[lbo-talk] (no subject)

[ken hanly]

You may be right but what about his point that as long as treasuries are high yielding investors will shy away from other more risky investments that would actually increase production? Is he right about that? It does seem that credit is still very tight even though many steps have been takent to increase the amount of money available. Why? Isn't it because of risk aversion and the fact that treasuries give a good return?

Cheers, k hanly/

Blog:  http://kenthink7.blogspot.com/index.html
Blog:  http://kencan7.blogspot.com/index.html

--- On Thu, 11/13/08, dredmond at efn.org <dredmond at efn.org> wrote:


> From: dredmond at efn.org <dredmond at efn.org>
> Subject: Re: [lbo-talk] (no subject)
> To: lbo-talk at lbo-talk.org
> Date: Thursday, November 13, 2008, 11:37 PM
> On Thu, November 13, 2008 3:24 pm, ken hanly wrote:
> 
> > I include just a part of a much longer article.
> Goldman explains why US
> > treasuries are so popular and why this discourages
> investment. What are
> > economists opinions on this analysis?
> >
> > David P Goldman was global head of fixed-income
> research for Banc of
> > America Securities and global head of credit strategy
> at Credit Suisse
> >
> http://www.atimes.com/atimes/Global_Economy/JK13Dj01.html
> 
> I'm not an economist, but judging by the article,
> Goldman is an outright
> sado-monetarist - loopy Far Right types who deify the bond
> market and have
> no clue that someone, somewhere, needs to actually buy
> products for
> businesses to flourish. It's the usual Far Right swill,
> about how slashing
> taxes on the rich, crushing unions and welfare states, and
> deregulating
> everything will create prosperity. Their policies have been
> a planetary
> disaster.
> 
> > contraction. If the Treasury tries to spend its way
> out of recession, the
> > results are likely to be very disappointing.
> 
> This is where Goldman falls into neo-Hooveresque lunacy.
> Private
> consumption is falling off a cliff, which means governments
> MUST spend,
> and massively, or we fall into a decade of hell. And
> governments can
> certainly spend - the Treasury can create money, and
> Congress can spend it
> on green jobs, infrastructure, etc. The only danger in
> printing money is
> kicking up inflation, which tends to hit bondholders -
> precisely the
> section of the ruling class Goldman worked for
> ("fixed-income" means
> bonds). But infrastructure investments don't create
> inflation, they create
> productive assets, which then pay for the debt.
> 
> True, the US won't be able to finance its current
> account deficit by
> borrowing abroad forever. But that's a long-term
> problem which needs a
> long-term solution - short-term austerity would only make
> things worse.
> First boost the economy, then boost savings.
> 
> -- DRR
> 
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