The End of "Everything Bubble"

[tenant13]

https://www.nytimes.com/2022/06/17/o...foroohar.html?

An interesting conversation with the financial journalist Rana Foroohar. It's a broad discussion about decades of financial macro policies, the current pivoting and possible future direction for US and the world. A few highlights for me:

There was a lot of inflation. It was just asset inflation. And we understand asset inflation as a boon, not as an economic problem.

This is definitely going to be the Asian century. We’re going to get cut out of that growth. And not because of anything that a U.S. policymakers have done but because the Chinese policymakers have decided they’re going to own their own supply chains. They call it the dual circulation economy but basically it’s about producing local for local

What we need is to make some decisions as a society to have an income-led economy rather than an asset bubble-led economy. [She brings up Germany as an example of such economy] In 10, 20, or 50 years America may look a lot more like an emerging market country because we didn’t make these decisions.

She does not say "this time it's different" although one can argue that predicting the end of neoliberalism and globalization is just that. Either way I think these are interesting opinions that are worth sharing and discussing.

[aja8888]

Take a guess at what country has government spending at 43% of GDP. (and it's not China)

[Happyras]

Quote:

Originally Posted by tenant13 https://www.nytimes.com/2022/06/17/o...foroohar.html?

Thanks for sharing some points, I would like to read the article, but once again at the end of the free read limit......

[MichaelB]

Quote:

Originally Posted by Happyras Thanks for sharing some points, I would like to read the article, but once again at the end of the free read limit......

The interview is on a podcast episode of the Ezra Klein Show, dated 6/17

[ExPatKiwi]

The crypto bitcoin bubble is crashing today now $18,000

[aja8888]

Quote:

Originally Posted by ExPatKiwi The crypto bitcoin bubble is crashing today now $18,000

Who was it that said "What, me worry?"

Hint:

what me worry.jpeg

[wannabe]

Happywras, you can get around the paywall by using Firefox as your browser and installing "no scripts." I also think you can read it in Firefox in incognito mode.

[MBAustin]

Quote:

Originally Posted by MichaelB The interview is on a podcast episode of the Ezra Klein Show, dated 6/17

It's worth the time to listen, IMHO. Very interesting.

[Montecfo]

Quote:

Originally Posted by ExPatKiwi The crypto bitcoin bubble is crashing today now $18,000

We will know the market had bottomed when crypto is at zero. I do like the accelerated pace.

[target2019]

This is an openspotify link to Ezra Klein Show, 6/17/22.
https://open.spotify.com/episode/3qW...89af75e61f41dd

[Montecfo]

Thanks to MichaelB for the podcast link.

As far as the content, I did not find it very useful. There was little to nothing new. Demonize globalization, financial engineering, a certain former president and capitalism. No solutions or alternatives proposed.

[jim584672]

That which shall not be named is in the $17,XXX area.

[tenant13]

Quote:

Originally Posted by Montecfo Thanks to MichaelB for the podcast link. As far as the content, I did not find it very useful. There was little to nothing new. Demonize globalization, financial engineering, a certain former president and capitalism. No solutions or alternatives proposed.

I would call their commentary a "constructive criticism" rather than demonizing but we can agree to disagree on that assessment. As to the solutions, wouldn't you say that their suggestion to rebuild local production capacity , limiting financial engineering and rebuilding middle class (aka consumers) by income redistribution (taxation) is at least an attempt to provide solutions?

What they are trying to say is that we should turn back from the neoliberal economic policies that have been implemented by Reagan and every administration that followed (both Rep and Dem) and go back to some sort of New Deal 2.0. We may not like what they are suggesting but that is the solution on the table.

[GenXguy]

Quote:

Originally Posted by Montecfo Thanks to MichaelB for the podcast link. As far as the content, I did not find it very useful. There was little to nothing new. Demonize globalization, financial engineering, a certain former president and capitalism. No solutions or alternatives proposed.

Thanks. Glad I didn't waste my time listening.

