The market crisis exposes the failure of the neo-con agenda of deregulation, self regulation, privatization and contracting out. The real solution to this crisis as Stiglitz pointed out in 2006 is the socializtion of capital.
Joseph Stiglitz was awarded the Nobel Prize for Economics in 2001.
Gardels: What, then, is the ultimate impact of the Wall Street meltdown of market-driven globalization?
Stiglitz: The globalization agenda has been closely linked with the market fundamentalists -- the ideology of free markets and financial liberalization. In this crisis, we see the most market-oriented institutions in the most market-oriented economy failing and running to the government for help. Everyone in the world will say now that this is the end of market fundamentalism.
In this sense, the fall of Wall Street is for market fundamentalism what the fall of the Berlin Wall was for communism -- it tells the world that this way of economic organization turns out not to be sustainable. In the end, everyone says, that model doesn't work. This moment is a marker that the claims of financial market liberalization were bogus.
Financial markets are supposed to be a means to an end -- a more prosperous and stable economy as a result of good allocation of resources and better management of risk. But instead, financial markets didn't manage risk, they created it. They didn't enable America's families to manage the risk of volatile interest rates, and now millions are losing their homes. Furthermore, they misallocated hundreds of billions of dollar.
We will never achieve perfect stability of our financial markets, or of our economy. Markets are not self-correcting.
Gardels: What set of policies in the advanced countries can make globalization work?
Stiglitz: The prescription for making globalization work is what is generally called “the Scandinavian model.” That means high levels of investment in education, research and technology plus a strong safety net. That of course also entails, as in the Scandinavian countries, a highly progressive income tax.
Far from making these countries less competitive, it has made them more so. Though it may seem a contradiction to conservative ideologues who think cutting taxes is the answer to everything, the fact is that people are more willing to take entrepreneurial risks if they can count on a safety net and if they have the training to be innovative.
In Sweden, the social democrats who fashioned this policy have just been turned out of office. But we should not read that as a some kind of rupture in the social consensus. The new, more conservative government will only be about fine-tuning the model.
SEE:
Blue Throne Speech
Auto Solution
Not So Good News
Huh?
Super Bubble Burst
October Surprise Was The Market Crash
No Austrians In Foxholes
CRASH
Tags
recession,socialism,capitalism,George W. Bush,asset-backed commercial paper ,, stiglitz, globalization, mortgages, FDR, bubble, US, economy, 1933, sub-prime mortgage, Wall Street, crash, recession,Bernanke, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, market crash, free trade, Republicans, recession,
Showing posts with label capitalism. Show all posts
Showing posts with label capitalism. Show all posts
Thursday, November 20, 2008
Friday, November 14, 2008
Huh?
NEW YORK, Nov. 13 /Standard Newswire/ -- The following text is of remarks by President Bush on Financial Markets and the World Economy:
History has shown that the greater threat to economic prosperity is not too little government involvement in the market - but too much.
Huh?
Hoover proves lack of government involvement led to the Great Depression. Here is Republican historical revisionism in it most blatant stupidity.Right wing American ideologues whether Republican, Conservative or Libertarian all try and avoid this obvious fact instead blaming the Smoot Hawley Act which was protectionist for the long Depression. In fact it was Hoovers hands off approach to the markets for three years that created the spiral downward. Smmot-Haweley and protectionist measures in Europe only agrivated that downward rush.
Bush, the Republicans, heck the liberals and the Libertarians in America live in a cloud cookoo land, one that imagines an artisan/farmer free market, free of monopolies, cartels and special business interests tied to the state. A time that is a fiction, a myth, of American Capitalism.
Ain't ever been such a creature nor is it the nature of American Capitalism and Imperialism.
Bush admits that capitalism is in a crisis; Faced with the prospect of a global financial meltdown
nations have responded with bold measures, and at Saturday's summit, we will review the effectiveness of our actions. This crisis did not develop overnight, and it will not be solved overnight.
And his solution is to keep on keeping on, capitalism is great, yep it has crisis, but heck its still the best system ever devised by humans.
This is a decisive moment for the global economy. In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed, exploitation, and failure. It is true that this crisis included failures - by lenders and borrowers, by financial firms, by governments and independent regulators. But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people around the world.
Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell the products they want, and the dignity that comes with profiting from their talent and hard work. The free market system also provides the incentives that lead to prosperity – the incentive to work, to innovate, to save and invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.
A nation that gave the world the I-Pod which is manufactured in China. Because as Reason magazine announced in 1999 that the world of the 21 Century was no longer America as the producer nation but America the consumer/service industry nation. A predicition that failed to understand that this would ultimately lead to a credit crisis, when a nation fails to produce value but rather lives on the value produced by others and lent to them.
Free market capitalism is far more than an economic theory. It is the engine of social mobility – the highway to the American Dream. It is what makes it possible for a husband and wife to start up their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and begin a better career. It is what allowed entrepreneurs in Silicon Valley to change the way the world sells products and searches for information. And it is what transformed America from a rugged frontier to the greatest economic power in history - a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the I-Pod.
Bush went on to defend capitalism, specifically post WWII American Capitalism, which itself is not a free market economy, but one of protectionism combined with state capitalism of the Military Industrial Complex. America subsidizes its aircraft manufacturerers, its agribusiness cartels, its auto industry, and has since WWII. To hear the President proclaim the glory of free markets and free peoples, is to also deny the hisorical reality which is American Capitalism. He further equates Japan's economic boom with American Capitalism, when in reality it is the result of State Capitalism. Japan used the Military Industrial Banking model for its development.
Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems. Free markets allowed Japan - an island nation with few natural resources - to recover from war and grow into the world's second-largest economy. Free markets allowed South Korea to make itself one of the most technologically advanced societies in the world. Free markets turned small areas like Singapore, Hong Kong, and Taiwan into global economic players. And today, the success of the world’s largest economies comes from their embrace of free markets.
South Korea which itself is an other model of State Capitalism, with Military and Finance capital under a pro-USA military dictatorship finally evolving into a manufacturing fordist economy modeled on the success of Japan. As for Singapore and Hong Kong these two islands of free market economies are ruled by dictators, proving that capitalism can function without democracy.
Meanwhile, nations that have pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall. Cuba, once known for its vast fields of cane, is now forced to ration sugar. And while Iran sits atop giant oil reserves, its people cannot put enough gasoline in their cars.
Oh sure free markets really work well, except Cuba is rationing sugar because they cannot compete with American subsidized sugar and the American led economic boycott of their country. No free market here.
As for the Soviet Union it collapsed because it lost the military race under Reagans expansion of military spending, the USA Military Industrial Complex defeated the Soviet Unions Military Industrial Complex. Capitalism did not defeat Communism, rather the American model of State Capitalism proved to be more flexible than the autarchic command economy model used in the Soviet Union. Unfortunately China proves that this autarchic command model can be flexible, and now American Capitalism is beholden to China for its national debt.
