CapitalistImperialistPig

WB is flacking for a David Einhorn argument against QE3 (our third bout of quantitative easing) . I happen to not like QE3 much either, but for an opposite reason - it's far to feeble to do much good. Let's start with a somewhat simplified economic identity Production = Consumption + Savings, or P = C + S. Call that conservation of economic stuff. Note that I neglect any fluxes, which is not locally valid, but close enough globally. Recessions and depressions occur when P stops growing or actually decreases. There are a lot of ways that can happen, including exhaustion of a critical resource (the Harappans?), troubles with those fluxes I neglected (think Spain) and other exogenous factors. Many, however, are like the current financial crisis, endogenous effects of non-linearity in the economy. A common characteristic of these latter is that consumption drops making it unprofitable to produce much. The economy is saving so much of its production that it becomes a glu...

Republican's have been quick to play the "class warfare" card, though to date they are the most successful practitioners, having steadily pumped cash to the very rich for nearly two generations now. Chrystia Freeland, in her book Plutocrats , has some hints that Obama's counterattack is aimed at the wrong target. Revolts elsewhere against the power of the super rich have originated mainly in the 1% that Obama targets (and belongs to). Although the 1% make about 15 times as much as the average of the bottom 90%, that pales compared to the factor of 125 multiple for the 0.1% and the much higher multiple for the Romneyesque 0.01%, not to mention the billionaires. The ordinary 1% no they are rich of course, but they are gnawed by envy of the really rich. They have enough money to be in contact with the big rich, but not to enjoy their unique perks. In India, Egypt, and Ukraine, rebellion of the 1% against the special treatment of the super rich oligarchs provided ...

The "make your nation a global laughingstock" competitions are always highly competitive, but Italy has shown a Lance Armstrong like dominance in recent history. Their latest entry consists of convicting some seismologists of not predicting an earthquake . I predict that it will be a long time before any scientific seismology or other predictive science gets done in Italy. To fill in the gap, let me just add my own prediction: Italy is a very seismically active region. It will have earthquakes. If you build crappy buildings with heavy walls and little or no earthquake resistance they will fall and kill people. Nobody knows when.

Paul Krugman often seems puzzled that his intellectual opponents fail to grasp the wisdom of his Keynesian policies. I think his big mistake is that he thinks that they are interested the same kind of mean and median social good that he is. From the standpoint of the rentiers, austerity can look darn good, at least until the house burns down. And then they mostly can just move.

Romney has been saying - for months, apparently - that Syria is Iran's road to the sea. WTF??? Syria does border the Mediterranean, but it shares no border with Iran, which does border on the Caspian Sea, the Persian Gulf and the Arabian Gulf/Indian Ocean. Romney might be cutting funds for Geography education.

Gold, or at least gold money, is a favorite fetish of the Randists, Ron Paulists, and the right-wing crackpotia in general. Fiat money, or anything that is an emergent property of society (to use Krugman's term) drives them nuts. It overflows their shallow intellectual buffers. Krugman puts them in their place. So what is fiat money? It is, as Paul Samuelson put it in his original overlapping-generations model (pdf), a “social contrivance”. It’s a convention, which works as long as the future is like the past. Obviously, such conventions can break down — but then so can things like property rights. In fact, you could argue that almost every asset in a modern economy owes its value to social convention; green pieces of paper could become worthless, but then so could any paper claim, which is, after all, worth something only because laws say it is — and laws can be repealed. And once you realize that a social convention is not at all the same thing as a bubble, several related fa...

According to one account , the World total of financial assets is about $200 trillion, or something like $28,000 per person, on average. Of course they aren't distributed anything like that. About 2/3 of these assets are held in the US and Europe, with another quarter in Japan and China. Latin America rates less than 3.5%. Despite these imbalances, recent history has seen a dramatic increase in both overall wealth and a decrease in inequality. In the US and some of the Europe the middle class has taken a hit, but their loss (or stagnation) has been the gain of newly middle class populations of China, India,and other rapidly developing countries. The percentages of the very poor have declined sharply globally, though they still represent billions.