide election victory give Sarah Pail an 82% approval rating (http://thespeechatimeforchoosing.wordpress.com/2010/11/08/rasmussen-republican-primary-voters-like-sarah-palin-best-82-percent-approval-rating/) and Republicans favorite TV program is Glenn Beck (http://www.foxnews.com/entertainment/2010/11/10/republicans-democrats-like-different-tv-shows-study-says/)? Foreign governments must wonder if the US is headed for government by Twitter and Facebook and a return to the Gold Standard and gunboats.

  21. Oh, I see the specious, half-witted arguments of an arch-conservative, neo-facist tea bagger who is here to spout GOP talking points. What you are not cognitively able to understand is that your party is using your ignorance and feeble-mindedness to spread easily-debunked fallacies and half-baked economic theories that lead to depression. See: GWB, President 2000-2008. Entitlement is what white people like you get in america, you have since you ethnically cleansed the natives and stole their land. To decry entitlement now, after 234 years of being catered to, is the epitome of all that is hypocritical, willfully ignorant, and outright hate-worthy about you moronic TP thugs.

  22. Get your head out. Race has NOTHING to do w/ our not liking Obama — it’s his socialistic policies that he is trying to ram down our throats, his lack of respect for our military, his apologizing about the US to other nations, etc.

    Many of us on the political Right would love to see a REAL black man in the White House….for example, Representative-elect/Lt. Col. ALLEN WEST from FL (remember, Obama’s mama was white). Dr. Alan Keyes, Dr. Walter Williams, Herman Cain, & Dr. Thomas Sowell would also get my vote in a heartbeat!

  23. For sensible analysis of QE2 read Martin Wolf at the FT. To understand this best in terms of China read Michael Pettis blog.

  24. Well said. I’d go a little further by saying this afair with the cartels has been happening for a long time and that’s why the U.S. supported dictatorships and corrupt strong man all over the world, including South America, Iran and Egip to name a few. In Brazil, during the dictatorship, American GM removed the non poluting electric buses from the streets, replacing them with gas guslling buses and people are breathing the results to this day. I personally lived under the military dictatorship, to protect me from becoming a comunist. The whole system was orquestrated by the U.S. and it’s secret services to protect American interests (GM, Ford, GE, etc. )
    It’s all about the money. As for comunism, the U.S. does not seem to have such a great problem with them, otherwise, this chinese thing would never have happened. Again, it’s all about the money and greed.

  25. Not quite: as long as China maintains a peg, the US cannot effectively devalue – China goes down as the USD declines (actually the Chinese peg acts to prop up the USD).

    The hot money is intended to offset the trade imbalance (trade surplus = capital deficit), substituting government investment with foreign investment. China will not be able to purchase all the USD at a fixed price as easily as in the past without flooding their own economy with yuan – igniting inflation.

    The US is basically saying (“you want USD, here have some USD, choke on it”).

    Quite a economic war we have going on.

  26. Alan Keyes???? It’s bad enough you have no clue what a mixed economy is, have no idea that the country is a constitutionally-based representative democracy (hence no president can ram policies down your throat), and you claim God-like special powers to divine whether or not Obama respects the military. I guess you take it as a sign of weakness if the president apologizes for mistakes the government makes (or maybe you’re saying our government never makes mistakes). People of character admit when they make mistakes, apologize and try to make amends. Governments and other organizations are composed of people, and hence, do make mistakes. Any decent organization recognizes this, accepts responsibility, apologizes and makes amends. This process increases their respect, and makes it more likely they can ultimately reach their goals. “Arrogant Bastard” is not the role model for a country to follow.

    Agree entirely with you that “race” has nothing to do with why most republicans and conservatives disagree with Obama (I think most polls show that he is personally liked by most Americans across the political spectrum—something about being a good father and husband who rose from a disadvantaged background. Racism still is a problem in the country (especially if it is directed at you), but most of it currently takes subtle forms that are often not recognized. Still, I think that it is largely policy issues that are driving the debate.

    You can make a very cogent conservative policy argument against Obama and the democrats. I think your efforts went into rejecting the racism charge, rather than providing alternative reasons for opposing Obama. But Alan Keyes?????

  27. where have you been in seclusion – or are you just waking up? :-)

    Congress can’t DECLARE war, they can only fund it. And they can’t write any “laws” that protect an individual against force and fraud because of provisions in the Patriot Act.

    So a REAL Congress has been “fired” because their job has been redefined and we ARE living in Martial Law because the individual has no privacy protections against force and fraud because “THEY” get to be “secret” while your info is on the internet thanks to no one in Intellius or LexisNexus responding to SNAIL MAIL written requests to be taken off the “here’s another bare ass for you all to go get” LIST.

    Good Morning, Morris!


  29. The steady stream of anti-Obama negativism seems to have gripped the entire punditry class. Where were these scions of economic philosophy when the financial treasures of the American middle class were being plundered? The steady drip of attack ensures that all positive notes are drowned out and does not allow for any positive resonance.

  30. The MSM has failed once again to provide Americans with the information needed to understand what is happening. The two G-20 meets for example did not result in a ‘business as usual’ context as many Americans seem to believe.

