U.S.: Un Paraiso de Locos

Enrique Diaz-Alvarez enrique at anise.ee.cornell.edu
Mon Jan 31 13:34:24 PST 2000

Doug Henwood wrote:

> Enrique Diaz-Alvarez wrote:
> >I am speechless. I don't follow the Spanish financial press much,
> >but from what
> >I have seen is a mixture of buy-whatever-went-up-yesterday financial advice,
> >let's-do-whatever-the-yanks-are-doing economic opinion, and
> >the-internet-is-the-future-man economic pseudo-predictions. How did you get in
> >there?
> So what'd Max say? My Spanish is almost nonexistent.
> Doug

[I left out the part about stockings, garter belts and whips; didn't seem relevant].

[I see that Max is a member of the Greenspan Cult, albeit a moderate one. The Bubblemeister's a bit like Reagan; I can't decide whether he is a smart con man or a dumbass that actually believes his own bullshit].

"The US economy today is a fool's paradise. Noone pays any attention whatsoever tot he posibility of a collpase." Max Sawicky, expert in finances and economics of the EPI of Washinton DC and author of "the poverty of the new paradigm", does not share the wave of generalized optimism rampant in the US.

Q: New Economy or irrational exhuberance: How would you describe the current economic situation in the US?

The best term is stock market bubble. Share rices are hugely overvalued. Some see a bubble in the labor market as well. Employment has grown a lot and this may have something to do with the stock market. I don't believe we have enough evidence to say that something has changed radically.

Q: What could throw everything off course?

A stock market collapse and a continuing federal surplus. If the Government uses the surplus to pay off debt, nsocial investment is curtailed and less money is available to the public. The incredibly low household savings rate cannot be sustained indefinitely. Sooner or later the'll have to start paying off their debt.

Q: Will there be a recession then?

Yes. We'll have a recession within (in?) two years, and in five years we will be recovering from it, and the situation will be aggravated by the collapse of the reformed welfare system.

Q: Many trust in Alan Greenspan as if he were a savior. Is he a genius or just lucky?

I think he's smart and lucky. Smart enough to give up his ideological prejudices and lucky enough to pull this off.

Q: Some expect Europe and Japan to relieve the US as engines of global growth...

I don't believe it'll happen. Japan is too small and has its own internal demand problems. Europe is too divided and too influenced by the German financial culture of monetary restriction. Europe's biggest problem is a monetary policy that restricts consumer demand and growth.

-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique

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