Rudd’s essay shows a stronger appreciation of the causes of this crisis, and the fragility of the economy in its wake, than I’ve yet seen from any other official source (with the sole exception of the Bank of International Settlements, where Bill White’s influence appears to remain, even though he is no longer its Economic Adviser–check this story on Bill and his forlorn attempts to raise the alarm during the Bubble).
Its one weakness is continued reliance upon neoclassical economic models to predict the future course of the economy after this crisis–when those same models ignore the role of private debt (which caused the bubble in the first place) and deleveraging (which will in fact drive the future course of the economy).
We can expect Rudd and Swann to continue with a large scale fiscal stimulus, in the hope that this will end the crisis. The next stage will come when this stimulus fails to achieve the level of growth predicted by neoclassical economic models, and as a result unemployment exceeds forecasts, public debt continues to run up, and deficit reduction strategies get pushed back in time.
So though Rudd is aware of the problem of deleveraging, he hasn’t yet taken developed policies that directly tackle it. But awareness of the problem is a necessary first step in addressing it, and Rudd has taken that first step.
http://www.debtdeflation.com/blogs/2009/07/27/rudds-essay-is-on-the-money/
Showing posts with label rudd. Show all posts
Showing posts with label rudd. Show all posts
31 July 2009
24 March 2009
All onboard the Anglo deficit spend hype train
I would read the latest Leap 2020 piece for another take on all this bailout hype euphoria and the G20 undercurrent critical of Europe.
"If we found this a relevant theme, it is because it represents in our opinion a deliberate attempt on the part of Wall Street and the City (2) to make the world believe in some rupture within the EU and to instil the idea that some « deadly » risk is weighing on the Eurozone, by endlessly conveying phony news on a “banking risk coming from Eastern Europe” and by stigmatizing a “cold-feeted” Eurozone as opposed to the “voluntarist” actions initiated by the Americans and the Bristish. One aim is also to divert the attention from the increasing financial problems encountered in New York and London, and to weaken the Europe position on the eve of the G20 summit."
Australia talks up the reserve currency status of old bucko.....and gently warns about eastern europe....
"Everybody agreed its fiscal stimulus plus," Mr Swan said. "We've got to do something about the flow of credit in the financial system. We've got to reform our international financial institutions."
The meeting also consolidated the dramatic shift towards a new power structure for running the global financial system, which offers a greater role for Australia and fast-developing countries such as China and Brazil.
The US, Japan and European countries vowed to share control of the global financial architecture with a broader group of nations, prompting Mr Swan to welcome the growing influence of the G20.
"Hopefully, we are seeing the eclipse of the G7 and the rise of the G20," he told The Australian. "That is a change that is good for Australia and good for the world because it reflects the fact that the G20 is where the growth in the world economy is happening, in places like China and India."
His comments came as US President Barack Obama said in Washington that the solution to the recession would involve fiscal stimulus and financial regulation.
Asked whether he favoured stimulus over regulation, Mr Obama said all nations must spend to compensate for the "drastic contraction" in global demand.
"We're not unique in that position," Mr Obama said. "Gordon Brown feels the same way, as does President Hu in China. Kevin Rudd has taken similar steps in Australia."
The power shift to the G20 was symbolised by the US surrendering its traditional power to appoint the president of the World Bank, and Europe giving up its monopoly on the top job at the IMF.
The memberships of two lesser-known financial groupings, the Financial Stability Forum and the Basel Committee, were broadened to give Australia and developing nations such as China and India greater roles in developing new regulations and redesigning the financial structure of recent decades.
"Seeing these other institutions ... now move to a more G20 representative style is really important in cementing the future of the G20 as opposed to the G7", which excludes Australia, Mr Swan said.
The G20, whose members make up 85 per cent of the world's GDP, was formed a decade ago as a forum for finance ministers and central bank governors and held its first summit of government leaders only last November in Washington in response to the economic crisis.
But the Obama administration yesterday displayed a new US willingness to share power in response to the global recession. The host, British Chancellor Alistair Darling, said: "We cannot carry on as if the world hasn't changed in the last 60 years."
US Treasury Secretary Tim Geithner said he was delighted with the agreement at the meeting that trade protection should be resisted and that monetary policy and tax-and-spend powers should be used to fight the recession."
"If we found this a relevant theme, it is because it represents in our opinion a deliberate attempt on the part of Wall Street and the City (2) to make the world believe in some rupture within the EU and to instil the idea that some « deadly » risk is weighing on the Eurozone, by endlessly conveying phony news on a “banking risk coming from Eastern Europe” and by stigmatizing a “cold-feeted” Eurozone as opposed to the “voluntarist” actions initiated by the Americans and the Bristish. One aim is also to divert the attention from the increasing financial problems encountered in New York and London, and to weaken the Europe position on the eve of the G20 summit."
Australia talks up the reserve currency status of old bucko.....and gently warns about eastern europe....
"Everybody agreed its fiscal stimulus plus," Mr Swan said. "We've got to do something about the flow of credit in the financial system. We've got to reform our international financial institutions."
The meeting also consolidated the dramatic shift towards a new power structure for running the global financial system, which offers a greater role for Australia and fast-developing countries such as China and Brazil.
The US, Japan and European countries vowed to share control of the global financial architecture with a broader group of nations, prompting Mr Swan to welcome the growing influence of the G20.