    Before the first meet, when the Fin Mins of Brazil and Indonesia chose to send subordinates, this was a symbolic protest. It was made important though by the fact that it was India’s Fin Min, instead of those protesting, who commented as to ‘why’. What he said essentially was that the G-20 is a waste of time. But what makes this important is the fact that India imports more than it exports, and so, India was showing solidarity among 2nd tier nations because it had little to gain or lose in regards to QE2. In other words, the solidarity itself is signaling that the ‘currency war’ is not just about currency, the 2nd tier nations were saying that they stand united against the US.(I’m using the term ‘2nd tier’ because some of the nations involved are not among the G-20)

    Another key clue that the MSM failed to recognize the importance of (they are more-so uninformed than devious), was when Brazil’s Fin Min., Guido Mantega, issued a joint statement with Brazil’s outgoing, and incoming Presidents, to the effect that Brazil is prepared to do whatever necessary to protect its currency from further appreciation(30% since March). This came after the first G-20 meet and after the Fed announced its QE2 intentions. At about this same time a rumor out of Brazil added another symbolic jab by claiming that 600 billion dollars might be bought with reals in the currency market(600 billion being the same number as the QE2 number[snarky]). And for another show of solidarity, the Fin Min in Thailand announced similar intentions in concert with a group of unnamed “neighboring” nations (the press sometimes confused some of these announcements with intentions to impose capital controls but Thailand already had such controls in place).

    There were many other such clues but without making a long comment longer maybe it is best just to say that US domination of world affairs has ended. The MSM should be explaining what this means but instead we are now stymied by our own deceit.

    According to Joe Stiglitz, for every dollar that the US spends on global development, it receives a return of $3. Yet many Americans actually believe that the global net flows are negative. As if a nation that represents 4% of the global population while owning more than half of all MNC stock has been dedicated to some sort of effort to feed humanity ‘Big-Macs’, and to improve their health with Coca-Cola etc. As if our militarism is somehow different than similar efforts of the past.

    Americans have some difficult times ahead on many levels. Most of them don’t even know what terms like ‘dollar hegemony’, or ‘demographic dividend’ mean. Many Americans actually believe that they work ‘hard’… while many have never done anything other than what they wanted to do.

    This would typically be the historical point when a people’s delusions about themselves lead to a major war, although, I suspect that Americans are too lazy and spoiled to be much of threat to any group larger than the Taliban. The Chinese are builders like the Germans. Our best hope is probably that of continuing to send them our processed food products, attack them with diet-related diseases.

    Meanwhile, maybe we could regain some confidence at the expense of the Taliban, maybe, assuming we realize that they are provisioned via ‘our’ Afgan military recruitment efforts.

    What a mess.

  31. We corvids are rooting for real shooting wars, at least as long as they don’t go nuclear–can’t eat radioactive food. Looks like we’re going to get them. Prof. Johnson, how long do we have? Is there anything to be done before disaster?

  32. agreed we need five year plans, companies have them, universities have them,indivuals have them, our country is satuarated with fake leaders, we need real leaders, we need a leadership university, our elite are failing us, we have some of the worlds best and brightest minds, we have a history of building and creating amazing things, we just needs some organization and leadership already, bill maher said it great last night, how is obama’s first commission on the deficit and not jobs, and not the corruption on wall street, or not on the creation of whole new industries like green/envirnment, or on creating another manhatten project on the transportation front, washington is making this nation pathetic

  33. i turned on sean hannity onthe radio to see what his propoganda is up to these days and he argues cutting taxes stirs economic growth always has, always will, yet i hear sane people saying clinton raised taxes, added millions of jobs, and balanced the budget, bush cut taxes added zero jobs, creates largest debt country has ever see, haaaa

  34. prof. michael hudson is saying the qe2 lets our banking industry borrow huge sums of money, low interest, 600billion this week, 2 trillion since 2008, this money is flooding overseas markets, stocks and currency, forcing up the price, making our banks a lot of money, shoring up their books after the crash, he says brazil’s currency sky rocketed in value, 3000% since 2008, helping our banks balance sheets, hurting brazil, he argues the point of us pressuring china is simply to further enrich our banks to help further pull them out of the mess they are, which has lead to a new trading block, of brazil china and russia, no longer trading in us dollars, or something along those lines, i am no pro, i just read a lot of his writing

  35. and quit giving welfare to the american elite, create a flax tax, 20% for all making less than 300k a year, 30% for those making over, closing all loopholes

  36. It is funny to observe that such useless meeting is nothing but wastage of time and money. I would consider such meeting is to impose one party’s interest on others to follow and to humble down some one to show might and power. The attitude and gestures complicate the already complicated issues rather than to solve them.

    It seems until and unless the intention of the countries forming G-20 is sincerely committed to work together rationally with the sole desire to evolve a tangible solution of the problem without egoist attitude against one another I suppose a solution to the problem can of course be found.

    However, to create such congenial atmosphere who would come forward to play the role?

    It is funny to observe that such useless meeting is nothing but wastage of time and money. i would consider such meeting is to impose one party’s interest on others to follow and to humble down some one to show might and power.The attitude and gestures complicate the already complicated issues rather than to solve them.

    It seems Until and unless the intention of the countries forming G-20 is sincerely committed to work together rationally with the sole desire to evolve a tangible solution of the problem without egoist attitude against one another I suppose a solution to the problem can of course be found.

    But to create such congenial atmosphere who would come forward to play the role?

  37. Re: @ The Raven___The Cowbirds must all be in allignment for disaster to be brought about___remember this, “Everybody wanted WWII?” is not the case today,…

  38. This is a reply to your post, but off-topic, but appropriate bc of Veterans’ Day/Remembrance Day: When you say, “his lack of respect for our military …” I emphatically disagree. You don’t provide any support/examples, but right off the bat I think about 1. Shinsheki as VA Secretary, 2. the new GI bill, 3. “End of combat units” in Iraq, and 4. the no-nonsense Bob Gates as Defense Secretary. I think that shows a great deal of respect.

  39. ian,

    You can’t go wrong reading M.Hudson. Nobody is as right, as often.

