Thai Pm Officially Launches Government Project To Stimulate Economy

[TAWP]

it isn't as easy as regulations or not, as some banks and countries clearly was more affected even with the same amount of regulations. Once the chips starts falling in an economical downturn the regulations that might or might not have been in place has very little effect on secondary fallout for other banks etc. And one bank, under heavy regulations, could still go under if doing trade with a bank that also is under heavy regulations but in-debt too high due to falling connections in its end etc. Regulations is never the answer as it often just makes sure people pushes against them. Like setting a speed-limit on a highway ensures people will try to drive at that speed or above - even if common sense would dictate it would be better to drive more slowly. As they might if the speed was 'open'.

In anyway, this is all very theoretical and hindsight gives us way too much power.

[chrislarsson]

Just a final point to the ones arguing that government intervention is always being BS.

Can you please explain how Canada, a country with a bigger government and more heavily regulated economy, is pretty much walking through this financial crisis completely untouched?

Not one Canadian bank has asked for money from the government.

Bigger government per capita maybe,

but doubltfully bigger in size and economy managed.

I would hazard that the greater regulation is the reason that Canada's banking sector

was less caught with it's pants down. Were these repackaged and WAY over leveraged debt derivatives

available as freely to Canadian banks and brokers?

Some argue that government regulation is BS. like USA Republican zealots,

but this may likely have been Canada's saving grace.

"So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking."

http://www.fareedzakaria.com/articles/newsweek/020709.html

[sokal]

Of course there is rampant fraud, when you have the fox guarding the hen house (i.e. let the market dictate the policy) you end up with the mess we are in.

Federal reserve control on interest rates is not free market, Having Fanny and Freddie co-signing everyones mortage is not free market.

[sokal]

All governments make the same mistake.

Stimulus packages are BS and will never be a healthy solution.

That must be why China is doing so badly...

China had real money to spend, they did not borrow it. They still don't make any sense and never will. Keynesian economics is BS

Does 30 years of annual 10% growth make sense to you?

Yeah, from free market reforms.

[sokal]

I

t's a very good article, but I don't really agree with it. Arguing that government is always bad, and the private sector good, is too simplistic. Reality is more complex that that.

I don't really think stimulus packages are the best option either. But what to do when an economy is in negative feedback loop, and no other tools are helping? Do you think the private sector can bring a country out of this?

Look at America. 70% of GDP comes from consumer spending. The times of keeping this spending up by easy loans is finished. In the next 5 years (at least), consumption will be mainly based on income, not increasing their debt. That means that people will either have to earn more money, or there need to be more consumers (i.e. lower unemployment), if there is going to be any growth.

At the moment, unemployment is going up every month (less consumers), and incomes are increasing very moderately, or not at all. This leads to less consumers, which in turn leads to higher unemployment, which in turns leads to....

So the question regarding getting out of this spiral is not about efficiency. It's about where demand is going to come from to break the spiral. There is where the role of government comes in.

But, of course, governments are supposed to save in good times, to be prepared for the inevitable bad times, so that they have the resources to give the economy the boost it needs to get back on its feet again. Unfortunately America has not done this.

The reason the US has 70% of its economy in consumer spending is because it has huge trade deficiets. All the US ever exports is debt. Every time the Chinese economy is mentioned on TV they show people working hard in huge factories, every time the American economy is mentioned on TV they show fat Americans in huge shopping centers.

This video simply proves that Keynes makes things worse

What are you talking about? There is no relation between the consumer spending rate and the trade deficit.

If 70% of the economy is consumer and service then that only leaves 30% more to fit in manufacturing and export.

Think of what a consumer is, a consumer has no productive capacity, none. So 70% of the US economy has no productive capacity which means it needs to export debt in order to pay for things. When you export debt rather then productive capacity you create a trade deficit.

[sokal]

But not use them over the long term exclusively.

Or excludively, if it can be a word.