But Bush was not the only one to proclaim that Capitalism may be melting down but its still not the problem. In listening to their Republican masters voice, our own Finance Minister and PM echoed Bush's doctrine that capitalism has not failed.
In a piece in the Financial Times, meanwhile, Mr. Flaherty too had rare kind words for the invisible hand, downplayed grand global financial architectural plans and suggested that reform -- like charity -- should begin at home. "The open market system did not fail in this crisis," he said.
Prime Minister Stephen Harper is expected to join U.S. President George W. Bush in a defence of free-market capitalism and resistance to international calls for dramatic re-regulation of financial markets.
The ruling class recongizes that capitalism has once again failed, the bubble burst, the market crashed, what goes up must come down, the business cycle has not been superceded by globalization. The elephant in the room is socialism. The Republican Libertarian argument is to let the market decide, except contrary to their Libertarian dogma that market has come cap in hand to its State to bail it out. Opps. Guess real capitalism does not like the discipline of the marketplace. In attempting to not bail out the working class who is really suffering from this crisis with record home foreclosures, record unemployment and the very real threat of the meltdown of America's core manufacturing centre; Michagan, Bush and Harper need to couch the argument as a question of state intervention. The strawman they set up is to equate state capitalism, state intervention as socialism. Which it is not.
Capitalism cannot continue as it is. Temporary fixes like increased regulation, government bailouts etc. are not a solution to the crisis nature of capitalism. Socialization of capital is what is required. The fact that workers create captial, not business which only produces 'jobs', without workers capitalism collapses. This was clearly seen in Alberta last year during the height of the boom, when neither for love nor money could businesses find enough workers.
The result was many small businesses, you remember them they are the core of the economy according to Bush and Harper. closed.
Workers create captial, they circulate that capital by home purchases and by consuming the products they produce. They fund capital through their pension and benefit plans, pensions are called institutional investors in Wall Street, one of the largest sources of capital available currently.
The Canada Pension Plan fund said Wednesday it ended its latest quarter with a loss of more than $10 billion in the value of its assets, primarily because of the stock market turmoil that has battered share prices around the world.
But president and CEO David Denison said Canadians shouldn't worry that the loss will affect their current or future retirement benefits.
"This fund is designed to be able to withstand this short-term market volatility that we are living through, quite frankly better than any other fund in this country," Denison said in an interview with The Canadian Press.
Here is the true source of capital the working class blue, white and green collar, that produce and consume. And it is the means to change capitalism, the use of workers productive value matched by their pension funds and the corporate pension liabilities which are owed them, with capital from public pension funds, workers can then fund the corporations and run them themselves.
In Quebec there are labour funds as well as the Cassie Popular, the credit unions which have enormous reserves of workers capital to be able to use for promoting workers control of industry. In the rest of Canada workers whose credit unions are mimicing banks, need to take control of them and use this vast reserve of capital to invest in worker controled industries.
With the socialization of capital under workers control, the question of bail outs and regulation of the market become moot.
This is the socialism that Bush and Harper fear. This is why they distort the definintion of socialism equating it with state capitalism and command economies. Which socialism never was about. It is about the need to socialize captial to benefit those who create it; the working class.
It is the working class who are the real investors in capitalism, not those investors on Wall Street who play the market. The working class exists because of capitalism and capitalism exists because of the working class. As this crisis deepens and government intervention fails to stop the melt down, the only solution that will become clear is the need for socialization of capital under workers control.
SEE:
STFU 'W'
October Surprise Was The Market Crash
No Austrians In Foxholes
CRASH
The Return Of Hawley—Smoot
Canadian Banks and The Great Depression
U.S. Economy Entering Twilight Zone
What Goes Up...
Wall Street Mantra
Bank Run
Tags
unionization, labour, , economy, trade union, recession,
socialism,
capitalism,
workers control,
George W. Bush,
asset-backed commercial paper ,, goldhomes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,Bernanke, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession,
History has shown that the greater threat to economic prosperity is not too little government involvement in the market - but too much.
Huh?
Hoover proves lack of government involvement led to the Great Depression. Here is Republican historical revisionism in it most blatant stupidity.Right wing American ideologues whether Republican, Conservative or Libertarian all try and avoid this obvious fact instead blaming the Smoot Hawley Act which was protectionist for the long Depression. In fact it was Hoovers hands off approach to the markets for three years that created the spiral downward. Smmot-Haweley and protectionist measures in Europe only agrivated that downward rush.
Bush, the Republicans, heck the liberals and the Libertarians in America live in a cloud cookoo land, one that imagines an artisan/farmer free market, free of monopolies, cartels and special business interests tied to the state. A time that is a fiction, a myth, of American Capitalism.
Ain't ever been such a creature nor is it the nature of American Capitalism and Imperialism.
Bush admits that capitalism is in a crisis; Faced with the prospect of a global financial meltdown
nations have responded with bold measures, and at Saturday's summit, we will review the effectiveness of our actions. This crisis did not develop overnight, and it will not be solved overnight.
And his solution is to keep on keeping on, capitalism is great, yep it has crisis, but heck its still the best system ever devised by humans.
This is a decisive moment for the global economy. In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed, exploitation, and failure. It is true that this crisis included failures - by lenders and borrowers, by financial firms, by governments and independent regulators. But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people around the world.
Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell the products they want, and the dignity that comes with profiting from their talent and hard work. The free market system also provides the incentives that lead to prosperity – the incentive to work, to innovate, to save and invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.
A nation that gave the world the I-Pod which is manufactured in China. Because as Reason magazine announced in 1999 that the world of the 21 Century was no longer America as the producer nation but America the consumer/service industry nation. A predicition that failed to understand that this would ultimately lead to a credit crisis, when a nation fails to produce value but rather lives on the value produced by others and lent to them.
Free market capitalism is far more than an economic theory. It is the engine of social mobility – the highway to the American Dream. It is what makes it possible for a husband and wife to start up their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and begin a better career. It is what allowed entrepreneurs in Silicon Valley to change the way the world sells products and searches for information. And it is what transformed America from a rugged frontier to the greatest economic power in history - a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the I-Pod.
Bush went on to defend capitalism, specifically post WWII American Capitalism, which itself is not a free market economy, but one of protectionism combined with state capitalism of the Military Industrial Complex. America subsidizes its aircraft manufacturerers, its agribusiness cartels, its auto industry, and has since WWII. To hear the President proclaim the glory of free markets and free peoples, is to also deny the hisorical reality which is American Capitalism. He further equates Japan's economic boom with American Capitalism, when in reality it is the result of State Capitalism. Japan used the Military Industrial Banking model for its development.
Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems. Free markets allowed Japan - an island nation with few natural resources - to recover from war and grow into the world's second-largest economy. Free markets allowed South Korea to make itself one of the most technologically advanced societies in the world. Free markets turned small areas like Singapore, Hong Kong, and Taiwan into global economic players. And today, the success of the world’s largest economies comes from their embrace of free markets.
South Korea which itself is an other model of State Capitalism, with Military and Finance capital under a pro-USA military dictatorship finally evolving into a manufacturing fordist economy modeled on the success of Japan. As for Singapore and Hong Kong these two islands of free market economies are ruled by dictators, proving that capitalism can function without democracy.
Meanwhile, nations that have pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall. Cuba, once known for its vast fields of cane, is now forced to ration sugar. And while Iran sits atop giant oil reserves, its people cannot put enough gasoline in their cars.
Oh sure free markets really work well, except Cuba is rationing sugar because they cannot compete with American subsidized sugar and the American led economic boycott of their country. No free market here.
As for the Soviet Union it collapsed because it lost the military race under Reagans expansion of military spending, the USA Military Industrial Complex defeated the Soviet Unions Military Industrial Complex. Capitalism did not defeat Communism, rather the American model of State Capitalism proved to be more flexible than the autarchic command economy model used in the Soviet Union. Unfortunately China proves that this autarchic command model can be flexible, and now American Capitalism is beholden to China for its national debt.
But Bush was not the only one to proclaim that Capitalism may be melting down but its still not the problem. In listening to their Republican masters voice, our own Finance Minister and PM echoed Bush's doctrine that capitalism has not failed.
In a piece in the Financial Times, meanwhile, Mr. Flaherty too had rare kind words for the invisible hand, downplayed grand global financial architectural plans and suggested that reform -- like charity -- should begin at home. "The open market system did not fail in this crisis," he said.
Prime Minister Stephen Harper is expected to join U.S. President George W. Bush in a defence of free-market capitalism and resistance to international calls for dramatic re-regulation of financial markets.
The ruling class recongizes that capitalism has once again failed, the bubble burst, the market crashed, what goes up must come down, the business cycle has not been superceded by globalization. The elephant in the room is socialism. The Republican Libertarian argument is to let the market decide, except contrary to their Libertarian dogma that market has come cap in hand to its State to bail it out. Opps. Guess real capitalism does not like the discipline of the marketplace. In attempting to not bail out the working class who is really suffering from this crisis with record home foreclosures, record unemployment and the very real threat of the meltdown of America's core manufacturing centre; Michagan, Bush and Harper need to couch the argument as a question of state intervention. The strawman they set up is to equate state capitalism, state intervention as socialism. Which it is not.
Capitalism cannot continue as it is. Temporary fixes like increased regulation, government bailouts etc. are not a solution to the crisis nature of capitalism. Socialization of capital is what is required. The fact that workers create captial, not business which only produces 'jobs', without workers capitalism collapses. This was clearly seen in Alberta last year during the height of the boom, when neither for love nor money could businesses find enough workers.
The result was many small businesses, you remember them they are the core of the economy according to Bush and Harper. closed.
Workers create captial, they circulate that capital by home purchases and by consuming the products they produce. They fund capital through their pension and benefit plans, pensions are called institutional investors in Wall Street, one of the largest sources of capital available currently.
The Canada Pension Plan fund said Wednesday it ended its latest quarter with a loss of more than $10 billion in the value of its assets, primarily because of the stock market turmoil that has battered share prices around the world.
But president and CEO David Denison said Canadians shouldn't worry that the loss will affect their current or future retirement benefits.
"This fund is designed to be able to withstand this short-term market volatility that we are living through, quite frankly better than any other fund in this country," Denison said in an interview with The Canadian Press.
Here is the true source of capital the working class blue, white and green collar, that produce and consume. And it is the means to change capitalism, the use of workers productive value matched by their pension funds and the corporate pension liabilities which are owed them, with capital from public pension funds, workers can then fund the corporations and run them themselves.
In Quebec there are labour funds as well as the Cassie Popular, the credit unions which have enormous reserves of workers capital to be able to use for promoting workers control of industry. In the rest of Canada workers whose credit unions are mimicing banks, need to take control of them and use this vast reserve of capital to invest in worker controled industries.
With the socialization of capital under workers control, the question of bail outs and regulation of the market become moot.
This is the socialism that Bush and Harper fear. This is why they distort the definintion of socialism equating it with state capitalism and command economies. Which socialism never was about. It is about the need to socialize captial to benefit those who create it; the working class.
It is the working class who are the real investors in capitalism, not those investors on Wall Street who play the market. The working class exists because of capitalism and capitalism exists because of the working class. As this crisis deepens and government intervention fails to stop the melt down, the only solution that will become clear is the need for socialization of capital under workers control.
SEE:
STFU 'W'
October Surprise Was The Market Crash
No Austrians In Foxholes
CRASH
The Return Of Hawley—Smoot
Canadian Banks and The Great Depression
U.S. Economy Entering Twilight Zone
What Goes Up...
Wall Street Mantra
Bank Run
Tags
unionization, labour, , economy, trade union, recession,
socialism,
capitalism,
workers control,
George W. Bush,
asset-backed commercial paper ,, goldhomes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,Bernanke, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession,
Tuesday, November 04, 2008
October Surprise Was The Market Crash
On the Sunday News Talk Shows and on the American cable news channels the pundits all commented on how this election there was apparently no October Surprise.
In American political jargon, an October surprise is a news event with the potential to influence the outcome of an election, particularly one for the presidency.
No October Surprise???
What do you call this.......Mutual funds plummet in October as global credit crisis grows
THE US stock-market crash appeared to draw to a close with the month of October, as a gain in the final session helped shares to stellar returns for the week.However, consumer-spending data and a steady stream of layoffs suggest the bear market is not over yet. The Dow Jones Industrial Average rose 144.32 points, or 1.57 per cent, to 9325.01, for its first two-session gain since September. For the month of October, the Dow fell 14 per cent, its biggest percentage drop since August 1998. It could have been worse: Until Tuesday's rally helped it bounce 11 per cent this week for the best weekly return since 1974, the Dow was looking at one of the worst months in its 112-year history. The Nasdaq Composite rose 22.43 points, or 1.32 per cent, to 1720.95, gained 11 per cent on the week and finished the month with a loss of 18 per cent. The Standard & Poor's 500 rose 14.66 points, or 1.54 per cent, to 968.75, helping it to a 10 per cent gain for the week. In October, the broad S&P 500 fell 16.9 per cent, its worst month since the date of another infamous crash, October 1987. "It was nuts," said Joseph Saluzzi, co-founder of agency brokerage Themis Trading, of the October action. "There was a time there in the middle of the month people were afraid, thinking: 'What is really happening here? Is this the end of the world? What's going on?'
