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A brilliant essay by James Galbraith without all the attendant progressive hysterics...
http://www.washingtonmonthly.com/features/2009/0903.galbraith.html#Byline
Our prescriptive remedies are ultimately hostage to what James Galbraith calls "the professional mindset", a mindset that constructs econometric models (like self-reflecting mirrors I would say) based on worst-case baselines that are 'modelled in' as per the 1981-82 trough. But if the models mirror 'the system', how can they ever capture systemic collapse or dysfunction?
This sleepy normalcy is relatable to Taleb's thin-tail phenomenon. In extraordinary times, the consensus --even its pet contrarians-- will always be confounded. We have seen this time and again from the folks up top. When the worst case scenario appears likely, the powers-that-be are 'systemically' bound to silence, evasion and denial. For one thing exogeneity undermines their power, most of which is illusory anyway and only given credence by imaginary, runaway and by-now ludicrous numbers.
In the context of the oil thread, I like this cornered rat theory. Knowing they are insolvent and their day draws near, the banks will take ever-larger speculative gambles. After all they are gamblers at heart in the post Glass Steagal era. Oil has an undeniable 'manipulability'. We saw it in 2008. As Galbraith suggests:
"The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil."
The money multiplier is, first and foremost, a barometer of hope and faith in the future. There is no hope without jobs. Fix the people not the banks! Obama is Roosevelt-lite. He suffers from a lack of imagination and a circle of Wall Street handlers masquerading as economists. Geithner's an apparatchik. An appartchik cannot think big. We need big thinking for big problems.
http://www.washingtonmonthly.com/features/2009/0903.galbraith.html#Byline
Our prescriptive remedies are ultimately hostage to what James Galbraith calls "the professional mindset", a mindset that constructs econometric models (like self-reflecting mirrors I would say) based on worst-case baselines that are 'modelled in' as per the 1981-82 trough. But if the models mirror 'the system', how can they ever capture systemic collapse or dysfunction?
This sleepy normalcy is relatable to Taleb's thin-tail phenomenon. In extraordinary times, the consensus --even its pet contrarians-- will always be confounded. We have seen this time and again from the folks up top. When the worst case scenario appears likely, the powers-that-be are 'systemically' bound to silence, evasion and denial. For one thing exogeneity undermines their power, most of which is illusory anyway and only given credence by imaginary, runaway and by-now ludicrous numbers.
In the context of the oil thread, I like this cornered rat theory. Knowing they are insolvent and their day draws near, the banks will take ever-larger speculative gambles. After all they are gamblers at heart in the post Glass Steagal era. Oil has an undeniable 'manipulability'. We saw it in 2008. As Galbraith suggests:
"The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil."
The money multiplier is, first and foremost, a barometer of hope and faith in the future. There is no hope without jobs. Fix the people not the banks! Obama is Roosevelt-lite. He suffers from a lack of imagination and a circle of Wall Street handlers masquerading as economists. Geithner's an apparatchik. An appartchik cannot think big. We need big thinking for big problems.
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