[lbo-talk] anxious

[Cseniornyc at aol.com]

Doug Henwood wrote: "People have been forecasting some sort of  
bone-crunching crisis for 
the U.S. economy, and the broader world economy,  for several decades. 
They point to rising debt, financial market  instability, or whatever the 
problem of the moment is. And that crisis has  failed to materialize. It could 
yet someday, I'm not denying that. But its  repeated failure to materialize 
should prompt some reflection on why it hasn't,  and why the propensity to predict 
it persists. On the first, I think the  prophets of doom underestimate the 
skill and power of state bailout managers  (and also fall for the temptation to 
see 
every problem as a crisis). "
******************************************************************************
**********************
I think we have some mutual misunderstanding here. I agree with your  
assessment of wishful thinking forecastings by the left and the  Austrians on the 
demise of the system. But I think this reasoning is  symmetric and it equally 
applies to the cheerleaders who only see a rosy outcome  in the horizon. That's 
why I pointed out specific economic items to consider in  assessing government 
statistics before swallowing them whole .I wasn't  forecasting any immediate 
crisis but it is obvious that the system is facing  severe problems that might 
lead to one sooner than later. The twin deficits are  approaching 6 % of GDP, 
the saving rate is near zero and SEA central banks  hold immense amounts of US 
debt ; then  would some one please tell me how  the policy makers in any 
economy can deal with this problems  without  causing a severe contraction and a 
reduction of the standard of living ? Please  tell me because I don't want to 
appear to be an ill wisher but I can't figure  out any economic mechanisms 
leading to a better outcome..
Again I agree the system has so far shown extraordinary resilience. But you  
don't specify the mechanisms (I don't imply you don't know them, most likely 
you  do) by which this is possible. In my opinion a lot has to do with the US  
hegemonic imposition of the dollar as the sole reserve currency in the world.  
This has facilitated the vast expansion of the financial sector ,locally and  
internationally, which has been able to fuel he economy almost unlimitedly 
via  genuine creative investment, asset bubbles and explosive, unprecedented  
corporate and consumer debt. This has certainly oil the system well..Finance has 

 been able to turn its activity into exchangeable commodities becoming a  
partially autonomous sector. This is something that Austrians and old fashion  
Marxists miss. Although gloomy views are not limited to them .Analysts and  
operators within the system such a Stephen Roach from Morgan-Stanley, Paul  
Krugman, Warren Buffet ,The PIMPCO guys and George Soros do not exactly hold  rosy 
views on the immediate economic future.
Because , as  powerful as it maybe be,  the system also has its  limits. I 
think it is beginning to test its lower boundaries right now.  We'll see how 
long it will take. All I can say is that eventually every chain  letter runs out 
of addresses.
Cristobal Senior
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <../attachments/20050907/7c16cf16/attachment.htm>