It cost McCain the election when he insisted that the fundamentals of the economy were good as the market came tumbling down.US Election Panel: 'It was close until the credit crunch
Wall Street collapsed right on top of McCain
Point: Dan SchnurThe most decisive event in this campaign wasn't anything either of the candidates said at their respective conventions or in any of the debates. It wasn't a sound bite from a speech or interview, or a memorable assertion in a television commercial or e-mail attachment. The turning point in this election didn't happen on the campaign trail but rather on Wall Street. In the last week of September, the race was essentially tied. Then Wall Street collapsed -- and it collapsed right on top of John McCain.In the first week or two after the extent of the economic meltdown became apparent earlier this fall, what had been a closely contested election broke significantly in Barack Obama's direction. The worst month for the Dow Jones industrial average in more than a decade made McCain's national security credentials almost irrelevant to voters frightened about their economic futures. Just as the success of the troop increase in Iraq and the rise in gasoline prices earlier this year represented real-world events that boosted McCain's support, the political ramifications of the rapidly spreading economic crisis have been of immense assistance to Obama's efforts to convince voters as to the necessity of a change of course in Washington.
SEE:
McCain A Socialist
No Austrians In Foxholes
tagsGreat Depression, John McCain, market crash, free trade, Republicans, recession, asset-backed commercial paper ,, goldhomes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,October Surprise, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession,
In American political jargon, an October surprise is a news event with the potential to influence the outcome of an election, particularly one for the presidency.
No October Surprise???
What do you call this.......Mutual funds plummet in October as global credit crisis grows
THE US stock-market crash appeared to draw to a close with the month of October, as a gain in the final session helped shares to stellar returns for the week.However, consumer-spending data and a steady stream of layoffs suggest the bear market is not over yet. The Dow Jones Industrial Average rose 144.32 points, or 1.57 per cent, to 9325.01, for its first two-session gain since September. For the month of October, the Dow fell 14 per cent, its biggest percentage drop since August 1998. It could have been worse: Until Tuesday's rally helped it bounce 11 per cent this week for the best weekly return since 1974, the Dow was looking at one of the worst months in its 112-year history. The Nasdaq Composite rose 22.43 points, or 1.32 per cent, to 1720.95, gained 11 per cent on the week and finished the month with a loss of 18 per cent. The Standard & Poor's 500 rose 14.66 points, or 1.54 per cent, to 968.75, helping it to a 10 per cent gain for the week. In October, the broad S&P 500 fell 16.9 per cent, its worst month since the date of another infamous crash, October 1987. "It was nuts," said Joseph Saluzzi, co-founder of agency brokerage Themis Trading, of the October action. "There was a time there in the middle of the month people were afraid, thinking: 'What is really happening here? Is this the end of the world? What's going on?'
It cost McCain the election when he insisted that the fundamentals of the economy were good as the market came tumbling down.US Election Panel: 'It was close until the credit crunch
Wall Street collapsed right on top of McCain
Point: Dan SchnurThe most decisive event in this campaign wasn't anything either of the candidates said at their respective conventions or in any of the debates. It wasn't a sound bite from a speech or interview, or a memorable assertion in a television commercial or e-mail attachment. The turning point in this election didn't happen on the campaign trail but rather on Wall Street. In the last week of September, the race was essentially tied. Then Wall Street collapsed -- and it collapsed right on top of John McCain.In the first week or two after the extent of the economic meltdown became apparent earlier this fall, what had been a closely contested election broke significantly in Barack Obama's direction. The worst month for the Dow Jones industrial average in more than a decade made McCain's national security credentials almost irrelevant to voters frightened about their economic futures. Just as the success of the troop increase in Iraq and the rise in gasoline prices earlier this year represented real-world events that boosted McCain's support, the political ramifications of the rapidly spreading economic crisis have been of immense assistance to Obama's efforts to convince voters as to the necessity of a change of course in Washington.
SEE:
McCain A Socialist
No Austrians In Foxholes
tagsGreat Depression, John McCain, market crash, free trade, Republicans, recession, asset-backed commercial paper ,, goldhomes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,October Surprise, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession,
Monday, November 03, 2008
Pension Rip Off
Canada's corporations are crying the blues again about the fact that they have underfunded liabilities regarding their pension obligations to their workers. While they may have a point that the government discourages them from putting extra into their pension funds, the fact is that they use this excuse to not max out their share of their pension responsibilites. Much like the government itself with its public sector plans, which are paid for by employers and employees, but the government never puts in its share, instead it uses its general funds to account for its future liablities, which of course gets it into trouble during periods of economic downturn and when the state runs up deficits and gets into debt as it did in the ninties.
That being said while corporations could benefit from legislative changes to the tax code, the fact remains that they would still prefer to invest in stocks and to pay their CEO's lucrative salaries and pay generous dividends to their shareholders before they invest in their own workers. Surprise, surprise. Now that market has melted down they cry the blues about not having paid their share into their future obligations to those who produce their wealth; their workers.
That being said while corporations could benefit from legislative changes to the tax code, the fact remains that they would still prefer to invest in stocks and to pay their CEO's lucrative salaries and pay generous dividends to their shareholders before they invest in their own workers. Surprise, surprise. Now that market has melted down they cry the blues about not having paid their share into their future obligations to those who produce their wealth; their workers.
See
The Importance of Savings
Your Pension Dollars At Work
P3= Public Pension Partnerships
Chinese Social Security Scandal
Social Insecurity The Phony Pension Crisis
Pension Plunder
Labour Is Capital
Pension Free China
Kids Are Commodities
Workers vs Worker
Air Canada Profits From Bankruptcy
Are Income Trusts A Ponzi Scheme
The Importance of Savings
Your Pension Dollars At Work
P3= Public Pension Partnerships
Chinese Social Security Scandal
Social Insecurity The Phony Pension Crisis
Pension Plunder
Labour Is Capital
Pension Free China
Kids Are Commodities
Workers vs Worker
Air Canada Profits From Bankruptcy
Are Income Trusts A Ponzi Scheme
Vencap
AIM High
P3 Myth Busting
Infrastructure Collapse
Fire Sale
Dumb and Dumber
Public Pensions Fund Private Partnerships
Golden Parachutes
Your Pension Dollars At Work
AIM High
P3 Myth Busting
Infrastructure Collapse
Fire Sale
Dumb and Dumber
Public Pensions Fund Private Partnerships
Golden Parachutes
Your Pension Dollars At Work
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Monday, October 27, 2008
Did Big Bang Create Crash???
