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Osterix

Osterix
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  • Why Organic GDP Growth And Inflation Elude Us - The X Factor [View article]
    To Joseph Stuber,

    I am a big fan of Keynesian and post-Keynsian theory. I especially like Hyman Minsky's elaboration of Keynes. The problem with Keynesian theory is that it is counter-intuitive. Like Einstein's Special Relativity it is contrary to how we normally perceive phenomena, whether natural or economic.

    This why we have politicians, especially Republicans but even many Democrats, arguing in favor of a balanced federal budget. If the political leaders are this confused and ignorant, what hope is there of voters being any more educated.

    Keynes says there can be an excess of savings which classical theory, based on Say's Law says is not possible. In this post you give a detailed explanation of how this excess happens- savings are lost to the economy of real goods and services and are diverted into the economy of financial assets.
    Jul 30, 2015. 08:37 PM | Likes Like |Link to Comment
  • A Contrarian View On Chinese Growth [View article]
    To: Milkweed,

    You are making a very common error. The Soviet Union had a "Command Economy" which includes economic planning. After World War II all the countries of Europe used economic planning to rebuild their economies. Americans don't believe in economic planning because it is "Socialistic."

    A command economy uses direct orders from the central government to allocate resources. This is very inefficient. A pure market economy is also very inefficient. In a capitalist planned economy, production goals are set by the government but how they are achieved is largely left to market mechanisms.

    Even today the Germans describe their economic system as a "Social Market Economy." They refer to the American brand of free-market capitalism as "Cowboy Capitalism." No one can accuse the German economy of being inefficient. It does have major defects but that is a whole different discussion.
    Jul 27, 2015. 08:09 PM | 1 Like Like |Link to Comment
  • A Contrarian View On Chinese Growth [View article]
    To Ben Gee,

    Guess what? Japan also has a planned economy. The Japanese government coordinates with the major economic sectors just as much as the Chinese government. The major difference is that in China the government owns all or major shares of large companies.

    In Japan everything is privately owned but no one does anything without coordinating with the government.
    Jul 27, 2015. 07:56 PM | 1 Like Like |Link to Comment
  • A Contrarian View On Chinese Growth [View article]

    To Stephen Graves,

    I agree with your conclusion of a future no growth Chinese economy because I think that going forward the huge amount of malinvesments made to prop up rapid growth will act as a major drag on economic growth.
    Jul 27, 2015. 07:48 PM | 1 Like Like |Link to Comment
  • A Contrarian View On Chinese Growth [View article]
    To tallguyz and Ben Gee,

    All bureaucracies work the same way. Each level avoids offending the level above with the information it sends up the line. When it comes to economic reporting in China, the local governments inflate their economic numbers that they send to the provincial level. The provincial governments inflate these numbers plus their own when they forward them to the central government. The central government inflates the numbers based on these inflated numbers once again in order to impress the world and the Chinese people that it is meeting its goals for GDP growth.

    What the actual GDP growth of China is, is pure guesswork. I personally am convinced that it is and has been much less than official figures that have been published over the past twenty years or so.
    Jul 27, 2015. 07:42 PM | 1 Like Like |Link to Comment
  • China - A Tale Of Two Economies [View article]
    "With its usual efficiency," I like your subtle sense of humor.

    How did the Chinese statisticians come up with exactly "7%", not "6.9% or "7.1%"?
    Jul 18, 2015. 09:47 PM | Likes Like |Link to Comment
  • China - A Tale Of Two Economies [View article]
    In any bureaucracy each level, starting at the bottom, modifies what it reports to the next higher level to avoid offending their superiors. In the case of China, local officials inflate what they report to provincial officials, who inflate what they report to national officials. The national officials inflate what they publicly announce to show that they are in control of the situation.
    Jul 18, 2015. 09:39 PM | 1 Like Like |Link to Comment
  • Greece Will Default, Deal Or Not (And It's Not A Deal, It's A Foreclosure) [View article]
    I would like your comment on my understanding of this situation.

    As I see it the German and French political leaders acted to save the large German and French banks who were the major lenders to Greece by transferring the debt to the Eurozone taxpayers. They should have made the large banks write off the loans as non-performing which is the normal procedure. This would have forced some of the largest banks to recapitalize or be nationalized. This would have been a heavy blow to their fellow elitists in the financial world. They were protecting the top 1% although they spun it in a different way.

    This was true in Germany in particular, because the politicians there have convinced the German voters that they have the moral high ground and are just demanding that the Greeks act in a responsible (German) manner. The German voters like American voters are clueless so they are angry at the Greeks instead of the German politicians.

