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  1. #1
    Senior Member Survive & Stay Free's Avatar
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    Default Could it happen again?

    I've been reading about the financial crisis which has saddled the UK and US with collossal debt which may not be paid in generations, one of the depressing and interesting things about this is that most of the authors I'm reading are suggesting that despite this having happened in recent memory, despite the likelihood of the debt and associated problems remaining around for a long time as a constant reminder that they rate the likelihood of another, very similar crisis as highly likely.

    What do you think?

  2. #2
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    The 2008 recession should have been played out, with no government interference in the US....since they didn't, it only prolonged the recession, the headache is going to be much larger. Next up is depression, it only needs a little jolt like it did in 2008.
    Compare it with a heroine addict shooting up more heroine to counter withdrawel :p

    Politically and Economicly for the UK, I'm not sure where they stand in what 'countermeasures' they took.

    Europe, if it doesn't cut Greece loose is going to be in a world of trouble, they're not doing Greece any favours right now preventing a quick but a hard recovering process. Poor germans having to shoulder so much of the debt =]

    China is booming, but at the same time inflating a few bubbles here and there, for instance in the real estate. It's buying oil like crazy too. However, China is quite capable of taking the hit, it has an industry able to stay competative. It has kept the value of the yuen articially low...so they could export like mad. They've been talking about letting it appreciate to the right value, but with their bubbles intheir economy ready to pop...
    Well, if their governments cut themselves loose from the US's economy, they have over a billion chinese to focus their products on...and their standard of living will increase, as their purchasing power goes up.

  3. #3
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Tantive View Post
    The 2008 recession should have been played out, with no government interference in the US....since they didn't, it only prolonged the recession, the headache is going to be much larger. Next up is depression, it only needs a little jolt like it did in 2008.
    Compare it with a heroine addict shooting up more heroine to counter withdrawel :p
    I dont believe there's any equivalence between the example of a heroine addict and an economy but I understand its the sort of trendy metaphorical reasoning that appeals to the political economists of libertarian bent.

    I'd interested to hear how you believe the US and world financial system could have operated without government intervention, to be honest I think the crisis demonstrated that the widespread and ideologically driven de-regulation of the eighties and after had failed, it hasnt been reintroduced either.

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    There is an equivalence(and easy to understand), the addict is the country addicted to borrowing,then spending it. Sounds great, things look like they boom...in the mean time they're racking up debt(country/body is deteriorating in health). Then it needs to borrow more and more, and spend and spend and print money to keep it all going(dosages keep increasing for better effect), but that path leads to more selfdestruction(Bussiness succumbing to debt, massive job losses).
    Well a country could overdose (hyperinflation of the currency due to excessive money printing), and you get things like Zimbabwe. Or you let the country go cold turkey, cut the spending and lower, start saving, increase interest rates...and let the withdrawel (recession) walk it's course.
    It's a biatch to go through, but it's the way to cure it. Depression of 1920–21 was a prime example, it was severe but very short because they did the right stuff back then. The alternative, doing the wrong things(which they are doing now)...is seen in The Great Depression.

  5. #5
    Courage is immortality Valiant's Avatar
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    ^^ Everyone knows that it was Roosevelt's New Deal policy that turned the depression in the United States. The War employed of the remaining 15% of unemployed left in 1940.
    This is precisely the same thing that Hitler did in Germany. It worked, too.
    Building the Autobahn, the hoover dam, digging ditches... It needs to be a part of a long-range plan, important to society and productive.
    I can agree with some that putting lots of money into making wartime equipment, ships and vehicles is not an ideal thing. It is mostly just short-term gain.
    Massive recovery programs are nothing new, though.

    In times like this, the government needs to inject money and start massive projects.
    Jump-start the industries, in order to save as many people as possible from ruin.
    Even if it won't benefit the large corporations and "free market" that libertarians so covet.

    Mightier than the tread of marching armies is the power of an idea whose time has come

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    Where are they going to get the money from?

  7. #7
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Tantive View Post
    There is an equivalence(and easy to understand), the addict is the country addicted to borrowing,then spending it. Sounds great, things look like they boom...in the mean time they're racking up debt(country/body is deteriorating in health). Then it needs to borrow more and more, and spend and spend and print money to keep it all going(dosages keep increasing for better effect), but that path leads to more selfdestruction(Bussiness succumbing to debt, massive job losses).
    Well a country could overdose (hyperinflation of the currency due to excessive money printing), and you get things like Zimbabwe. Or you let the country go cold turkey, cut the spending and lower, start saving, increase interest rates...and let the withdrawel (recession) walk it's course.
    It's a biatch to go through, but it's the way to cure it. Depression of 1920–21 was a prime example, it was severe but very short because they did the right stuff back then. The alternative, doing the wrong things(which they are doing now)...is seen in The Great Depression.
    An modern mass consumer economy is based upon he circulation of money, if you engage in the sort of policy decisions you are talking about you cut off the money circulation to the sections of society most likely to spend it rather than save it and take it out of the economy.

    The consequence is that the economy contracts, no one buys, there's nothing to produce and no need for a service sector so more people remain out of work or become out of work, the money in the economy further reduces.

    At which point you have a permanent economic decline and crisis the sort of which no nation bounces back from because the personal consequences, trauma, anxiety, widespread anomie take at least three generations to shake off and in all likelihood one of the "strong men" gets elected in the mean time as in the example you mentioned of Zimbabwe.

    I mean this is basic keynesianism, its now any functioning economy since before 1945 has operated, all the moralistic aphorisms in the world wont escape that fact.

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    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Tantive View Post
    Where are they going to get the money from?
    Taxation.

    *gasp* *the horror* *the horror* *gasp*

  9. #9
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    Somebody famous once said "History doesn't repeat itself, but it sure as hell rhymes."

    Yes, variations on past events... even fairly recent economic catastrophes... will happen.

  10. #10
    Senior Member Eckhart's Avatar
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    It certainly can happen again. As no steps (laws, regulation, adjustments to our system) were taken to prevent such happenings in the future other than hoping that people will be more reasonable, it is still possible to happen. As we all know that most people won't become more reasonable and responsible, it is also very likely to happen again in some time.

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