Since the economists and advocates for the free market seem to be at a loss as to why the current international financial system collapsed, perhaps they should look at the coincidence between the start of the Big Bang experiment in Europe and the fact that perhaps this is a quantum economic meltdown, the result of the firing of the Hadron Collider in France.
After all the marketplace that manipulates capital in the money markets and theshadow economy; hedge funds, dirivitives, etc. is the result of the use of computer technology and in particular the access that the internet allows computers. The internet which was created by CERN in order to facilitate the international scientific coordination of the Hadron Collider project.
And remember those folks who worried that the start up of the collider would create a black hole? They were laughed at. Yet within days of the collider start up and failure, the international financial market blew up in a big bang not seen since the Great Depression.
Coincidence? In a quantum universe I think not. After all what is a bigger black hole than the collapse of international capitalism?
Cern CIO talks about the credit crunch and black holes
CERN's Large Hadron Collider, the biggest and most complex machine ever built, will study the smallest building blocks of matter, sub-atomic
particles.
CERN scientists launched the experiment on September 10, firing
beams of proton particles around the 27-km (17-mile) tunnel outside Geneva 100
meters (330 feet) underground.
But nine days later they had to shut it down
because of a helium leak caused by a faulty electrical connection between two of
the accelerator's huge magnets
When it works again, the collider will recreate conditions just after the
Big Bang believed by most cosmologists to be at the origin of our expanding
universe 13.7 billion years ago.
It will send beams of sub-atomic particles
around the tunnel to smash into each other at close to the speed of
light.
These collisions will explode in a burst of intensely hot energy and
of new and previously unseen particles.
CERN, which invented the Worldwide
Web nearly 20 years ago, has set up a high-power computer network linking 7,000
scientists in 33 countries to crunch the data flow, enough to create a tower of
CDs more than twice as high as Mount Everest.
CERN Unveils Global Grid For Particle Physics Research
The network can pull in the IT power of more than 140 computer centers in 33 countries to
crunch an expected 15 million GB of data every year.
By Antone Gonsalves
InformationWeek October 3, 2008 04:57 PM
CERN, the world's largest particle physics lab and creator of the World Wide Web, on Friday launched a
global computer network that links the IT power of data centers in 33 countries
to provide the data-crunching muscle needed in conducting experiments on the
nature of matter.
The Cern nuclear-physics laboratory in Geneva, Switzerland, is helping
the technology industry refine the multicore processors and fat gigabit networks
destined for the datacentres of tomorrow through the Openlab
initiative.
Through the project, the IT department at the lab behind the
Large Hadron Collider pushes cutting-edge kit to breaking point to perfect it
for its own use, and the consumer and business markets.
The lab has
partnerships with companies including HP ProCurve, Intel and Oracle, who provide
the backbone of its IT infrastructure, its 8,000-server computer centre and its
links to the Worldwide LHC Computing Grid, consisting of more than 100,000
processors spread over 33 countries.
Cern's chief information officer,
Wolfgang von Rueden, told ZDNet.co.uk sister site silicon.com: "We wait for
industry to develop the technology, then we take it and see how far we can push
it and feed back to them."
CERN Orchestrates Thousands of Business Services with ActiveVOS
Visual Orchestration System Integrates Diverse Systems
for More Effective Mobile Workforce
Last update: 9:00 a.m. EDT Oct. 21,
2008
WALTHAM, Mass., Oct 21, 2008 (BUSINESS WIRE) -- Active Endpoints, Inc. ( http://www.activevos.com/), the inventor of visual orchestration
systems (VOS), today announced that CERN, the European Organization for Nuclear
Research, of Geneva, Switzerland, has successfully deployed ActiveVOS(TM) to
orchestrate and manage its core technical and administrative business services.
As one of the world's largest and most respected centers for scientific
research, CERN is the nucleus of an extensive community that includes over 2,500
on-site staff, and nearly 9,000 visiting scientists. These scientists
principally work at their universities and laboratories in over 80 countries
around the world. Using ActiveVOS, CERN has now integrated and automated all its
core processes as well as integrated those processes with the many external
systems required by this dispersed workforce.
"Automating all of the
essential business processes such as arranging travel, ordering materials,
authorizing access to controlled areas for our 11,500 users from all over the
world was a complex challenge," said Derek Mathieson, section leader, CERN.
"Using ActiveVOS's capabilities including process versioning, retry policies,
error and exception handling, integrated debugging and support for open
standards, we now have completed over 1,200,000 process instances. We add, on
average, approximately 12,000 new BPEL processes every day. ActiveVOS has also
automated internal administrative processes, such as annual performance reviews
and safety alarm activation. We are now able to support our large community of
scientists and our staff, ensuring they spend their time on research and not
administrative tasks."
SEE:
No Austrians In Foxholes
CRASH
Black Gold
The Return Of Hawley—Smoot
Canadian Banks and The Great Depression
Bank Run
U.S. Economy Entering Twilight Zone
Tags
gold,homes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,Bernanke, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession, Harper, Conservatives, Cabinet, Government, politics, Hadron Collider, Budget, black holes, politicsbig bang, Surplus, Economy, CERN
After all the marketplace that manipulates capital in the money markets and theshadow economy; hedge funds, dirivitives, etc. is the result of the use of computer technology and in particular the access that the internet allows computers. The internet which was created by CERN in order to facilitate the international scientific coordination of the Hadron Collider project.
And remember those folks who worried that the start up of the collider would create a black hole? They were laughed at. Yet within days of the collider start up and failure, the international financial market blew up in a big bang not seen since the Great Depression.
Coincidence? In a quantum universe I think not. After all what is a bigger black hole than the collapse of international capitalism?
Cern CIO talks about the credit crunch and black holes
CERN's Large Hadron Collider, the biggest and most complex machine ever built, will study the smallest building blocks of matter, sub-atomic
particles.
CERN scientists launched the experiment on September 10, firing
beams of proton particles around the 27-km (17-mile) tunnel outside Geneva 100
meters (330 feet) underground.
But nine days later they had to shut it down
because of a helium leak caused by a faulty electrical connection between two of
the accelerator's huge magnets
When it works again, the collider will recreate conditions just after the
Big Bang believed by most cosmologists to be at the origin of our expanding
universe 13.7 billion years ago.
It will send beams of sub-atomic particles
around the tunnel to smash into each other at close to the speed of
light.
These collisions will explode in a burst of intensely hot energy and
of new and previously unseen particles.
CERN, which invented the Worldwide
Web nearly 20 years ago, has set up a high-power computer network linking 7,000
scientists in 33 countries to crunch the data flow, enough to create a tower of
CDs more than twice as high as Mount Everest.
CERN Unveils Global Grid For Particle Physics Research
The network can pull in the IT power of more than 140 computer centers in 33 countries to
crunch an expected 15 million GB of data every year.
