Reply to Global Crisis Article

Christine Lagarde International Monetary Fund

Reply to:

Christine Lagarde: We've made progress since the financial crisis. But there's still more to do

It started long before the collapse of Lehman brothers.  While the collapse of Lehman brothers was, as you stated 
"Looking back today, the pressure points seem obvious. But they were less obvious at the time. Most economists failed to predict what was coming. It is a sobering lesson in groupthink." This was less group-think than mob psychology. Or, as I put it, "buying into the premise.  (EVEN as I write this, Julie Chen on The Talk  CBS Corporation asked the question, "What is more important to you, Function or Fashion?"  The audience cried out-- "Fashion")  This I covered in my article
"Marketing 1959"

Moreover, you said,

"What were these pressure points? At the core was financial innovation that vastly outpaced regulation and supervision. Financial institutions—particularly in the United States and Europe—went on a frenzy of reckless risk-taking. This included relying less on traditional deposits and more on short-term funding, dramatically lowering lending standards, pushing loans off balance sheets through murky securitizations, and more generally, shifting activity to the hidden corners of the financial sector that were subject to less regulatory oversight. For example, the market share of subprime mortgages in the United States reached 40 percent of overall mortgage-backed securities by 2006—up from almost nothing in the early 1990s." 1.  The subprime mortgage programme was instituted contrary to the best financial advice. 2.  Fannie Mae and Freddie Mac were in trouble even as politicians were declaiming their stability.

However, to truly understand this, there must be the cultural transformation. After Ronald Reagan replaced Jimmy Carter, the American culture turned into "a kid in a candy store" mania. Lifestyles of the Rich and Famous took over: How much to fill this bathtub with champagne? How much to fill this bathtub with caviar? Celebrities were paying $22. for a $2. cigar.  I know that because I smoked Macanudo Prince Philip Cafe for $2.  But not after the Rich and Famous took over. Our entire culture was primed (no pun intended) to accept the culture lust for luxury.  This was covered in my article  Ascribed Value--or ridiculous consumption. My most recent efforts, since the EuroCrisis, has been propounding the algorithm: Capital Investment + Economic Stimulus =  Economic Development+ Growth Sincerest regards,
Slim.

Bob Asken
Box 33
Pen Argyl, PA
19072


Copyright (c) 2018 Bob Asken
All rights reserved.

Global Crisis: Global Solution

“A global economic problem requires a global economic solution.”  ~ Slim Fairview

“The military option is no longer viable.  The Economic zero-sum game doesn’t work anymore.” ~ Slim Fairview.

How are things working out globally?  

First of all, recent reports indicate that emerging economies contribute 75% to the global growth.  That would make emerging economies important for the global economy.

Hence I wrote the following.

The G 20 in Good Times & Bad (Not for the G 20 alone, anymore.)

Solving the Emerging Crisis

Emerging Nations Economic Unions

Forming an E 20.

G 20 Summit!  E 20Invited?

The Haves are increasing arithmetically.

The Have-nots are increasing geometrically.

The real challenge is not the difference in the number of dollars between the haves and the have-nots.

The real challenge is the difference in the number of people between the haves and the have-nots.  

This is not a sustainable model.

What we are witnessing globally in migrations is explained by what are politicians are able to deal with.  What we are really witnessing is a basic law of physics.  People are moving from a greater concentration to a lesser concentration.

Now, remember the difference in the number of dollars?  The problem is that money in the industrialised nations has reached a saturation point.  This is the point at which the sponge no longer absorbs water.

This is explained in my article Ascribed Value. Or, ridiculous consumption.

Ascribed Value

The tedium is listening to people forecast the problems with no one offering any solutions.  You can’t solve opportunities. You can solve problems.

Case in point. I’ve been inveighing against Merkel’s Austerity rant with the celerity of a honey badger for 4+ years.  Now, Mario Draghi is “printing money”.  Why? Because austerity failed.

The World is in desperate need of 

Capital Investment

Economic Development

Growth.

This requires a meeting of the minds of world leaders on a single issue.  This is about survival.  Imagine the alternative.  I covered that in The G-20 in Good Times & Bad.

Warmest regards,

Slim

slimfairview@yahoo.com

Copyright © 2015 Bob Asken

All rights reserved.

Antigone Defeats Merkel

Antigone Defeats Merkel

To understand the results of the Greek Election—OXI—we must understand the potency of the story of Antigone written circa 440 B.C. by Sophocles.  Briefly,

Antigone, a young woman in Thebes was the beloved niece of the King, Creon.  Antigone’s brothers get into a brawl and die. Creon orders that Eteocles be buried with honour while the body of Polynices be left to rot and forbids anyone to bury him.  In defiance of this order, Antigone buries her brother, is caught, and is sentenced to death. This shows that no one is above the law.

Flash forward about 1.500 years. In 1944, France is under NAZI occupation. Jean Anouilh resurrects the story of Antigone.  Before it can be performed, however, it must be submitted to the NAZI censors for approval.  The NAZI censors read the manuscript and say, “Good. This will show the people what happens to those who defy authority.”

The French people, however—the occupied French—see the play and understand. “If this young woman can risk her life, and indeed sacrifice her life, to do what is right in defiance of a brutal and unjust authority, then we can…."

Hence, the esprit de corps of the French Resistance Movement is embodied in Antigone.

The closer to the Vote on the Referendum, the more frantic the threats became.  After the Vote—OXI—the response is to punish Greece.

Santayana said, “Those who forget history are doomed to repeat it”

Slim Fairview said, “Those who never learned history are doomed—Period!”

Remember what Humphrey Bogart said to Captain Renault in Casablanca. "Louis, are you pro Vichy or Free French?"

Today, "Are you Pro Merkel or Free Greece?"

 

Before Merkel, Germany, and the ECB decide to punish Greece, I urge them and others to heed this admonition.

“If you take revenge on the People of Greece, the People of the Emerging Nations of the World will remember.”

Warmest regards,

Slim

On the Emerging Nations Global Economic Crisis.

Solving the Emerging Crisis

Emerging Nations Economic Union

Forming an E 20 

slimfairview@yahoo.com

Copyright © 2015. Bob Asken

All rights reserved.

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