    The real though, has risen 39% since 1/1/2009, and 30% since March of 2010. Mostly due to carry-trade dollars being exchanged for reals which are then invested mostly in Brazilian G-bonds.(you have it mostly correct although it is essential to understand that it is when investors convert their invested reals back into dollars that causes even worse problems than the inherent appreciation.[This re-conversion also has the potential for boo-koo, secondary gains])

  40. Well, Obama is the one who was left holding the bag. The Republicans didn’t want it, otherwise that washed-up over-the-hill mavericky non-maverick wouldn’t have won the nomination. Obama turns out to be just a place-holder, carrying on the same policies as his predecessor, revealing that the US is getting to the end of the line. The modus operandi of financial manipulations seemed to be working, but the wealth produced was illusory, unsustainable. To change metaphors, the airplane has almost reached stall point. What will follow – a controlled dive or will it tumble out of the sky? The latter possibility corresponds, I guess, to a Palin presidency, pretty remote I’d say.

  41. The food weapon – get the Chinese eating more fat and sugar, that’s the answer! Heart disease and diabetes are the stealth armaments of the future.

  42. If we read back in history, we see that for centuries China was the dominant economy in the world. Centuries. Its powers were interrupted temporarily by British imperialism, but China is reverting to its mean once again. Chinese power is not new.

    So the only question for us now as China returns to form is whether we will end up a close second, or whether we get caught up in the sleazy ‘prestige’ of our large banks and allow our wonderful country to fall to ruin.

  43. There once was a country with massive exposure,
    to living off credit without much composure;
    now their future is set,
    ‘cause they buy their own debt,
    and their fifty states are all in foreclosure.

  44. Why the surprise? The U.S. thinks it’s still an international player despite the fact that it’s become a Third World craphole of corruption & fraud.

    Go ahead and stick a fork in the USA: IT’S DONE!!!!
    I’d like to see you swindling bastards try to invade your way out of THIS one.

  45. The difference being that the dynasty which currently sits upon the Dragon Throne is not Confucian in nature. The question becomes, can Maoism function as effectively as Confucianism did in crisis. We are barreling toward an ecological crisis (which is the general precipitating event in the fall of a dynasty – massive drought leads to famine, famine is interpreted in the provinces as the loss of the mandate of heaven, revolution, a generation of chaos, then a new dynasty emerges). The Maoist dynasty ignores this cycles at it’s peril.

  46. How can anyone seriously accuse a man who has significantly increased the military budget by hundreds of billions of dollars, who has steadfastly refused to investigate or prosecute any crimes they might have committed, and who has increased the number of countries in which the US military is deployed of not respecting the military. Obama has too many failings to list them all here, but one of the biggest is his kow-towing to a our military and refusing to challenge their dominance of our country.

  47. I thought the Annoited One was going to get along famously with the World…to include what GWB called the Axis of evil…heck, he can’t even get a deal with our friends/allies

  48. The Financial Crisis and America’s Political Duopoly

    November 12, 2010 – Huff Post – excerpts

    “What unites the midterm election results, the recommendations of the bipartisan deficit reduction commission, the Federal Reserve’s decision to spend another $600 billion to keep interest rates down, the failure to address the foreclosure crisis, and America’s worsening relations with its G-20 partners? And, more generally, what explains the Obama Administration’s toothless response to the financial crisis, in particular its reversion to status quo regulatory and economic policies over the past two years?

    In making my documentary on the financial crisis, Inside Job, I obsessed over these questions. Some argue that President Obama, as a matter of individual personality, is averse to confrontation; others say that, lacking financial experience while being forced to confront the most severe crisis since the Great Depression, he was hostage to his campaign advisers, who happened to be Clinton-era insiders who had helped cause the crisis. Gradually, however, I have come to a different conclusion, one based on a more fundamental, structural problem in American politics.

    My answer is this: far from being in an era of brutal partisan warfare, as conventional wisdom holds and as watching the nightly television news might suggest, the United States is now in the grip of a political duopoly in which both parties are thoroughly complicit. They play a game: they agree to fight viciously over certain things to retain the allegiance of their respective bases, while agreeing not to fight about anything that seriously endangers the privileges of America’s new financial elites. Whether this duopoly will endure, and what to do about it, are perhaps the most important questions facing Americans.

    The current arrangement all but guarantees the continuing decline of the United States as a nation, and of the welfare of the bottom 90% of its citizens.

    The political duopoly arrangement, with its emphasis on intense fighting over values issues, serves to divert attention from the financial sector’s “quiet coup,” to use the economist Simon Johnson’s phrase, and to divide potential opposition to it.”


    – Director of the Wall Street documentary ‘Inside Job’

  49. that makes sense, like stock, if i buy a trillion shares of gm the price goes up, has to, than i sell em all, and gm is screwed as the price free falls, but i got mines

  50. pipo,
    Try to look at the bright side of life. Enjoy the eye candy of Sarah’s caboose and take on a “temporary suspension of disbelief” that the large percentage of illiterates listening to Glenn Beck in their trailer homes are not going to run out and vote for the woman in 2012.

    Sure it’s delirious, but conducive to mental health.

  51. It’s been said he’s not the warmest guy in the world. Maybe there is some inexperience showing through. Another 15 years of getting knocked around in life might have done him some good before jumping into the WH.

  52. I’m reminded again of the three stages of warfare.
    (1) You begin with “diplomatic warfare” which pretty much describes this year’s G-20. And when that doesn’t work (which it did not), a country(s) will resort to

    (2) Economic Warfare. The “destructive trade war” you refer to. And when that war reaches an unresolved climax, there follows:

    (3) Military Warfare. Think WWII and how this sequence with Japan went from diplomatic to economic to military.

    A simple theory, and one I believe that China is preparing for. Not sure how relevant Europe is.

  53. Setting your nasty crack about people who live in trailer houses, Glenn Beck has become the voice of America. All one has to do is look at the election results and the overall mood in the country.

    From my experience, at 69, the illiterates are everywhere and at every level. If one’s prejudices are the mark of a man, so be it.

