>The short answer to Kilander's ideas about flooding markets with dosh is that
>that is what the US, Japanese and EU have been doing most of 1998. The IMF
>spent
>$18bn in Russia and the bailout went wrong in 3 weeks. The longer answer would
>have to start with the world-system, not end with it. When the crash of 1987
>happened I was in Moscow and there were big street parties to
>celebrate the 70th anniversary of the October Revolution (yes, really)
>amid considerable schadenfreude about western woes. It was a great surprise
>to me and most people (putting it mildly) when it turned out to be none
>other than the Soviet Union which would foot the bill for the vampire's
>next unexpected renaissance. But that's what happened: because the world
>system is a single spatio-technical unity. People like Brad deLong are
>capable of writing about that the whole time without ever actually noticing
>the fact. Check out Nouriel Roubini's Asia Crisis Page and see what I mean.
>The collective floundering on this list looks like a Palladian college of
>sweet reason by comparison.
Forgive us, Mark, for not enjoying the same privileged access to truth as you.
$18 billion is risible. A headline in the FT said the other day, "Russia promises austerity to continue." 300% interest rates are not consistent with an indulgent central bank. Asia, too, has been whacked with austerity. European central bankers have been growling in a bearish way. The U.S. federal funds rate - the short rate that is the Fed's principal policy target - is above the nominal GDP growth rate, which, historically, has meant tightness. Fiscal policy everywhere is tight, and mostly tightening. I'm willing to believe a serious deflationary implosion - global, which the U.S. couldn't escape - is underway, but you're wrong about the flood of liquidity.
Doug