By Antone Gonsalves
InformationWeek October 3, 2008 04:57 PM
CERN, the world's largest particle physics lab and creator of the World Wide Web, on Friday launched a
global computer network that links the IT power of data centers in 33 countries
to provide the data-crunching muscle needed in conducting experiments on the
nature of matter.
The Cern nuclear-physics laboratory in Geneva, Switzerland, is helping
the technology industry refine the multicore processors and fat gigabit networks
destined for the datacentres of tomorrow through the Openlab
initiative.
Through the project, the IT department at the lab behind the
Large Hadron Collider pushes cutting-edge kit to breaking point to perfect it
for its own use, and the consumer and business markets.
The lab has
partnerships with companies including HP ProCurve, Intel and Oracle, who provide
the backbone of its IT infrastructure, its 8,000-server computer centre and its
links to the Worldwide LHC Computing Grid, consisting of more than 100,000
processors spread over 33 countries.
Cern's chief information officer,
Wolfgang von Rueden, told ZDNet.co.uk sister site silicon.com: "We wait for
industry to develop the technology, then we take it and see how far we can push
it and feed back to them."
CERN Orchestrates Thousands of Business Services with ActiveVOS
Visual Orchestration System Integrates Diverse Systems
for More Effective Mobile Workforce
Last update: 9:00 a.m. EDT Oct. 21,
2008
WALTHAM, Mass., Oct 21, 2008 (BUSINESS WIRE) -- Active Endpoints, Inc. ( http://www.activevos.com/), the inventor of visual orchestration
systems (VOS), today announced that CERN, the European Organization for Nuclear
Research, of Geneva, Switzerland, has successfully deployed ActiveVOS(TM) to
orchestrate and manage its core technical and administrative business services.
As one of the world's largest and most respected centers for scientific
research, CERN is the nucleus of an extensive community that includes over 2,500
on-site staff, and nearly 9,000 visiting scientists. These scientists
principally work at their universities and laboratories in over 80 countries
around the world. Using ActiveVOS, CERN has now integrated and automated all its
core processes as well as integrated those processes with the many external
systems required by this dispersed workforce.
"Automating all of the
essential business processes such as arranging travel, ordering materials,
authorizing access to controlled areas for our 11,500 users from all over the
world was a complex challenge," said Derek Mathieson, section leader, CERN.
"Using ActiveVOS's capabilities including process versioning, retry policies,
error and exception handling, integrated debugging and support for open
standards, we now have completed over 1,200,000 process instances. We add, on
average, approximately 12,000 new BPEL processes every day. ActiveVOS has also
automated internal administrative processes, such as annual performance reviews
and safety alarm activation. We are now able to support our large community of
scientists and our staff, ensuring they spend their time on research and not
administrative tasks."
SEE:
No Austrians In Foxholes
CRASH
Black Gold
The Return Of Hawley—Smoot
Canadian Banks and The Great Depression
Bank Run
U.S. Economy Entering Twilight Zone
Tags
gold,homes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,Bernanke, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession, Harper, Conservatives, Cabinet, Government, politics, Hadron Collider, Budget, black holes, politicsbig bang, Surplus, Economy, CERN
Saturday, October 25, 2008
Deja Vu
Stephen Harper, Jim Flaherty and Mark Carney assured us that the economic fundamentals in Canada are sound, despite the current meltdown of international finance capitalism. Wearing Bush/McCain like rose coloured blinders they refuse to admit that Canada faces a pending recession and the government will likely incur a deficit. Something Harper and Flaherty denied during the election campaign. Instead they say steady as she goes.
Of all the leaders, Harper was most determined to stay the course.
"What leaders have to do is have a plan and not panic," he said. Revising the plan
based on new data was considered to be a sign of panic, not prudence.Harper, in
the dying days of the campaign, proclaimed that he would not run a deficit,
raise taxes or cut spending. That may be a difficult circle to square, and those
words may come back to haunt him.
Wait I have heard this before...why in 1929 when then PM William Lyon Mackenzie King said he would stay the course.....
October 24, 1929 went down in history as "Black Thursday". On that day, stock prices plummeted on the New York Stock Exchange, creating a domino effect on world stock markets. It signaled the beginning of the Great Depression.
Canada was one of the hardest hit by the economic crisis. The country relied heavily on its exports. Pulp and paper, wood and wheat represented two-thirds of Canadian exports and accounted for much of the country's prosperity.
Governments in Canada were slow to respond to the desperate economic and social conditions. Until the Great Depression, government intervened as little as possible, letting the free market take care of the economy. Social welfare was left to churches and charities.
When the Depression began William Lyon Mackenzie King was Prime Minister in 1930. He believed that the crisis would pass, refused to provide federal aid to the provinces, and only introduced moderate relief efforts.
Although unemployment was a national problem, federal administrations led by the Conservative R.B. BENNETT (1930-35) and the Liberal W.L. Mackenzie KING (from 1935 onwards) refused, for the most part, to provide work for the jobless and insisted that their care was primarily a local and provincial responsibility. The result was fiscal collapse for the 4 western provinces and hundreds of municipalities and haphazard, degrading standards of care for the jobless.
The Depression altered established perceptions of the economy and the role of the state. The faith shared by both the Bennett and King governments and most economists that a balanced budget, a sound dollar and changes in the tariff would allow the private marketplace to bring about recovery was misplaced.
Library and Archives Canada / C-000623Bennett Buggy in the Great Depression in Canada
October 1929 – Stock Market Crash: Markets Suffer the Worst Losses in Canadian History
In the late 1920s, Canada’s economy and stock exchanges were booming. From 1921 to the autumn of 1929, the level of stock prices increased more than three times. But these heady days came to a swift end with the stock market crash on Black Tuesday, October 29, 1929, in New York, Toronto, Montréal and other financial centres in the world. Shareholders panicked and sold their stock for whatever they could get.
Overnight, individuals and companies were ruined. It was estimated that Canadian stocks lost a total value of $5 billion on paper in 1929. By mid-1930, the value of stocks for the 50 leading Canadian companies had fallen by over 50% from their peaks in 1929.
The stock market collapse affected all investors—individuals who had been persuaded to buy shares as well as speculators looking to make a fast dollar. Despite the market crash, 1929 was a good year for banks, mines, manufacturing and construction in Canada. All reported record profits at year-end.
Although the crash was sudden and deep, there were signs that it was coming. Earlier in 1929, stock prices had been volatile. Economic slowdowns in May and June hinted that the booming economy was heading for a recession. Export earnings were declining and the price of wheat plummeted.