  54. “I shudder when opening mail,
    And my sinking accounts make me wail.
    I would sure like to beat
    Up those guys on the Street,
    But I fear that I can’t afford bail.”

  55. http://therealnews.com/t2/index.php?option=com_content&task=view&id=33&Itemid=74&jumival=634

    Hot Money Creating Havoc in Global Economy
    Kevin Gallagher: Countries Using Capital Controls to Defend Against Speculators
    Go to story | Go to homepage


    Austerity Road to 19th Century
    James Crotty: Right-wing billionaires used crisis to weaken social safety net
    Go to story | Go to homepage



    Jane D’Arista: This crisis has brought forth the notion of class warfare, the haves vs. the have-nots July 28, 2010

  56. Friedman defends Greed as Good:

    Simon Johnson:
    It is curious that you choose to posture the “currency wars” as deriving solely from the behavior of China:

    “The Chinese are digging in hard on their exchange rate; this is headed towards a mutually destructive trade war.”

    Anyone studying the language of choice in your article on that subject (press the link in point #1)would be hard pressed not to call this an American business posture if not an apologia for attempting to press old tricks against a wounded and weary global community. Did you really tell the naive public that the USA does not manipulate currencies because the dollar floats. Text book answer but totally untrue in the real world of systemic and interdependent counterbalances. Did you really tell the public that the reason we pressured the G20 (which they did not support or buy with good reason) to consort against the Chinese currency was for “labor” and jobs in the USA? WOW! Mutually Assured Production! (And you can hire an international team of physicists to go in and find them just like Bush in Iraq!). But apparently the global community wasn’t buying that scenario this time around. It seems they were more concerned with the issues exploiting a counterproductive carry trade, of capital flight and capital controls to stop the recurring financial abuses not to hide them.

    Meanwhile Obama is doing sales for the oligarchy with essentially arms deals and a Friedman-esque speech to India while attempting to have South Korea sign another one of those ifty bilateral trade agreements. You know the ones that prevent the host country from protecting itself when it is being gutted and sacked by financial capture and flight? Am I mistaken, or was that really what the G20 group was talking about (not free access to the IMF money window as you footnoted) when they talked about designing protection for countries against the free flow of capital? Geeze! I was beginning to understand that there are 2 Simon Johnsons; and the MIT entrepreneur is clearly as one sided as some of the asymmetrical trackies in the business boom cycle of bottom out scenarios.

    Here’s Obama’s protegee for the American position that failed at this G20…which may not be a total failure for the real people of the world:

    Friedman defends Greed as Good:

  57. 1. India and China are only doing what your companies wanted
    for 100 years which is another market to sell to.
    2. So 100 years of White Man polluting and destroying
    the Carbon cycle and Nitrogen Cycle is fault of the brown people.

    Don’t worry about the environment, worry about
    Oil peaking out your lifestyle depends on it.
    and that your kid will have to deploy to Iran to fend of
    the brown people from your oil.

    Dumb ass.

  58. For some alternative perspectives:
    Read whole article :http://www.spiegel.de/international/world/0,1518,727970,00.html
    Two weeks ago, Geithner followed up on his complaints with action when he proposed a mechanism that would require countries with trade surpluses to modify their fiscal and economic policies in ways that would stimulate domestic demand. This would enable these countries to import more, said Geithner. In other words, countries with a trade surplus should voluntarily give up their competitive advantages for the benefit of the United States.

    A Bombardment of Communiqués

    Geithner failed to get his way at a meeting of G-20 finance ministers two weeks ago. Now, President Obama has decided to take matters into his own hands, and he is hell-bent on advancing the issue at this week’s summit.

    The White House and the US Treasury Department have bombarded their partner countries with memos and draft communiqués explaining their ideas. Washington wants to see countries with a trade surplus or deficit exceeding 4 percent of GDP subjected to heightened observation or required to change their policies. The Americans are doggedly sticking to this quantitative benchmark.

    The German government is not prepared to bow to the will of the battered hegemon. “The proposal is not acceptable for Germany under any circumstances,” German Finance Minister Schäuble said in a SPIEGEL interview. His ministry’s policy is clear: “We reject non-cooperative solutions.”
    EXCERPT FROM http://www.spiegel.de/international/world/0,1518,727970,00.html

    ALSO SEE: http://www.spiegel.de/international/world/0,1518,728765,00.html (FOLLOW UP ARTICLE)


    Thank G20 It’s Friday – Yet Another Global Clusterfuss BY PHILIP DAVIS Friday, November 12, 2010

    It is difficult to imagine how G20 could resolve differences when “Mutually Assured Production” is not on the real agenda. The US political / financial elitists can’t even service its own domestic economy. A good many of us believe that it is not only rigged but riddled with criminality and fraud, and yet there is no will to prosecute or even a serious will to pursuit legitimate restraints. We are talking about people who are doing the work of God! They don’t really need anyone else!!!

  59. Simon, although this brief and accurate analysis got 78 responses before mine, I must say that the actual article, brief as it was, was entirely unnecessary, unless you consider it important to preach to the choir. I would presume, without reading more than a couple of the responses, that most of them focus on side issues or reinforcements, and or agreements with what you wrote.

    My comment, along the lines of unnecessary, is that anyone (beyond the usual crap media pundits) who actually had any expectations of any kind of remote “success” in the G20, are, or must be aliens from another planet, universe, or just plain insane. The cliff at which the Ship of Fools (our political leadership, globally) and Plutarchs, is pointed leads downward to a bottomless chasm. I actually question the survival of the human race in anything akin to its present composition if this self destructive path continues.