    First there is the issue of being a responsible lender. The German and French banks kept making huge loans to the Greek government when even a minimum of due diligence would have shown it was over its head. The German government looked the other way because a lot of this money was being spent in Germany. (eg., the Greek navy bought four state-of-the-art German submarines for about two billion dollars not counting the massive future costs of operation. The Greek navy needs nothing more sophisticated than small to medium sized missile boats.) It was no different than the mortgage bubble in the US prior to 2008. The lenders were as/more irresponsible than the borrowers. No Americans bankers went to jail and no Eurozone bankers will ever go to jail as the Greek crisis drags on into the indeterminate future. One of the rules of Eurozone membership is that a country that gets into financial trouble can't be bailed out by the other countries. The creditors all assumed that if push came to shove this rule would not be enforced with respect to Greece. So far they are correct.

    The second point is with respect to Germany in particular which is the leader in taking a hard line with Greece. Based on what I have read over the years, if the Eurozone project fails and all the member countries go back to their national currencies, the economy of Germany would collapse. This is because, by using the Euro instead of the Deutchmark, German goods are underpriced for export by as much as 40%. This is the main reason Germany has been such an export powerhouse in recent years. It is true German machinery, especially specialized machinery, is superior to or has no competition from other countries, but the fact that it is available at what amounts to low, subsidized prices is a tremendous advantage.
    Jul 16, 2015. 01:45 PM | Likes Like |Link to Comment
  • World Bank: China must reform 'distorted' financial system [View news story]
    Tai Yu,

    Anyone who refers to John Maynard Keynes is aces in my book. Just one editorial note: "intervention" is a better term than "interference" in the context of your article.
    Jul 1, 2015. 07:40 PM | 1 Like Like |Link to Comment
  • Last Exit [View article]
    Dealerdeb1:

    I don't have a BOA card. I will have to check it out. Thanks for the tip.
    Jun 18, 2015. 06:49 PM | Likes Like |Link to Comment
  • Last Exit [View article]
    Crushedbyoil:

    Most CC companies offer 12 months zero interest for balance transfers. We just transfer our balances to a different company every twelve months.

    The reason CC companies make these offers is that most people don't have the discipline to pay down the balance in 12 months. So in 12 months they have to start paying the 16 to 18 percent interest on what they still owe.
    Jun 18, 2015. 06:44 PM | 1 Like Like |Link to Comment
  • Canadian energy stocks hammered after "devastating" Alberta election [View news story]
    Just to get serious for a moment. If the BC economy was as devastated as you claim, I suspect it was not because of the government in power. The same would have happened if the Conservatives were in power.

    IMHO the problem with the Canadian economy is that it is too dependent on commodity exports. It is like Australia in that respect. Too many people on both sides of the border think of the Canadian economy as just like the American. This is a structural problem that no political party in Canada is willing to address. NAFTA made the situation worse by making the Canadian economy an annex of the US economy.

    US companies invest in Canada on the basis of what is best for them without regard to the impact on Canada, or the impact on the US for that matter.
    May 7, 2015. 04:50 PM | 1 Like Like |Link to Comment
  • Canadian energy stocks hammered after "devastating" Alberta election [View news story]
    Tar sands oil is too expensive. Producers can still make money at current prices because the sunk capital costs have been spent already. Once they are fully amortized and new capital is required Tar Sands oil will not be able to compete with other sources. If global oil prices go lower the situation will be even more negative for it.
    May 7, 2015. 04:37 PM | 1 Like Like |Link to Comment
  • Canadian energy stocks hammered after "devastating" Alberta election [View news story]
    I take back what I said above. There is at least one conservative with a sense of humor. "There is no equivalent to the NDP in the US, I think you have laws against it unless I'm mistaken."

    Actually there is a Socialist Party in the US. It generally conists of a handfull of people meeting in the back corner of a bar, Starbucks or a church basement.
    May 7, 2015. 04:29 PM | Likes Like |Link to Comment
  • Canadian energy stocks hammered after "devastating" Alberta election [View news story]
    A minimum wage of $15 in Canadian money is equal to about $8 in American money so I don't see how that will cripple the local economy.

    PS. Since conservatives have no sense of humor I know many readers will take this comment literally.

    PPS. Every time there is an effort to raise the minimum wage, consevatives claim it will cause the end of civilization as we know it. It has never happened in all the states that raised the local minimum wage over the Federal minumum in the US and never will. It is like seat belts and air bags. If everyone has to do it, there is no cost disadvantage for any individual company because all can and will pass on the same added cost to their consumers.
    May 7, 2015. 04:21 PM | 3 Likes Like |Link to Comment
COMMENTS STATS
462 Comments
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