From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Fri Sep 28 2007 - 12:28:32 EDT
--- glevy@PRATT.EDU wrote: > > May be it's me who does not understand the > complexity > > of the theory, but I find all such pieces to be > full > > of theoretical confusions and mixing of cause and > > effect. > > Hi Ajit: > > Here's another article (in this case by Alan > Woods)that you (and Jurriaan, > for different reasons) almost certainly won't like: ... > In any event, I'd be interested in hearing what you > and others on the list > think are the causes of the current financial > "crisis" (I put that in > quotes because you or others on the list may or may > not believe there is a > crisis ...yet)? > > In solidarity, Jerry ___________________________ This reads like a journalist reporting without any meaningful analysis. I gave up after reading part one. But here are some quotations just to highlight the problems with such rhetorical writings: (1)"What is now left of the claim that the bankers and capitalists deserve their profits and interest because they are brave pioneers of private enterprise who are being rewarded for "risk taking"? Where is the risk if, when there is a crisis, the government immediately steps in to underwrite all the losses? This is the real face of "market economics". When the market is going up and the banks are making huge profits out of all kinds of swindling and speculative deals, the market rules. But when the economic climate changes and the cold winds begin to blow, they soon forget all about market principles and demand subsidies from the state." (2)"Thanks to the Thatcherite reforms of the 1980s and the deregulation of the City, all this has changed. The bankers are now fully absorbed into the casino world of modern capitalism and addicted to gambling on the stock markets. The problem is that they are gambling not with their own money but with the life-savings and pension funds of millions of ordinary people, overwhelmingly working class or middle class." If (2) is true, which probably is, then would the author want the governments to let the banks collapse so the poor working middle classes lose all their life's savings? If not, then what is the point of the rhetoric in (1)? (3)"The entire banking system is now up to its neck in fraud and swindles of all sorts. This was always the case." Where did the author get his data for the fraud and swindles and how did he arrive at the scientific measure of "up to the neck"? But more importantly, if "this was always the case", then what is "now" doing in the first sentence? (4)"The English economist Gilbart as early as 1834 wrote: "whatever gives facilities to trade gives facilities to speculation. Trade and speculation are in some cases so nearly allied, that it is impossible to say at what precise point trade ends and speculation begins." In Marx's day it was estimated that possibly "nine-tenths of all the deposits in the United Kingdom may have no existence beyond their record in the books of the bankers who are respectively accountable for them."(The Currency Theory Reviewed, etc., pp. 62-63)" Any producer must "speculate" about the future demand and prices and profits, otherwise how and why would she produce? If banks sit on all their deposits then banking system will simply not exist and even capitalism would collapse. 10% minimum reserve requitement is perhaps a conservative figure, what's the problem with that? (5)"This is what both the British and American bourgeois are afraid of. That is why both the Fed and now (reluctantly) the Bank of England are injecting more inflation into the economy. By so doing they may postpone the evil day a little longer, but only at the cost of causing an even sharper and deeper collapse later on. Let us supppose that the city of New Orleans had successfully protected itself from Catherina and I go on to claim, in my conviction that there would be some other hurricane in future that would be even stronger than Catherina, that "By so doing they may postpone the evil day a little longer, but only at the cost of causing an even sharper and deeper collapse later on." What would that mean? Unless I make an argument that the very act of defence of the city would cause the future hurricane to be much stronger, my statement would be considered by most reasonable people to be idiotic. Where is the analysis that the measures to avoid such crises must lead to greater crises? When I was in the US, I remember the big "savings and loan crisis" happened during, I think, Reagan's time. But it was simply managed by the government and it didn't bring about a future meltdown of capitalism. My guess is most of the people don't even remember the savings and loans crisis now. So I don't know what to make of all these poorly reasoned but prophetic articles. If I lived in Florida and kept claiming the big one is coming whenever wind blew at a more than 10 miles and hour; I'm sure one day I will be right and then tell everybody--didn't I tell you so? Wouldn't you bow to me then for being all knowing? Cheers, ajit sinha ____________________________________________________________________________________ Looking for a deal? Find great prices on flights and hotels with Yahoo! FareChase. http://farechase.yahoo.com/
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