And compare this to the current Economist issue: Someone posted the downloadable cover piece here recently. It's full of the usual nonsense, but what is not downloadable is the actual indepth article, "What a peculiar cycle", under "Americas' Economy". It eerily mirrors Godley, in fact their "US private sector net saving" graph is a flipped over mirror of Godleys' - maybe they're ripping the story off from him. One choice quote:
(Is the "new economy" really new?)
"One observer who demands attention thinks not. Larry Summers, who has just retired as Americas' Treasury secretary, has recently argued that Americas' current cycle is fundamentally different from its postwar predecessors - though not because it is "new". He argues that it has more in common with economic cycles as they worked before the second world war - or even, wait for it, with Japans' during the late 1980's. This is a comparison he thought it unwise to draw while still in office. Mr. Summers still hopes that a recession will be avoided in America. But if he is right about how things work, predictions based on orthodox business cycle calculations are of little use."
In other words, a huge overinvestment in productive capacity unconnected with actual (effective?) demand. Supply side run amok. I suppose we should expect Says' Law to be refuted in practice - once again.
-Brad Mayer
-Brad Mayer
>One of Wall Street's revered traditions, the sucker rally, seems to be in
>progress today, so it's worth noting this comment in today's Wall Street
>Journal:
>
>"Usually falling stock prices mean stocks are better bargains. But earnings
>are falling at an even faster clip than prices lately, so price-earnings
>have actually been going up. A week ago, the price-earnings multiple of the
>Nasdaq was 121 ... below the current 154 figure, meaning that investors are
>paying more for a dollar of earnings than just a week ago. Even if
>money-losing stocks are taken out of the Nasdaq calculation, the price
>earnings ratio is 35, a historically high level. In fact, a look at past
>bear markets underscores how expensive stocks remain. The Nasdaq traded at
>a price-earnings multiple of just 19 in late 1988, when the most recent
>Nasdaq bear market ended."
>
>The magic of the marketplace!
>
>Carl