Julio Huato wrote:
> Just as I don't understand Patrick's qualms with the paper. How can
> multicollinearity be a problem in *this* case?
Because the subprime mortgages, current account deficit, public debt,
relatively stagnant GDP etc etc are symptoms of a deeper problem.
> And why is it wrong
> for R&R to focus on the U.S. and limit the analysis to the experience
> of rich countries?
How can this story not be told without noting international financial contagion, financial imperialism, the spatial fix, globalisation...
> That doesn't go as far as believing that crisis is the regular
> mode of being of capitalism, as Patrick seems to think,
Not at all. The crisis comes, as Cox defined it most usefully, when a
system's reproduction is not automatically perpetuated by
self-correcting features but instead needs an exogenous shock whose
logic is contrary to the system's laws of motion. There was not a
'crisis' in that sense from the 1940s-60s, but by the late 1960s
systemic overaccumulation and crisis displacement processes began to be
evident.
> If I understand him correctly, Doug has been reluctant to anticipate a
> serious mess in the U.S. economy as he's come to expect a savvier
> policy response
Savvy means an earlier bailout? Isn't that always the strategy of the
ruling lads: move the devalorisation elsewhere? In which case Doug's
mistake in downplaying the economic problems until they bit him in the
ass is a function of not recognising the potentials for the internal
crisis (overaccumulation and financial speculation) to grow to such
large proportions from early on, and not recognising the scope of
capital's collateral damage and in some cases (e.g. Iraq) the resistance.
> from the central bankers, more effective that people
> in the left typically grant them. Curiously, this has coincided with
> greater humbleness on the part of the central bankers themselves.
>
They were humble for a few months in 1998 too. Some even tried a
post-Washington gambit. That's why comrade Doug and others with
market-watching skills who see the mess unfold now should have been more
like Chicken Little, instead of being so damn sanguine. A good model,
I'd say, was Dean Baker at www.cepr.net, who called the real estate
bubble a bubble long before anyone else awoke.
Cheers, P.