Economists and historians are still debating what caused the crash. At the time of the crash, Canada had no monetary policy or central bank, so there was little government intervention in the market. (See 1934—Bank of Canada.) Canadian firms had healthy profits and did not expect the boom to end. Corporate profit expectations were inflated. Canadian corporations took advantage of the bull market to issue new stock, which overheated the supply. Banks gave out easy and cheap credit, and let people buy stocks on margin: buyers paid only a fraction of the share price and borrowed the rest. Speculation was rampant: bidding drove up the value of stocks as much as 40 times the companies’ annual earnings. Investors seemed to pay less attention to corporate earnings than to how much their shares would appreciate in value.
The economy could not sustain its rapid growth and the bubble burst. Investors lost confidence in the market. In the United States, the government was blamed for not controlling the speculative frenzy. Because Canada’s economy was so closely tied to that of the United States, the New York crash brought down Canadian markets, too.
It is widely felt that the stock market collapse started a chain of events that plunged Canada and the Western world into the decade-long Great Depression, which ended only with the outbreak of the Second World War.
1929 - 1939 —The Great Depression.
The Roaring Twenties saw boom times in Canada. Unemployment was low; earnings for individuals and companies were high. But prosperity came to a halt with the stock market collapse in New York, Toronto, Montréal and around the world in October 1929. The crash set off a chain of events that plunged Canada and the world into a decade-long depression. It was the beginning of the Dirty Thirties.
The Great Depression caused Canadian workers and companies great hardship. Prices deflated rapidly and deeply. Business activity fell sharply. There was massive unemployment—27% at the height of the Depression in 1933. Many businesses were wiped out: in Canada, corporate profits of $396 million in 1929 became corporate losses of $98 million in 1933. Between 1929 and that year, the gross national product dropped 43%. Families saw most or all of their assets disappear. Governments around the world, including Canada’s, put up high tariffs to protect their domestic manufacturers and businesses, but that only created weaker demand and made the Depression worse. Canadian exports shrank by 50% from 1929 to 1933.
THE CAUSE OF THE DEPRESSION
Many Canadians of the thirties felt that the depression wasn't brought about by the Wall Street Stock Market Crash, but by the enormous 1928 wheat crop crash. Due to this, many people were out of work and money and food began to run low. It was said by the Federal Department of Labor that a family needed between $1200 and $1500 a year to maintain the "minimum standard of decency." At that time, 60% of men and 82% of women made less than $1000 a year. The gross national product fell from $6.1 billion in 1929 to $3.5 billion in 1933 and the value of industrial production halved.
Unfortunately for the well being of Canada's economy prices continued to plummet and they even fell faster then wages until 1933, at that time, there was another wage cut, this time of 15%. For all the unemployed there was a relief program for families and all unemployed single men were sent packing by relief officers by boxcar to British Columbia. There were also work camps established for single men by Bennett's Government.
The Great Depression, also known as The Dirty Thirties, wasn't like an ordinary depression where savings vanished and city families went to the farm until it blew over. This depression effected everyone in some way and there was basically no way to escape it. J.S. Woodsworth told Parliament "If they went out today, they would meet another army of unemployed coming back from the country to the city." As the depression carried on 1 in 5 Canadians became dependent on government relief. 30% of the Labour Force was unemployed, where as the unemployment rate had previously never dropped below 12%.
It was estimated back in the thirties that 33% of Canada's Gross National Income came from exports; so the country was also greatly affected by the collapse of world trade. The four western prairie provinces were almost completely dependent on the export of wheat. The little money that they brought in for their wheat did not cover production costs, let alone farm taxes, depreciation and interest on the debts that farmers were building up. The net farm income fell from $417 million in 1929 to $109 million in 1933.
Canada suffered a major depression from 1929 to 1939. In terms of output it was
similar to the Great Depression in the United States. However, total factor productivity
(TFP) in Canada did not recover relative to trend, while in the United States TFP had
recovered by 1937. We find that the neoclassical growth model, with TFP treated as
exogenous, can account for over half of the decline in output relative to trend in Canada.
In contrast, we find that conventional explanations for the Great Depression - monetary
shocks, terms of trade shocks and labor market and competition policies – do not work
for Canada.
Our conclusion is that the reason that Canadian output per adult was still 30 percent below
trend in 1938 was that productivity failed to return to trend.
Relative to trend, consumption fell more in Canada, and remained below that of
the United States throughout the 1930s. Investment in Canada fell to 15 percent of its
trend value by 1933, and recovered very slowly in both countries (remaining roughly 50
percent below trend in 1939). Government purchases in the two countries followed a
similar pattern during the downturn, before diverging in the late 1930s when U.S.
government spending remained above trend, while in Canada it fluctuated about trend.
U.S. government output increased more relative to trend
than Canadian government output. A large part of the difference in government
expenditure can be attributed to different government policies towards providing
unemployment relief. In the United States, the government relied much more heavily
upon make-work projects (government relief projects) than in Canada. The fraction of the
workforce employed by the government doubled in the United States, while increasing by
less than 50 percent in Canada. The increase in U.S. government employment was mainly
due to public works, as nearly 7 percent of U.S. employment in the late 1930s was in
relief projects. Relief workers were never more than 1.5 percent of the total number of
employed people in Canada.
Canada was the first country to leave the gold standard, suspending gold
shipments in January 1929 (Bordo and Redish (1990)). Despite the suspension of
convertibility, the Canadian government took steps to prevent depreciation of the dollar,
motivated in part by a wish to maintain access to American capital markets to refinance
Dominion debt (Shearer and Clark (1984)). As a result, the government maintained the
advance rate at its 1928 level throughout 1930, despite the fall in world rates. This policy
was ultimately abandoned in 1931. Despite this, the Canadian dollar did depreciate
relative to the U.S. dollar by approximately 15 percent between 1929 and 1931, before
recovering to its 1929 level in 1935.
The “debt-deflation” view of the Great Depression asserts that deflation and high
private debt levels contributed to the Great Depression by reducing borrower wealth and
constraining lending. Haubrich (1990) argues that the debt crisis was much less severe in
Canada than in the United States. He argues that there is little evidence to suggest that the
debt crisis caused the Great Depression in Canada.
A common view is that banking crisis played a significant role in transforming the
1929 downturn into the Great Depression. For example, Bernanke (1983) states that “the
financial crisis of 1930-33 affected the macroeconomy by reducing the quantity of
financial services, primarily credit intermediation” (p. 262). As has been pointed out by
numerous authors, however, Canada did not experience any bank failures.
Can the usual explanations of the Great Depression account for the Great
Depression in Canada? Our answer to this question is no. As we show, money shocks,
policy shocks and terms of trade shocks cannot account for the 10-year depression.
Explanations based on these shocks fail because their effects are quantitatively too small
to explain the Great Depression.
