Sunday, December 23, 2012

Economic growth is fundamentally about consuming greater and greater volumes of goods, most of them derived from the earth's primary resources. We are now competing with the populations of other countries like China who also want to consume goods derived from the same resources. Until recently, developed countries were able to outbid everyone else for those resources by borrowing more. Now we can't do that any more, so we're pretty much stuffed.Economists are required to forecast economic positions, not rant on about ''finiteness of global resources'' with a one-track mind. Those who persist with that blinkered thinking have failed to grasp how technologies of many types have overcome past predictions of the world running out of materials throughout history.  These people know no more than you or I....Possibly less, because we live in the real world, we see what's happening, and we are not protected by our government jobs for life with no accountability. They are, to use a cliche, no better than soothsayers, witch doctors or Mystic Meg.One should remember the Japanese manufacturing strategy of ''thinner, lighter, smaller, cheaper....''. Efficiencies and new-to-the-world technologies have been with mankind in every generation. It won't be any different in the future.
Every commentator you see in the media focuses on money. Spend more, spend less, create money, whatever. Indeed your comaprison with weather shows the fundamental lack of understanding. Weather behaves in an unconscious way, humans don't.
Economics is about people and therefore society. Greece and Spain (and the UK and US) have profound problems becasue they are not like the Dutch or the Germans or other northern european societies.
The assumption is that an economy is a black box defined by a function that has the same probability distribution and almos invariably Gaussian ... That is, if you inject xbn of currency in then you have the same probability of outputs as all societies react in the same way. When they obviously don't.
These econometric models are garbage. As a teenager (50 years ago now) a school friend recommended I read Asimov's Foundation trilogy. The fact Hari Seldon could not compute the Mule (a black swan event if ever there was) stuck with me and as I have studied probability theory and its relationship with economics it has become obvious that art is a far better determinant of humanity than the mis-application of maths. Never forget banking problems emanate from kiddies with firsts in maths and physics who could manipulate the equations but didn't understand what those equations represented in philosophical terms. They certainly didn't consider Mule characters called mortgage brokers. Since Keynes and especially since the collapse of Bretton Woods the study of money has reigned supreme in economics. The few millenia in which humans traded has been discounted. Yet that trading is the basis of everything. Why would it change just because of fiat money? Trade represents wealth people want, fundamentally worthless fiat money does not.
Money only acts as a pyschlogical tool to exploit knowledge (or create more knowledge) to create that wealth.
That motive force differs from society to society due to culture. Culture being the prism throuh which that pyschological tool works.
Skidlesky's problem (including not realising that qe must have reached the real economy otherwise inflation over the period could not have been maintained) and others is their unwillingness or inability to consider people. It also reflects the system in which they operate whereby remembering any old garbage for a period and repeating it earns plaudits. After all, despite being a fool the Guaridan invites him to comment. Religous schools are praised for exam passes whilst being purveyors of fairy stories and myths. Obviosuy their forte is passing on any old rubbish and this is admired..

6 comments:

Anonymous said...

Despite all the predictions of Mayan apocalypse, the world will probably not end by Saturday morning. How will the believers cope when life carries on?

The clock strikes midnight, the hallowed date arrives and, once again, the apocalypse fails to turn up on schedule.

For such a cataclysmic event, the projected end of the world has come around with surprising regularity throughout history.

Each time a group of believers has been left bewildered at the absence of all-consuming death and devastation.

If they've taking the warnings seriously enough, they will have sold their homes, abandoned earthly civilisation's material trappings and braced themselves for the arrival of a new era.

The latest date to herald widespread alarm is 21 December, which marks the conclusion of the 5,125-year "Long Count" Mayan calendar.

Around the world, precautions are being taken.

Anonymous said...

Temperatures as low as -23C (-9F) and heavy snowfall this month have left the capital Kiev and most of the country under a thick frozen layer.

In western areas, vehicles were trapped in a three-day traffic jam stretching at one point about 20km (12 miles).