    Taking a long view of this problem, it appears that what the world’s leadership wants is almost critically misaligned with what is actually best for the planet. We can talk economics if you wish, but, in this case the considerations are transcendent of econmics by an order of magnitude. Perhaps someone would like to parse the issues and explain just how the G20 is even interested in any kind of realpolitik global cooperative effort. This is where mankind’s nasal apparatus is looking very Bergeracish, and the job of severing is preparing to take place in spite of any optimism which graces its countenance. If we continue in the direction in which we are traveling, we will be experiencing global social insanity, that is expecting the same things we have done for decades to somehow succeed when all we have actually done is continue kicking the can of progress toward oblivion. Can no one see? Does anyone actually care? Or is this the flaw in humanity. When the stage gets this large and the problems this immense, then no one seems to be able to get any real focus, and spends every living moment trying to exert the same old parochialism at a time when a global sanity is required. How much energy, effort, intellect, etc., can we spend without solving problems with such obvious solutions.

    In the past we had treaties, we had compromises. Somehow leaders were able to understand the stakes, and understand that to get half a loaf was better than dieing of starvation. Now we get can-kicking platitudes, saber rattling, and resignation. And, of course, the big problem is that the basis of world power is world oligarchs, and they don’t relate to humanity at all. The chasm is larger than it’s ever been, and to get to the other side is a bridge too far.

  60. Just gotta love you folks over here Calvin and his stupid bigots crack and the travelr64 and his speaking about economics. You guys really need to get out of your basements and move out of mommy’s house. Get a life and learn how to debit with out calling people names for a change some one might give you credit for having a brain then.

  61. Ken it is not only Obama it is the all the branches in the hands of the democratic party that did the job to the country and lets not forget the 13 trillion in debt we are now because of it your president has spent more money in 2 years then all the previous presidents combined or did you miss that part.

  62. I agree with Mr. Waterbury regarding low-to-no expectations for positive change via the G20 mtg. I do appreciate Mr. Johnson’s post, however, as it remains necessary to follow the outcomes of such to develop a “read” on nuances.

    We all need to understand these layered nuances to survive the coming worldwide economic volatility.

    I do so hope Haig’s three stages will not come to fruition in the current scenario but I do acknowledge evidence of this progression.

    Mr. Woych makes an excellent point when questioning the outcome motivations of our political and financial elite. This is of grave import.

    Anonymous ponders how maoist leanings will evolve in times of economic/political crisis vs confucianism. A very interesting and relevant question. I would add a complicating twist of insidiously, creeping western values melded with Maoism.

    I greatly appreciate those posters who refrain from personal sniping towards others who post. There are enough “useless daily diatribes” to which we are subjected compliments of our politicians, we frankly do not need further subjugation via this blog.

    A free flow of ideas with supporting data is infinitely more useful.

  63. so? at least one lawyer in USA would figure out that calculating a 39 hour straight work shift for a worker would end up in a law suit – murder by reckless math

  64. Stop having these meetings because they are turning into a global $$$ version of the Israeli-Palenstine “Peace” Talks – 783 “talks” and the only thing to come out of each and every “talk” is the addition of one more item to the 2000 year old list of grievances against the other side.

    BTW – at least 80% of the posts here have a sub-conscious philosophical foundation in Nihilism – perhaps an AA-like program for the “elite” to help them get rid of the dopamine addiction to sadistic fetishes?

  65. It is not the Political Duopoly but Duoligarchy!

    The financial oligarchy is becoming well known; its twin, the military oligarchy, is a forbidden subject for Americans. In fact it is one giant, intertwined military-industrial-financial-political oligarchy. Add to the mix, the self-deceiving and colluding mass media.

  66. Have you SEEN any recent photos from China? There is no “organic food” on the planet that can protect a person against that much toxic waste.

    Something to be said for “free speech” on this blog, the diagnosis of sociopath is quick and accurate DATA.

  67. Excellent observation. Confucianism was an entire ordering of society the Maoists supplanted with extreme prejudice. The Maoist dynasty is transitioning from a rule of arbitrary violence to state-directed mercantilism. It is not clear Maoism has the internal cohesion that allowed the Confucian dynasties to succeed for so long.

    Nor is it clear whether mercantilism will be a step along China’s evolution — as it was in post-feudal Europe — or if China will ossify at this stage. More than a few demographers have observed China might very well be old before it’s rich.



  68. ” Cerberus, Greek form: Κέρβερος, [ˈkerberos] in Greek and Roman mythology, is a multi-headed hound (usually three-headed) which guards the gates of Hades, to prevent those who have crossed the river Styx from ever escaping.”

  69. This G20 meeting could not have come at a worse time with the loss of House seats. It does not matter how one voted, but President Obama is now a lame duck. The world knows he is one and right or wrong we the people are showing a very divisive mind. This meeting was too close to the elections and not far enough away to have had a compromise bill showing a bit of unity. Right now, I am guessing, many in the G20 see Republicans who are more in line with their austerity measures coming in the next two years with a presidential election and they do not have to play nice.
    You need to add that many countries do not like QE2 (the ship is sailing on that one and whether it will sink or find new shores…). As I have said in other places, I agree that we do not need QE2 now. Inflation is already here even with the decline in commodities on Friday with China’s announcement on interest rates. Everything I have studied on Japan in the 70’s, it was not their QE that helped them, but global inflation. They were further aided with the VCR, which they started to build and took electronics from Germany and France. This is the key to coming out of this for a bit. To me it is amazing that we are acting like an old economy when with immigration we have a demographic bulge making its way to the top, but not a reversed pyramid like Japan.
    If we could get business to look at my proposal of a paired older worker with a younger just graduated worker, we should be able to get past this imbalance. This would then give younger people a chance to pay off student loans, set-up a house, etc., which brings a country forward in terms of spending and lets the older worker work on their savings, take their vacations, etc. Both groups get to learn from each other and yet are responsible for their own work. Who knows maybe the 6 hour day might become the norm. This lets those who are spending the most on families age 35 – 55, work full time. This also lets those older people who wish to work longer, work until they are ready to retire and not have to take the perceived needed SSI at 65, but they can wait until they actually retire with no loss of SSI. As with all social idea changes, this needs to be done voluntarily, but the gains both economically and in terms of retained business/technical skills knowledge is insurmountable.