Our findings in this paper tell us where to go next. Future research into the Great
Depression in Canada should focus on models in which changes in the level of trade
affect the level of productivity. Such models are consistent with the fact that Canada’s
TFP and trade both declined from 1929 to 33. Beginning in 1934, trade began to slowly
recover, and so did TFP. This also matches the fact that the only large shock that hit
Canada but not the United States was trade, while the main difference in macro
performance is the behavior of productivity.
Journal of Economic Literature Classification Numbers: E30, N12, N42.
Key Words: Great Depression, Canada, productivity, terms of trade, deflation
Community Voices
GWINNETT COUNTY: Depression days brought to mind
By Rick Badie
The Atlanta Journal-Constitution
Saturday, October 25, 2008
Elwood Hart lived in Canada during the Great Depression. He considers himself lucky. A Salvation Army was next to the family’s home in Hamilton, Ontario.
“Maybe it was a bowl of soup or a bologna sandwich, but I got something to eat,” said Hart, now a Lawrenceville resident. “If it weren’t for that, I don’t think we could have ever made it. We weren’t living in the United States, but the situation was the same all over.”
Comparisons and contrasts are being drawn between the current economic crisis and the Great Depression. Conventional wisdom says this is the worst financial crisis since the Great Depression. Generally, experts say the odds of a full-blown depression are nonexistent. Let’s hope they are right.
Not many of us were around between 1929 and 1939, so we can’t compare the impact of that period’s economic crisis to today’s turmoil. Hart is now in his mid-80s, so his take on what he saw then and what he sees now carries weight.
We met years ago at the Gwinnett County Veterans War Museum, where his military career is on display. He served with the Canadian Army in Normandy during World War II. With the U.S. Army, he saw two tours of duty in Korea and Vietnam. He received an honorable discharge in 1967.
As for the Great Depression, “I remember it well,” Hart said. “People don’t realize what it was like back then.”
He remembers people lining up at food banks to get a hunk of cheese and powdered milk. He remembers stuffing newspapers in his shoes because they were way too big. And he remembers a white pet rabbit that just disappeared one day.
“I got up one morning and asked my dad where my rabbit was,” Hart told me. “He said, ‘It’s down your stomach. You had it for dinner.’ You ate anything you could get back then. There was no waste of clothes or food. Today, when I throw out trash, wild animals won’t find any food. I don’t throw it away.”
But how does that compare to today’s economic woes, particularly among everyday people barely making it?
Every Monday, Tuesday and Wednesday morning, Hart drives to a local Publix to load his car with day-old breads, cakes and pastries. When he pulls up to the Salvation Army, where the goods are doled out, people are waiting.
“It’s gotten so bad right now that there are twice as many every day as there were a couple of months ago,” he said. “In fact, it’s so bad that, a lot of time, me or some of the women in the church have to stand there. We have a sign that says everyone is to get two loaves of bread and a pastry. If you don’t watch them, they will fill up on all they can get. That’s why I say things are getting bad, similar to the 1930s, I tell you.”
As a brass collector, Hart routinely visits Goodwill stores in search of treasures. He said he’s seen a noticeable uptick in the number of people buying clothes. And at his church, clothes donations have fallen off considerably.
“It’s not that bad yet now,” Hart said.
“But it’s getting there.”
SEE:
No Austrians In Foxholes
CRASH
Black Gold
The Return Of Hawley—Smoot
Canadian Banks and The Great Depression
Bank Run
U.S. Economy Entering Twilight Zone
Tags
asset-backed commercial paper ,, goldhomes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,Bernanke, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession, Harper, Conservatives, Cabinet, Government, politics, Flaherty, Budget, GST, politicsCanada, Surplus, Economy, Taxes, EI,
CRASH
Black Gold
The Return Of Hawley—Smoot
Canadian Banks and The Great Depression
Bank Run
U.S. Economy Entering Twilight Zone
Tags
asset-backed commercial paper ,, goldhomes, mortgages, housing, bubble, US, economy, oil prices, sub-prime mortgage, Wall Street, crash, recession,Bernanke, Inflation, Staglation, Stock-Market, US, Federal-Reserve-Chairman, Oil, gold, commoditiesSmoot-Hawley, protectionism, tariffs, Herbert Hoover, U.S., U.S. economy, Canada, Great Depression, John McCain, market crash, free trade, Republicans, recession, Harper, Conservatives, Cabinet, Government, politics, Flaherty, Budget, GST, politicsCanada, Surplus, Economy, Taxes, EI,
Thursday, December 20, 2007
Lenin Was Right
"When we go to hang the last aristocrat it will be the capitalist that sells us the rope." Lenin.
As American Capitalism fails it will be Chinese State Capitalism that bails it out.
Kill the competition: China bails out Morgan Stanley,
The Times: Morgan Stanley reported the first quarterly loss in its 73-year history after taking writedowns of $9.4 billion (£4.7 billion) on mortgage-related investments. The bank was forced to agree a $5 billion cash injection from Beijing.
The reason is that they are sitting on trillions in Foreign Direct Investment funds that they have not expended yet. Allowing them to be able to come in and bail out their capitalist competitors.
Dr. Kathryn Dominguez of the Gerald Ford School of Public Policy presented her paper on this topic at the U of A School of Business annual Eldon Foote Lecture in October which I attended.
I recommend reading her paper as it will explain why China's investment in Morgan Stanley is not unexpected, and in fact is the beginning of their bail out of big banks and financial corporation which are suffering as the credit crunch expands from the subprime meltdown.
International Reserves and Underdeveloped Capital MarketsSEE
International reserve accumulation by developing countries is just one example of the puzzling behavior of international capital flows. Capital should flow to where its return is highest, which ought to be where capital is scare. Yet recent data suggest the opposite – net capital flows from developing countries to industrialized countries. This paper examines the role of financial market development in the accumulation of international reserves. In countries with underdeveloped capital markets the government’s accumulation of reserves may substitute for what would otherwise be private sector capital outflows. Effectively, these governments are acting as financial intermediaries, channeling domestic savings away from local uses and into international capital markets, thereby offsetting the effects of domestic financial constraints that lead to excessive private sector exposure to potential capital shortfalls.
China: The Truimph of State Capitalism
State Capitalism By Any Other Name
Petro Dollars Bail Out The CITIBank Smack Down
U.S. Economy Entering Twilight Zone
Sub Prime Exploitation
Wall Street Deja Vu
Housing Crash the New S&L Crisis
US Housing Market Crash
America's Debt EconomyFind blog posts, photos, events and more off-site about:
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Marx,
USSR,
China,
Viet Nam,
taylorism,fordism, NEP, state capitalism, state monopoly capitalism, monopoly capitalism,
sset-backed commercial paper ,, UK
homes, mortgages, housing, bubble, US, economy, Northern Rock , sub-prime mortgage, Wall Street, crash, recession,
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