Liberal marketeers do not give it any credit, just like any aggressive Christian sect, and they believe theirs is the only correct way.

I'm not excluding liberalism towards the markets as an idea, don't get me wrong, it's just at this point majority of professionals think it's inappropriate strategy to deal with the crisis.

They might be all wrong.

You are talking about belief while being a proponent for the only repeated solution that is proven to not work.

That is usually the sign of a person with strong belief. Discard facts if they conflict with the belief, 'we are doing this anyway'.

A true free market solution has never been adopted as a way out of any crisis and hence the 'rescue attempts' always falls short or distorts the nations until the fall into the next crisis.

The current market crisis is in many regards built upon two things, a government forcing banks and institutes to handle loans that will fail at any sign of trouble, and a banking system that knows the government will revert to socialist tendencies when the problems rise and bail them out.

Much like the car-companies should have been allowed to die (if you cannot make environmentally sound cars with decent mileage that the customers want, maybe you shouldn't be making cars at all) the broken banking institutes should have been cleared out once and for all.

Instead of getting a clean start for a better future they will bandage the broken system and hope to postpone the next crash a little bit more...

Without the bailout of the banks, you would have an economic meltdown. Without a functioning financial system asociety can not work.

Secondly it would mean the immediate end of America as an economic super-power, as they would pretty much not have any financial institutions left.

This is, of course, is how the market is supposed to work. The bailout of the banks in America is nothing less than protectionism. With the failure of America's banks, banks in Canada, Europe and China that have been properly managed would quickly be there to replace America's.

You have no idea how the capital markets work, I don't know were to start.

[sokal]

Just a final point to the ones arguing that government intervention is always being BS.

Can you please explain how Canada, a country with a bigger government and more heavily regulated economy, is pretty much walking through this financial crisis completely untouched?

Not one Canadian bank has asked for money from the government.

Bigger government per capita maybe,

but doubltfully bigger in size and economy managed.

I would hazard that the greater regulation is the reason that Canada's banking sector

was less caught with it's pants down. Were these repackaged and WAY over leveraged debt derivatives

available as freely to Canadian banks and brokers?

Some argue that government regulation is BS. like USA Republican zealots,

but this may likely have been Canada's saving grace.

"So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking."

http://www.fareedzakaria.com/articles/newsweek/020709.html

Canada did not have a FANNY and FREDDIE co-signing everyones loans for them creating moral hazard.(governement intervention in the free market)

In Canada, the interest on mortgages is not tax deductable, in the US, it is. (government intervention in the free market)

Don't get too high on Canada, they are all connected. Mark Carney, the governer of the Bank of Canada, worked at Goldman Sachs for years.

[chrislarsson]

Without the bailout of the banks, you would have an economic meltdown. Without a functioning financial system asociety can not work.<br /><br />Secondly it would mean the immediate end of America as an economic super-power, as they would pretty much not have any financial institutions left. <br /><br />This is, of course, is how the market is supposed to work. The bailout of the banks in America is nothing less than protectionism. With the failure of America's banks, banks in Canada, Europe and China that have been properly managed would quickly be there to replace America's.<br />

<br /><br />You have no idea how the capital markets work, I don't know were to start.

Do you also believe that people like Warren Buffet, Joseph Stiglitz, Paul Krugman, etc, have no idea how capital markets work?

Edited September 11, 2009 by chrislarsson

[chrislarsson]

Just a final point to the ones arguing that government intervention is always being BS.

Can you please explain how Canada, a country with a bigger government and more heavily regulated economy, is pretty much walking through this financial crisis completely untouched?

Not one Canadian bank has asked for money from the government.

Bigger government per capita maybe,

but doubltfully bigger in size and economy managed.

I would hazard that the greater regulation is the reason that Canada's banking sector

was less caught with it's pants down. Were these repackaged and WAY over leveraged debt derivatives

available as freely to Canadian banks and brokers?

