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Wednesday, January 28, 2009

Economy After Neoliberalism

Posted by Charles Mudede on Wed, Jan 28, 2009 at 1:52 PM

In the NYT:

“We cannot underestimate the challenges and dangers that the world economy faces in 2009,” Stephen Roach, chairman of Morgan Stanley Asia, said at the forum’s traditional opening debate on the macroeconomic outlook. “It will most likely be the first year since World War II when G.D.P. actually contracts.”

The only bright spot, as the conference [the World Economic Forum in Davos] got under way came from Wen Jiabao, the Chinese premier. Eager to calm concerns that his country’s economy would not avoid recession, Mr. Wen struck an unabashedly upbeat tone.

“I can give you a definitive answer,” he said. “Yes, it will; we are full of confidence.”

The premier's confidence in China makes me worried not about the state of the global economy but the state of the Chinese citizen. They know it is they who will somehow have to pay for the premier's confidence.

Again, during this mess it is important for us not forget this passage from Krugman's letter to Obama:

First, let's put the costs of the economic-recovery program in perspective. It's possible that reviving the economy might cost as much as a trillion dollars over the course of your first term. But the Bush administration wasted at least twice that much on an unnecessary war and tax cuts for the wealthiest; the recovery plan will be intense but temporary, and won't place all that much burden on future budgets.

Something not to forget. The price for the rescue of the economy is currently less than half the amount Bush wasted during his two terms.

Comments (7) RSS

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The Chinese have only lately acquired the art of cooking the books, a trick they learned from American business. So don't believe most of what they say. Instead, look to the Human Misery Index, which will be the numbers of people dispossessed and starving. Again, the Chinese will try to fudge these numbers and then try to hide them, which is another trick they learned from American mainstream media.

Funny how we don't hear or see much about those great big tent cities that have sprung up around LAX airport... (hint: try YouTube).

Posted by MichaelPgh on January 28, 2009 at 2:12 PM

The Three Trillion Dollar War is a great book, very dry, about the estimated costs of the war. And they mention about eleventy billion times that three trillion is an extremely conservative estimate. As in, we can be sure it has cost at least three trillion, how much more than that is not known.

Posted by meeps on January 28, 2009 at 2:18 PM

@1,

Hiding bad news is a time-tested art form practiced by democratic and authoritarian governments alike. The Chinese must be very U.S.-centric if they learned all that stuff from us and us alone.

Posted by keshmeshi on January 28, 2009 at 2:32 PM

@1, bluh? What? Which China are you talking about? Did you just find out that there was a China, this afternoon?

Posted by the stupid, it burns on January 28, 2009 at 2:46 PM

They probably will have a 7 percent GDP, but Michael probably is correct in part - some people think that since they tend to execute people who deliver bad news and send their families to work in remote areas, that they probably will have a 3-4 percent GDP in actual measurements.

Remember, they own a LOT of t-bills.

Posted by Will in Seattle on January 28, 2009 at 3:00 PM

Bush wasted money on quite a few things so Obama should do the same in an effort to prevent the inevitable and necessary changes to our economy and government?

Really?

Posted by Do as I say not as I do? on January 28, 2009 at 3:37 PM

Krugman is right and if these investments are funneled into long term benefits for the people: transportation, water systems, renewable energy and grid improvements - the short term expenditure will pay for itself within 15 years. We just have to make sure that we limit how much more of our stimulus plan is sucked into the black hole of the banking industry.

Posted by Morgan on January 28, 2009 at 11:57 PM