  70. I would like to add since everyone is worried about Medicare; those who are working longer can stay on their health plans longer. This is only an observation and I am sure I can find a study to back this, but workers who work longer, tend to have better health with the daily mind exercise and physical work; plus, the feeling of purpose by having something to go to every day.

  71. Annie,

    I’m not sure if I understand your comment, in fact I find many of your comments less than clear.

    But, if you are suggesting that China is responsible for more environmental damage than the US, that is not entirely true. The US carbon footprint is of course about 4 times that of China’s on a per-capita basis.

    Plus, if the end consumer is given responsibility for pollution created, then Americans are far more destructive than any other population regardless of the standard. Add to that the fact US/MSM pollute far more globally than the platform companies of any other nation (over 50% of all MNCs are US based), and what damage China is ‘doing’ is minor compared to what the US is responsible for doing, and that doesn’t count what has been done by Americans in the past.

    Go see Nicaragua or most any nation in Latin America some time. Or consider what our militarism leaves behind.

    Then, consider that the number of dead-zones has risen from less than 100 in 2003, to over 400 at the last count in 2008. And then ask yourself which nation in the world has far and away the most influence over all matters of commerce? Americans are vastly more destructive than any people in the history of the planet, they are mostly just too delusional about themselves to know it.

    It feels good to blame the Chinese though, doesn’t it?

  72. Re: @ ZerolnMyOnes & Anonymous___In 1992, Michael H. Hart wrote – Quote: “At the present time, Confucianism is in low estate in China. The Chinese Communists, in an effort to break completely with the past, have vigorously attacked Confucius and his doctrines, and it is possible that the period of his influence upon history has drawn to a close. In the past, however, the ideas of Confucius have proven to be very deeply rooted within China, and we should not be surprised if there is a resurgence of Confucianism in the course of the next century.”
    Sidenote quoted: “The ideals of Confucius, closely grounded as they are in Chinese culture, have not been widely influential outside East Asia. They have, however, had a major impact in Korea and Japan, both of which have been greatly influenced by Chinese culture”

    Mao Zedong: “Maoist”…”The Maoist dynasty ignores this cycle at it’s peril”
    Quote (Hart)___”It seems more appropriate to compare Mao with Lenin, who also lived in the twentieth century. Just as Mao was the leader who established Marxism in China, so Lenin was the one who established it in Russia. At first sight, Mao seems the more important of the two: After all, China has more than three times the population of the Soviet Union. But Lenin preceded Mao, set an example for Mao, and influenced Mao’s thinking. Furthermore, by establishing the world’s first Communist state, Lenin had an enormous worldwide influence, far more influence outside his own country than Mao did.”

    The Author I quote has an uncanny way of predicting pragmatism with subtle clairvoyance, if that makes any sense at all to the astute reader…but it does to me. Thankyou, Simon, and James :-)

    PS. I’d like to say something about “Buddhism”, but I’ve already taken up to much time…Thanks

  73. I too agree. But how to do it? I’ve seen monkey sh-t fights more organized than than our political process in DC!

  74. ian,

    Not exactly. Currency values are more like commodities as each are primarily priced by supply and demand factors. Stocks are more about P/E ratios although they are potentially subject to supply and demand.

  75. In a way it would be nice if Obama just told the global citizens that if they truly appreciate his style of leadership vs. the Bush style leadership in the US that there is a price to pay for it, getting the US economy back on it’s feet. If the world does not prop up the US economy then a Republican President with a nod towards the right will soon take over for Obama and then the world can deal with a more militant US foreign policy. The US MNC CEO’s will more directly pull the strings for the US government and no doubt drive the global economy back into the ditch. There you go world, you didn’t want to economically support Obama in his time of need so now you can deal with a united Republican congress and President. How do you like them apples?

  76. Sounds like you have been to Costa Rica. The locals down there could drive the sh-t throwing monkeys away from the trails but, presumably, the locals enjoy seeing tourists come back from their hikes disgusted and smelly.

    The point is, I’ve encountered those nasty monkeys and they can be very organized. Those having had daily encounters with tourists will in fact wait for their targets to be in a crossfire, then they let go, literally and figuratively. Some groups of monkeys may in fact be too organized for your particular comparative.

  77. The Slaying of the Celtic Tiger

    Nov. 13, 2010 6:53PM EST – Globe and Mail – excerpts

    “Anglo Irish Bank’s unfinished head office pokes into the sky on Dublin’s North Wall Quay, a silent testimony to the rise and fall of the Celtic Tiger.

    The eight-storey shell of what was supposed to be Anglo Irish’s glittering new headquarters is both a symbol of Ireland’s ascent out of a wretched history of poverty and despair and a constant reminder of the massive housing and property bubble whose collapse has sent Ireland cascading into what is effectively national insolvency.

    Anglo Irish is now a ward of the state, a recipient of tens of billions of Euros in bailout money. Ireland itself is a fiscal mess, thanks to a budget deficit that makes Greece’s look like spare change. The real estate market is a disaster, and interest rates demanded by bond investors are so high that the exchequer effectively can’t afford to finance the country.

    The Irish government has some breathing room – it doesn’t have to return to the capital markets until next July. But if that bond auction fails, the country will almost certainly be broke and require a bailout from the European Union.

    Ireland’s virtually collapsed bond market is a painful reminder to investors, politicians, taxpayers and businesses that the euro zone’s debt crisis, triggered by Greece last spring, is far from over. Quite the opposite: More bailouts are all but certain, and a permanent sovereign debt restructuring mechanism needs to be drafted…

    Anyone who bought property in the last five years is in negative equity in this country.”