Some argue that government regulation is BS. like USA Republican zealots,

but this may likely have been Canada's saving grace.

"So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking."

http://www.fareedzakaria.com/articles/newsweek/020709.html

Canada did not have a FANNY and FREDDIE co-signing everyones loans for them creating moral hazard.(governement intervention in the free market)

In Canada, the interest on mortgages is not tax deductable, in the US, it is. (government intervention in the free market)

Don't get too high on Canada, they are all connected. Mark Carney, the governer of the Bank of Canada, worked at Goldman Sachs for years.

There is no question about that this financial crisis is caused by decades of mistakes and mismanagement. The question is how to handle it now.

[sokal]

There is no question about that this financial crisis is caused by decades of mistakes and mismanagement. The question is how to handle it now.

They need to let the system purge itself of its debts and imbalances, the recession is the cure, not the disease. You cannot stop recessions, they need to play out naturally just like the Asian financial crisis did in 1997. The real day of reckoning is in front of us, not behind us.

[patklang]

Would any poster trust the Thai hiarchie spending that sort of money without 1 hand in the till,no chance whatsoever.

[chrislarsson]

There is no question about that this financial crisis is caused by decades of mistakes and mismanagement. The question is how to handle it now.

They need to let the system purge itself of its debts and imbalances, the recession is the cure, not the disease. You cannot stop recessions, they need to play out naturally just like the Asian financial crisis did in 1997. The real day of reckoning is in front of us, not behind us.

How can you compare the Asian Crisis with this one? The recovery was so fast mainly because exports to America took off so quickly. Americas problems can not be solved by exports.

You may not be able to prevent recessions entirely, but fluctuations can be reduced greatly if governments act responsibly.

One of the main causes for the '97 crisis in Thailand was that its monetary policy satisfied all 3 conditions in the 'Impossible Trinity', while only 2 is possible. Thailand will never go back to all 3 conditions again.

Can anybody here show a scenario how market forces alone can take a country out of an economy stuck in a negative feedback loop?

My expectations are not very high, but let's give it a go.

Edited September 13, 2009 by chrislarsson

[chrislarsson]

There is no question about that this financial crisis is caused by decades of mistakes and mismanagement. The question is how to handle it now.

They need to let the system purge itself of its debts and imbalances, the recession is the cure, not the disease. You cannot stop recessions, they need to play out naturally just like the Asian financial crisis did in 1997. The real day of reckoning is in front of us, not behind us.

If this recession is causing 20+ percent unemployment (as id did in the Great Depression), would you still call it a cure, and not a disease?

[TAWP]

There is no question about that this financial crisis is caused by decades of mistakes and mismanagement. The question is how to handle it now.

They need to let the system purge itself of its debts and imbalances, the recession is the cure, not the disease. You cannot stop recessions, they need to play out naturally just like the Asian financial crisis did in 1997. The real day of reckoning is in front of us, not behind us.

If this recession is causing 20+ percent unemployment (as id did in the Great Depression), would you still call it a cure, and not a disease?

Even with the insane packages being put out by corrupt governments worldwide, I doubt we will see any fall of that magnitude.

[chrislarsson]

There is no question about that this financial crisis is caused by decades of mistakes and mismanagement. The question is how to handle it now.

They need to let the system purge itself of its debts and imbalances, the recession is the cure, not the disease. You cannot stop recessions, they need to play out naturally just like the Asian financial crisis did in 1997. The real day of reckoning is in front of us, not behind us.

If this recession is causing 20+ percent unemployment (as id did in the Great Depression), would you still call it a cure, and not a disease?

Even with the insane packages being put out by corrupt governments worldwide, I doubt we will see any fall of that magnitude.

If arguing that the ideas the majority of the worlds leading economists hold are insane, there is no point in a continued discussion.

I rest my case.

[animatic]

Sadly such a purge has real people attached to these numerical amounts.

