Big thinkers still stumped on global economic crisis

BBC ^ | 21 April 2013 Last updated at 19:05 ET | Andrew Walker

[haffast]

More than five years after the onset of the financial crisis, you might have thought economic policy makers would know what to do next.

Well they don't. Or at the very least, there is nothing like the kind of consensus that prevailed before the financial crisis.

The International Monetary Fund (IMF) has been hosting a conference on rethinking economic policy, organised by four experts in the area, including the IMF's own chief economist.

One of the other organisers - the Nobel Prize winner George Akerlof of the University of California - had a vivid analogy for the state of uncertainty the economics profession now faces.

"It's as if a cat has climbed this huge tree - the cat of course is this huge crisis. My view is 'oh my God the cat's going to fall and I don't know what to do'."

snip

The trouble for the economics profession is, according to the last of the conference hosts and another Nobel Prize winner, Joseph Stiglitz: "There is no good economic theory that explains why the cat is still up the tree".

snip

Then there is monetary policy. Before the crisis the main tool was interest rates, but the toolkit has since expanded to include quantitative easing - shovelling money into the financial system hoping it will stimulate more spending.

There was support for that but it wasn't universal. 'Not a clue'

Allan Meltzer of Carnegie Mellon University in Pittsburgh Pennsylvania for one thought it was a huge amount of stimulus with very little effect.

snip

There was no great enthusiasm for the rapid increase in government debt in the rich countries over the last few years, but few would go as far as the conservative view of Allan Meltzer:

snip

[haffast]

Meltzer:

"If we want financial stability, economic stability and other good things don't we begin by restricting budget deficits? Formally, indefinitely and for all future time?"

Haaallooo, tap, tap, tap......is this thing on?

Big thinkers admitting they don't have a clue. Hint: fiat money, usury, greed, pride, and arrogance.

[Paladin2]

Eschew debt.

Reduce theft through reduced taxation.

[llevrok]

One thing I will always thank Monica Lawinsky for is tying up congress and the white house for a number or years. They did little to tinker with the economy and it found it's prime level of function.

Today, all these Keynesian governments are possessed with tinkering and disrupting the power of laissez faire.

[who_would_fardels_bear]

Now how can we make good on all the bad bets we made on credit default swaps using other peoples’ money without them finding out and having us all tarred and feathered?

[Wanderer99]

There is no logical solution to stupidity.

When most of the human population goes idiot then we are all basically screwed.

[Vince Ferrer]

I am not stumped. There is too much debt, there is no capacity for more. There is no "next big thing" big enough to expand GDP and get the economy moving again. And we have a government which is throwing roadblocks to employment.

So we sit here. We are going to sit here for a long time, until the developed world collapses and renounces the debt, or until we reengineer the financial system to not be based on growth and debt.

[Southack]

Well, they aren’t thinking big.

If you reduce the regulatory burden, then companies spend less on compliance (e.g. permits, hearings, forms, mandates) which increases profits.

If you reduce the tax burden, then companies pay less to the government, which increases profits...and wonder of wonders...leaves individuals with more money to buy products and services from companies which increases profits again.

If you reduce the cost of energy, say from fracking, nuclear, hydro-power, et al, then companies pay less for operations, which increases profits.

If you reduce the cost of money (e.g. easier/cheaper loans), then companies pay less for investment funds which increases profits.

If you reduce the cost of insurance, say through tort reform, then companies pay less to be insured, increasing profits.

Oh, and here’s a tip for those “big thinkers” who haven’t figured out how to save the world economy ever since Japan tanked in 1989:

pause

drum roll

Profits have to be increased to grow your GDP sustainably.

[GeronL]

governments need to stop spending more than they get and they need to stop high taxes and harsh regulations that hurt the business environment too

Then again, th BBC News channel even blames sovereign debt crises on capitalism, lol. The same channel where an analyst was allowed to call North Korea a “rightwing state” without any other view being expressed.

[laplata]

When most of the human population goes idiot then we are all basically screwed.

---

Well, we’re screwed.

[piytar]

Um yeah they do. They’re either in on the scam or scared to say anything because they know how awful it is.

Unless they’re emotion driven leftards, though, they get it. After all, it is not really that complicated.

[piytar]

There is no "next big thing" big enough to expand GDP and get the economy moving again.

Actually there are a few that are big enough to let this thing draw out even further, which means the crash will be even worse. One is fracking of natgas deposits in the US. There are a couple of tech pieces, too. But even as big as those are (value: a few trillion), they're not going to be enough to stave off the crash for long. And that in itself is terrifying: trillions not being enough...

[vpintheak]

One word: entitlement. These “experts” need to look it up. Morons.

[piytar]

Yup.

[tdscpa]

Hey! Our economy is in the toilet! BUT! We have an election coming up. Let’s elect a communist president and senate! YES! That’s the ticket!

[Vince Ferrer]

I would agree that natural gas and oil is as “next big thing” as we have right now, but Obama is sitting on permits and the pipeline. Gas is what is holding us together so far, and it will get better if we can grab some industrial business from Europe, but unless Obama opens up public lands to more exploration, I don’t think it will get us out of the hole. Congress could also get rid of the requirement that ethanol be made from corn, since it can be made 30% cheaper from coal. If they did that, we could run our cars on E85 and be oil independent.

[fso301]

More than five years after the onset of the financial crisis, you might have thought economic policy makers would know what to do next.

The World's economic system has operated based on America being a more free market, libertarian economic system. Now Obama comes along determined to transform America into some form of Euro-socialist nation. That should be a clue as to resolving the situation.

[RJL]

Big thinkers still stumped on global economic crisis

If printing and spending massive amounts of money were the answer they'd be in great shape because that is all they know how to do. And by the way, there is NO big thinking going on with these fools.

[woofie]

The best plan is for them to give me $ ....crises over

[1010RD]

Has somebody contacted the Ivy League Schools about the economic crisis? They have the smartest people in the world, a real “brain trust”, and if we’re not using them to fix the problem aren’t we just wasting that resource?