[copyright1997reloaded]

Quote:

Originally Posted by tenant13 I would call their commentary a "constructive criticism" rather than demonizing but we can agree to disagree on that assessment. As to the solutions, wouldn't you say that their suggestion to rebuild local production capacity , limiting financial engineering and rebuilding middle class (aka consumers) by income redistribution (taxation) is at least an attempt to provide solutions? What they are trying to say is that we should turn back from the neoliberal economic policies that have been implemented by Reagan and every administration that followed (both Rep and Dem) and go back to some sort of New Deal 2.0. We may not like what they are suggesting but that is the solution on the table.

No.

This part I agree with:

Quote:

Her view is that a decade-plus of loose monetary policy has been the economic equivalent of a “sugar high,” which kept the prices of stocks, housing and other assets going up and up and up, even as the fundamentals of the economy have been eroding. This “everything bubble,” as she calls it, was bound to burst — and that’s exactly what she thinks is happening right now.

But one has to ask of how and why we've had loose monetary policy? Because we've become a society where economic downturns aren't supposed to happen, where companies are not supposed to maximize profits, where any talk of trying to beware of supply lines controlled by potential adversaries was looked at as crazy nationalism, and where we've had every increasing deficit spending and unfounded never-to-be-touched social programs, and thinking that we need to have undeclared wars and troops all over the world...all at the time where our kids are lacking fundamental math and science skills and we import some of our best technical talent. Instead, our best talent wants to work doing financial engineering instead of engineering of plants and advanced manufacturing.

The above is a recipe for disaster and we are nearing the edge of the precipice, one a long long time in the making.

Yes, I know the above is generalizing and perhaps a rant.

[Montecfo]

Quote:

Originally Posted by tenant13 I would call their commentary a "constructive criticism" rather than demonizing but we can agree to disagree on that assessment. As to the solutions, wouldn't you say that their suggestion to rebuild local production capacity , limiting financial engineering and rebuilding middle class (aka consumers) by income redistribution (taxation) is at least an attempt to provide solutions? What they are trying to say is that we should turn back from the neoliberal economic policies that have been implemented by Reagan and every administration that followed (both Rep and Dem) and go back to some sort of New Deal 2.0. We may not like what they are suggesting but that is the solution on the table.

No "sort of new deal 2.0" was defined. So I guess I would say it was long on "constructive criticism" and short on alternative better paths.

We already have a massively progressive tax system where 45%+ of Americans pay no income tax and the top 1% pay almost 40 percent of income tax. If redistributive taxation was the answer I guess we are already doing it.

We already have ESG investing for those who dislike financial engineering. Suggesting debt issued to buy back stock should have been used to combat climate change or other ills is naive.

Some of what they said was self-refuting. Paraphrasing "meat is too cheap because the price does not reflect the suffering of the animals, since the animals are paying for it". However desirable in the eyes of some, how does higher priced meat help the middle and lower classes once again?

Re-shoring of supply chains must happen for reasons now obvious to everyone. No news flash there.

But I certainly welcome people to read or listen and draw their own conclusions.

[jurgs01]

We just need to go back to what made America great...free markets. We have the largest government in the world that is destroying our country.

[target2019]

Quote:

Originally Posted by tenant13 I would call their commentary a "constructive criticism" rather than demonizing but we can agree to disagree on that assessment. As to the solutions, wouldn't you say that their suggestion to rebuild local production capacity , limiting financial engineering and rebuilding middle class (aka consumers) by income redistribution (taxation) is at least an attempt to provide solutions? What they are trying to say is that we should turn back from the neoliberal economic policies that have been implemented by Reagan and every administration that followed (both Rep and Dem) and go back to some sort of New Deal 2.0. We may not like what they are suggesting but that is the solution on the table.

I listened, but just in the background. I'll try again.

[marko]

Quote:

Originally Posted by tenant13 and rebuilding middle class (aka consumers) by income redistribution (taxation)

I suspect we'd end up taxing the very people we'd be trying to re-build. They always seem to be the ones left with the tab.

[braumeister]

.