The severe weather is also affecting neighbouring Bulgaria and Romania, where six people have reportedly died.

Meteorologists warn that the cold snap in the region could continue and temperatures may drop even further.

Anonymous said...

Army units have also been deployed to help clear the snow on major motorways.

Thousands of "heating shelters" have been set up where those in need - particularly the homeless and the elderly - can receive a hot meal and a warm place to sleep.

But the authorities have been criticised for being slow to react to the adverse weather.

Not everyone is taken care of, critics say, and a number of homeless people know nothing about the emergencies shelters.

"I sleep in the cellar of an abandoned building. I have a roof over my head and nothing else," Dima, a homeless man in Kiev, told the BBC.

Last winter, more than 100 people died from the cold in Ukraine.

Anonymous said...

Thousands of people have gathered at ancient sites in Central America and elsewhere in anticipation of what they believe will be the end of the world.

The date - 21 December 2012 - is, some believe, the end of the "long count" calendar of the Mayan civilisation.

In China, police have arrested hundreds of members of a Christian group who apparently believe the prophecy.

Last year, experts said a new reading of the calendar showed that it did not in fact predict the apocalypse.

Many believe the date instead marks the start of a new era in the calendar.

Continue reading the main story
Maya 'Long Count' calendar
Calendar begins in year corresponding to 3114BC
Moves forward in 394-year periods known as Baktuns
Winter solstice in 2012 marks end of the 13th Baktun
Myth of end of the world based on erroneous reading of Mayan tablet carved 1,300 years ago
Archaeologists and Maya experts say text refers to start of a new era
Life after the (non) end of the world

Among the believers of the "apocalypse" themselves, there are different accounts as to when exactly the world should end.

Some said it would end at midnight on Thursday, while others gave the deadline of just after 11:00 GMT on Friday. Both predictions have failed to materialise.

Another group of followers said they were waiting for Friday's dawn, but that has also come and gone.

Anonymous said...

The Dow Jones industrial average opened down 1.2pc at 13,158.6 in New York as the latest twist threw into disarray attempts to head off $600bn of indiscriminate tax rises and spending cuts that could push the US economy into recession next year.

London's FTSE 100 dropped 0.7pc in early afternoon trading to 5,912.45.

US House of Representatives Speaker John Boehner told a press conference that the House would be prepared to return to Washington from the Christmas recess if needed. Mr Boehner described yesterday's scrapped vote as "not the outcome I wanted," and said that the plan failed because of confusion over proposed tax rises.

"With such a staunch group in the House, it looks as if the odds of going into 2013 without a deal have increased," Kevin Caron at Stifel Nicolaus & Co told Bloomberg. "I don't know whether we're going to reach a deal, when we're going to reach a deal, if there's going to be a deal. It's just a complete wild card at this point."

Anonymous said...

Mario Monti has resigned as Italian prime minister, officials say, keeping a promise to step down after the passing of his budget by parliament.

MPs earlier passed the 2013 budget drawn up by his government with 309 votes in favour and 55 against.

An announcement on whether Mr Monti will take part in elections - expected in February - will probably be made at a news conference on Sunday.

Mr Monti was brought in to form a technocratic government last year.

However, the conservative People of Freedom party of his predecessor, Silvio Berlusconi, withdrew its support for his cabinet this month.

Mr Berlusconi, a three-time prime minister already, is fighting his sixth election campaign.

The new political uncertainty in Italy, the third-biggest economy in the eurozone, has unsettled investors.

'Undecided'

Mr Monti travelled to the presidential palace after a cabinet meeting late on Friday to hand in his resignation to President Giorgio Napolitano.

President Napolitano accepted the resignation and called on Mr Monti to remain as head of an interim administration until the elections, which analysts say will most probably be held on 24 February.

The date will be determined after President Napolitano consults with political leaders on Saturday and dissolves the two chambers.

In his last speech before his resignation, Mr Monti said his 13 months in office had been "difficult but fascinating".