  78. What would you all say if I told you that as we speak, Republicans & Democrats are working together to repair the damage that is so aptly diagnosed? Stay tuned and do not despair!

  79. Re: @ observer___Obama broke every promise of
    Change…cemented us in Afghanistan for the next decade…tipped-toed around BP…Stuffed health-care reform down our throats…lobbied for independents (TP’s in drag) and shunned the democratic incumbents…watch as american workers and homeowners went belly-up…put in the hole for $2.6Tillion without even creating one-ioda of jobs…gave the banksters and auto industry a free ride…rides around every day in his personal $1,000,000.00 jet day junkets…picks every slug that created the morass were in to be on his cabinet from Bush #43 ,and Slick Willy…etc.,etc.,etc., (a litany of infinity regarding inexperience, and arrogance to come together in the early genesis of his regime) , and you have the audacity to dare say “we didn’t come to his support in our time of need!!!”

  80. I’m not sure I think it is fair for a family with dual income, minimum wage jobs to pay 20% in taxes. Maybe raise the minimum wage and then tax @ 20%?

  81. You liberal bastards! It’s those people in their trailer houses who bust their asses every day that keep this country running and line your worthless Obama lovin’ pockets. YOU DAMNED WORTHLESS PUKE!! You’re not fit to wipe the crap stains out of Sarah Palin’s filthy underwear! She’s a damned fine lady, as governor she did SUCCESSFULLY NEGOTIATE DEALS FOR ALASKA. AND AS GOVERNOR OF ALASKA, SHE RAN INTERNATIONAL SECURITY AND INTELLIGENCE.

  82. Ignore what Ray says below, Ian. You are correct. Ray doesn’t seem to understand that stock prices are 100% determined by supply and demand for shares — it’s a stock MARKET after all.

    P/E ratios have no direct effect on prices since the P in P/E ratio is price itself! A ridiculous statement!

    Shares of stock, currencies, precious metals, agricultural products, etc. are all a commodity in the truest since of the term. Supply and demand determines their prices in whatever unit of measure you wish to measure a price in — USD, gold ounces, sea shells, etc. One share of GM common is just like any other share of GM common — shares are commodities and trade as such. GM’s shares are just very worthless commodities that’s all.

  83. Why is it not fair, and who are you to decide what is fair or not? Just make the tax flat and be done with it — every American paying the same $0.20 on every $1 they earn regardless of how much they earn is certainly “fair” because every American will be treated the same. Personally, I prefer a 0% flat tax for everyone — why punish work and productivity by taxing it?

    We should most certainly touch Social Security and completely overhaul it into a true safety net for only the indigent in our society. Everybody else needs to plan ahead and stop only living — and spending — and borrowing to spend — on the here and now. To create such a program where EVERY American participates was clearly fallacious and stupid because it’s unsustainable. Why does Ross Perot with his billions of dollars need to get a Social Security check every month? It’s stupid, stupid New Deal / Great Society socialism that is putting the U.S. government on the verge of bankruptcy and killing the purchasing power of the Federal Reserve Notes in which we all earn our livings. Heads out of your butts people!

  84. Didn’t Sarah Palin also discover the nation of Afrika, or is it Africa. Anyway, you know the country I mean.

    And just because nations like Afrika can’t be seen from Alaska does not mean that Sarah Palin does not have any applicable experience, like she does with Russia. Back when she had more time on her hands, when she was still the Guvner, she was a regular viewer of the National Geographic channel and the like.

  85. ian,

    What SR22 has told you is nonsense. But I should not be required to explain something as widely known as the fact that P/E ratios make stocks vastly different than commodities and currencies regarding the laws of supply and demand. Believe what you will. But if you want to learn more on this subject the truth lies somewhere between the EMH and the work that won Joe Stiglitz his Nobel for work on asymmetrical information theory. The significance in the acronym: ‘P/E’, is represented here by the ‘E’, not the ‘P’.

  86. Nice comment via fCh! Take a look at these links. They are not the party politik “mind-wash” and dribble, but return to a question of substantial (material) reality and a syntehsis of American cultural transitions and transformations in longer and broader terms.

    Consider the fact that Daniel Bell’s (think tank thinking) End of Ideology and his (Self serving) “Post-Industrial” view of (class formative) “service economy” in an “emergent” capitalistic society…is really…
    JUST A “BUBBLE!” Do you really think the academic elite are prepared to assess their own foundations as part of the global expansion, and perhaps, the soft side of the political “service” economy? Well, the “tenured” class system will not be “the last one standing” and the degeneration to a politcal military will revisit deeper historic times indeed!

    check these out:

    on the resource base reality of diminishing returns:

    Click to access museletter-222.pdf

    (Dr. Livingston,…I presume?) An interesting and thought provoking re-evaluation of our status quo:
    Read the preface:

    Below is another excerpt from the new book:

  87. “‘Refudiate,’ ‘misunderestimate,’ ‘wee-wee’d up.’ English is a living language. Shakespeare liked to coin new words too. Got to celebrate it!'”

    — a Tweet sent by Sarah Palin in response to being ridiculed for inventing the word “refudiate,” proudly mistaking her illiteracy for literary genius, July 18, 2010

    “All of ’em, any of ’em that have been in front of me over all these years.”

    –Sarah Palin, unable to name a single newspaper or magazine she reads, interview with Katie Couric, CBS News, Oct. 1, 2008


  88. Bruce,

    There is what might turn out to be an interesting conversation on this subject over at econbrowser.