So lets also purge the people who trusted their financial advisors to make them

a better return than the banks would have, using the same devices that the big boys

were seen to successfully use, and that were OK'd by the governments of the day

as proper to use.

Oh wait, their children will stop eating..

No that's the cure I forgot.

The facts that so many countries are ALL in the same methodology

to arrest this collapse speaks to it's logic and hoped for effectuation.

I am invested rather conservatively, better than the banks,

but not anywhere near the plungers. While incomes have come down,

I am not wiped out by a long shot, and prefer that efforts are made to

re-balance and then repair the equilibrium controls of the world system; top to bottom.

[TAWP]

If arguing that the ideas the majority of the worlds leading economists hold are insane, there is no point in a continued discussion.

I rest my case.

You don't have to take my word for it, since I base the position that governments shouldn't be spending my money on bailing out failed business on ideology.

But a friend of mine is an active professor in Economics (funny enough, one of his research areas is risk-management and derivatives) and what his research has shown is that financial institutes are more willing to take higher risks with Your money with the knowledge that the government will bail them out. To put it in his words 'it is a win-win situation, if the high gamble pays off [which it always does short-term atleast] they win big, if it fails the government bails you out and you are still safe'.

If governments allowed failing business to be ruled by true market rules instead of protecting their rich friends, much would be different in the world today.

We cannot survive the crash of a bubble by creating a new bubble. Which is what each stimulus package is creating.

But I am sure you are a professor in the field and are willing to come and hold a lecture? I would be willing to listen.

[Plus]

The govt can't afford NOT to bail them out either.

These days if one big company falls, tens if not hundreds of MILLIONS of people will suffer, many of them not even connected to that company in any way.

Take a simple chain of mortgages, falling house sales, closing real estate and servicing companies, small shops in the areas affected by closures and, and a domino effect on other behemoth companies in the same field as the original failure. It spreads like fire.

Of course it's a pity that rich cats who caused it all in the first place get the best deal out of those bail outs, but suspending bail outs is like throwing the baby with bath water.

As for original risk taking - yes, it depends on guarantees, but so does the rest of the modern economy. This bubble grows on trust people put in each other and in institutions.

Less trust, less growth, as simple as that.

As long as everyone and everything is judged by growth, from economy to personal success, crises like these are unavoidable. I think Marx figured that out first.

[chrislarsson]

If arguing that the ideas the majority of the worlds leading economists hold are insane, there is no point in a continued discussion.

I rest my case.

You don't have to take my word for it, since I base the position that governments shouldn't be spending my money on bailing out failed business on ideology.

But a friend of mine is an active professor in Economics (funny enough, one of his research areas is risk-management and derivatives) and what his research has shown is that financial institutes are more willing to take higher risks with Your money with the knowledge that the government will bail them out. To put it in his words 'it is a win-win situation, if the high gamble pays off [which it always does short-term atleast] they win big, if it fails the government bails you out and you are still safe'.

If governments allowed failing business to be ruled by true market rules instead of protecting their rich friends, much would be different in the world today.

We cannot survive the crash of a bubble by creating a new bubble. Which is what each stimulus package is creating.

But I am sure you are a professor in the field and are willing to come and hold a lecture? I would be willing to listen.

The professor that you know are correct, and the "too-big-to-fail" issue is still there. But it should have been addressed before the crisis and not been allowed to be there from the beginning. You cannot let the whole financial sector collapse, just to teach it a lesson. Countries do not work without it. Actions will have to be taken so that it cannot happen again.

Here is an article written on the financial crisis by Nobel Laureate Joseph Stiglitz. Maybe I cannot teach your friend a lesson, but I am sure he can.

http://www.time.com/time/business/article/...1851739,00.html

Edited September 19, 2009 by chrislarsson

[chrislarsson]

Here is another article on the too-big-to-fail issue:

http://www.newsweek.com/id/214132

[oswald67]

Give us back Thaksin !