"Hopefully, we are seeing the eclipse of the G7 and the rise of the G20," he told The Australian. "That is a change that is good for Australia and good for the world because it reflects the fact that the G20 is where the growth in the world economy is happening, in places like China and India."
His comments came as US President Barack Obama said in Washington that the solution to the recession would involve fiscal stimulus and financial regulation.
Asked whether he favoured stimulus over regulation, Mr Obama said all nations must spend to compensate for the "drastic contraction" in global demand.
"We're not unique in that position," Mr Obama said. "Gordon Brown feels the same way, as does President Hu in China. Kevin Rudd has taken similar steps in Australia."
The power shift to the G20 was symbolised by the US surrendering its traditional power to appoint the president of the World Bank, and Europe giving up its monopoly on the top job at the IMF.
The memberships of two lesser-known financial groupings, the Financial Stability Forum and the Basel Committee, were broadened to give Australia and developing nations such as China and India greater roles in developing new regulations and redesigning the financial structure of recent decades.
"Seeing these other institutions ... now move to a more G20 representative style is really important in cementing the future of the G20 as opposed to the G7", which excludes Australia, Mr Swan said.
The G20, whose members make up 85 per cent of the world's GDP, was formed a decade ago as a forum for finance ministers and central bank governors and held its first summit of government leaders only last November in Washington in response to the economic crisis.
But the Obama administration yesterday displayed a new US willingness to share power in response to the global recession. The host, British Chancellor Alistair Darling, said: "We cannot carry on as if the world hasn't changed in the last 60 years."
US Treasury Secretary Tim Geithner said he was delighted with the agreement at the meeting that trade protection should be resisted and that monetary policy and tax-and-spend powers should be used to fight the recession."
31 January 2009
The Prime Minister takes my advice or is it that great minds think alike
I had some gratuitous? advice for the Ruddster...
"The Prime Minister needs to review the errors of Scullen, ditch the tawdry advice of those who "didn't see it coming" and get ready to bite the bullet and abandon, repudiate and punish those responsible for this long terrible sleepwalk into disaster: the property and real estate carny barkers, the directors of public companies unresponsive to the will of shareholders, the housing developers against local democracy, the auditors and accountants who certified an oligopoly of greed and tax fraud prudent in return for a place on the gravy train. And generally, the whole media, business and professional elite that apropriated twenty years of productivity growth on the promise of prosperity for all and delivered instead declining real incomes, insecurity of tenure and equal opportunity disaster."
open letter to PM
Well, I only caught the zeitgeist, I guess because Rudd's letter of thanks didn't arive.
But the news of his 180 degree turn is everywhere..
"In an essay to be published next week, the Prime Minister is scathing of the neo-liberals who began refashioning the market system in the 1970s, and ultimately brought about the global financial crisis.
"The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes," he writes of those who placed their faith in the corrective powers of the market.
"Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself."
Mr Rudd writes in The Monthly that just as Franklin Roosevelt rebuilt US capitalism after the Great Depression, modern-day "social democrats" such as himself and the US President, Barack Obama, must do the same again. But he argues that "minor tweakings of long-established orthodoxies will not do" and advocates a new system that reaches beyond the 70-year-old interventionist principles of John Maynard Keynes.
"A system of open markets, unambiguously regulated by an activist state, and one in which the state intervenes to reduce the greater inequalities that competitive markets will inevitably generate," he writes.
He urges "a new contract for the future that eschews the extremism of both the left and right".
He mocks neo-liberals "who now find themselves tied in ideological knots in being forced to rely on the state they fundamentally despise to save financial markets from collapse"."
rudd breaks off the dance
"The Prime Minister needs to review the errors of Scullen, ditch the tawdry advice of those who "didn't see it coming" and get ready to bite the bullet and abandon, repudiate and punish those responsible for this long terrible sleepwalk into disaster: the property and real estate carny barkers, the directors of public companies unresponsive to the will of shareholders, the housing developers against local democracy, the auditors and accountants who certified an oligopoly of greed and tax fraud prudent in return for a place on the gravy train. And generally, the whole media, business and professional elite that apropriated twenty years of productivity growth on the promise of prosperity for all and delivered instead declining real incomes, insecurity of tenure and equal opportunity disaster."
open letter to PM
Well, I only caught the zeitgeist, I guess because Rudd's letter of thanks didn't arive.
But the news of his 180 degree turn is everywhere..
"In an essay to be published next week, the Prime Minister is scathing of the neo-liberals who began refashioning the market system in the 1970s, and ultimately brought about the global financial crisis.
"The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes," he writes of those who placed their faith in the corrective powers of the market.
"Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself."
Mr Rudd writes in The Monthly that just as Franklin Roosevelt rebuilt US capitalism after the Great Depression, modern-day "social democrats" such as himself and the US President, Barack Obama, must do the same again. But he argues that "minor tweakings of long-established orthodoxies will not do" and advocates a new system that reaches beyond the 70-year-old interventionist principles of John Maynard Keynes.
"A system of open markets, unambiguously regulated by an activist state, and one in which the state intervenes to reduce the greater inequalities that competitive markets will inevitably generate," he writes.
He urges "a new contract for the future that eschews the extremism of both the left and right".
He mocks neo-liberals "who now find themselves tied in ideological knots in being forced to rely on the state they fundamentally despise to save financial markets from collapse"."
rudd breaks off the dance
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