  89. Thanks for the heads up on the econbrowser, I will definitely take a look.

    If you like the history of ideas, (or even if you don’t), this article will truly knock you over with the parallels for today. Just a bit over one century earlier ago, it appears that they were arguing over much of the same things:

    Click to access tir_04_4_beito.pdf

    Mugwumps and the political machinery of 1896 – 1900. The names have been switched around… ( standard disclaimer …the names have been changed to deceive the innocent…)…and some issues appear slightly shuffled but here’s the same snake with different skin. The similarities to the present are all too obvious and only goes to prove the old maxim…the more things change; …the more they stay the same!

    Click to access tir_04_4_beito.pdf

  90. Ray: I could not access the current G20 discussion but I was able to retrieve an excellent summation made in mid-Sept. with a number of articles presented. It is direct and no non-sense academics and I am very grateful that you lit up this site. Here’s the link to the articles (with some great commentary):

    (Well apparently the editors here have a problem with sub-texting that link. I found the articles with the econbrowser search box (just print “G20”). It would be great if we can cross these two streams (wasn’t that in one of the star wars movies…?)

  91. Turns out, the post at econbrowser, ‘Losing the Battle, Winning the War?’, fizzled, or so it seems. Had some serious people involved but they seem to have withdrawn. Oh well.

    I wonder what Shakespeare would say about Sarah Palin?
    Probably something like: ‘inwayoverherheadiate’ maybe. Or howdothitcometothisiated.

  92. Yea Jimmy. Who said that you were allowed to have an opinion. This forum is only for regurgitators.

  93. RAY…
    Production of the “Taming of the Shrew” is already underway with Palin in mind (…she is a multi-taker you know…oh! …did I misspell that…?)

    I did find the post at econbrowser, ‘Losing the Battle, Winning the War? with your Brazilliant comment and have added 2cents into the mix (pending approval delay).

    There are multiple links to very smart blogging. It is a great adjunct to this blog and we should mine it routinely to keep SJ and JK sharp and on their toes!
    Now if we can only do something about this censoring editor!!!!!

    Regards, Bruce

  94. I don’t know what you mean by “censoring editor!!!”

    I should go ahead here and admit that I am one of the most censored bloggers on the net.

    I am always commensurately polite and yet blocked at ‘Economist’s View’, ‘Naked Capitalism’, and others; and as you are witnessing at EB, the likes of BR the 2nd, and MC and JDH, the mediocre but well-paid twins, conformistly speaking; and Dean the I-called-the-housing-bubble-only-3-months-after-Hudson’s-article Baker, and yet the prince Jamie-gave-me-credit Galbraith, but missed the fact that we were beneficieres of Hudson’s article, who JG the prince failed to mention because he too dosn’t know the material, but has a good job; and all of these types, are unwilling to have a no-holds-barred-conversation with me.

    I have in fact had comments pulled from threads, which were polite but telling, that allowed my hosts to alter their previous comments (updates), due to what I made inescapable, and so as to avoid embarrassment, they cheated. ‘They’ being influential. ‘Me’ being honest and correct and avoided.

    You being graceful while I am too much.

  95. Earle, thanks for helping me make my point. Your impassioned attack on Obama is exactly the perspective that I was highlighting for our G20 friends.

  96. Thanks for your passion and light!
    As soon as Obama emails me, my depression will be as distant as a star!

    Here’s a link from CASSE sent me this morning. You can download the 10-page summary or put the whole 130-page report in your pipe! Who says the left doesn’t have alternatives?


    Enough is Enough

    Ideas for a Sustainable Economy in

    a World of Finite Resources

    by CASSE Center for Advancement of Steady State Economy


    to read a 10-page summary of the CASSE report, click on

    Click to access EnoughIsEnough_Summary.pdf

    to download the 130 page report, click on

    Click to access EnoughIsEnough_FullReport.pdf

    Marc Batko mbatko1@hotmail.com http://www.freewebs.com/mbtranslations

  97. What a morally relativistic universe you inhabit, ray I love! It it’s not relative to YOU, it’s “less than clear”.

    So how about logic? I wasn’t replying to YOU, I was replying to “Gib” and his “food weapon” fantasy.

    Then you feel the need to give me a lecture when I was actually PROVING by my response that not ALL “Americans” are “destructive”….

    and all that to PROJECT something on to me which I was NOT even remotely thinking – that my response was “blaming the Chinese”.

    I believe I was PERFECTLY clear – and correct – when I said that no “food” can counteract the damage done by the HIGH levels of toxic waste that is being manufactured ever faster as I write.

    Mentally slapping a creme pie in your face.


    It was an oddball sight – past 7 PM on a Sunday evening and a half dozen carts lined up at the cashiers with 8 by 10 area rugs (made in China, India and Belgium), and a half dozen people in line at the display area pointing out to the attendant which one they want – quite a mad shopping rush on area rugs, even for NYC metro area – so I quipped to my friend because the one I came back with a car to get was already gone (in 2 hours)…well, the man in front of us turns around and quips back – these are the best rugs to wrap the body up in for disposal.

    I cracked up – good one.

    It’s not as if anyone is even considering “forgiveness” for being robbed, ridiculed and called stupid for years on end…

    You need to watch who you THINK you can lecture, ray I love…

    Constitutional Convention and BURN the Patriot Act.

    I have the paperwork to prove how the CIA rolled the west with “foreclosure” to fund whatever it is they think they are doing.

    And don’t ever accuse me of being a “damaging American” at the same time you are telling me that my comments are “less than clear” – that psychobabble schtick censored YOU.

    Voted for Kyl again, didja?

  98. No political party or economic philosophy can turn debt into wealth. If wishes were horses, can’t make a silk purse out of a sows ear, the leopard can’t change it’s spots … and so on. Centralized banks have no interest in family/State/local/national/global economies outside of controlling all resources on the planet. Believing otherwise is living in fantasy …

Comments are closed.