|
 | ||||||||
|
|
| ||||||
       | ||||||||
| ||||||||
| ||||||||
|
||||||||||||||||
|
||||||||||||||||
|
|
|
||||||||||||||
 |
« Previous Entry | Main | Next Entry » Is it time to admit that the world is already in a recession? Name:
Sara
Question/Comment: Over the past few weeks, we have gone to extreme measures to save economies around the world. Treasuries and central banks to date have used multiple tools to ease this crisis such as, lowering Interest rates, pumping billions of dollars into stock markets and failing companies, offering to buy bad assets, and nationalizing banks, to no avail. Is it time to admit that the world is already in a recession? And what can Main Street and people around the world do to restore confidence in world economies? Paul Solman: Almost everyone IS admitting the world is in recession, or heading towards one. How to restore confidence on Main St.? (Is there a "Main St." in Dubai?) Here's my best shot, repeating some of what I've written before: This world has the same economic resources - people, land, raw materials, technology -- that we had yesterday, last week, last month, last year. In fact, we have MORE people and MORE technology. So the problem is HOW to deploy our resources. The markets, left to their own devices, have done a spectacularly poor job. So now it's governments' turn to mobilize us so we don't sit idle, and become even less rich than we are at the moment. As for many Americans, what's the worst that can happen here? Compared to almost every other country in the world, we're in a better position to handle a breakdown of the global economy (though I don't know about Dubai). We grow enough food to feed ourselves. Yes, we might have to cut back our fossil fuel use drastically, but mightn't that actually be a GOOD thing, though a re-reliance on coal could be devastating. Could we car pool more? Ride bicycles more? Walk more? We're not going to starve, and we're unlikely to freeze. Moreover, the growing inequality of the past 30 years or so may finally turn around. Of course, there's the grim condition of unemployment. But if the credit markets stay frozen and the downturn gets worse, we'll have to pump more government money into the world economy, just as many people (especially Democrats) have long advocated here in the US. We might extend unemployment benefits; put people to work on public projects. According to its champions, such a program would restore America's badly deteriorating infrastructure, move us toward energy "independence" via alternative sources and conservation, even perhaps foster a sense of national unity. Show this to your friends in Dubai, or on Facebook, perhaps? Or maybe back on Main St. itself. See if it makes them feel any more confident. -- Posted October 11, 2008 | Comments (2) | Permalink
 TrackBacksListed below are links to blogs that reference this entry: Is it time to admit that the world is already in a recession? . TrackBack URL for this entry: http://www.pbs.org/newshour/mt4/mt-tb.cgi/750 2 CommentsLeave a comment |
|
|
 |
||
|
 |
 |
| |||||
| |||||
| |||||
|
|
| |||
| |||||
| |||||
| Support the kind of journalism done by the NewsHour...Become a member of your local PBS station. | |||||
10-12-2008
Dear Mr. Solman:
Your view below touches a fundamental problem relating to knowledge. As a knowledge-centered organization, Post-Science Institute would like to expand on your view.
Mr. Paul Solman said:
"Here's my best shot, repeating some of what I've written before:
This world has the same economic resources - people, land, raw materials, technology -- that we had yesterday, last week, last month, last year. In fact, we have MORE people and MORE technology. So the problem is HOW to deploy our resources. The markets, left to their own devices, have done a spectacularly poor job. So now it's governments' turn to mobilize us so we don't sit idle, and become even less rich than we are at the moment."
"HOW to deploy our resources" is the key question. The post-science answer is to assign priorities based on valuation.
The priorities should be based on the expected rates of return of various proposed projects. For example, the toxic assets have one of the lowest rates of return because the monetary rate is most likely negative. However, the government is trying to convince the public to buy these assets due to their non-monetary rate of return, in the form of confidence.
If the government wants to behave as a private investor with nearly unlimited funding, it should arrange the priorities purely in terms of the expected monetary rate of return.
Deterministic price determination takes one iterative loop. Calculation of the rate of return requires two iterative loops, one for the price and the other for the return. The government or the bank does not even have a deterministic method of valuation, and, thus, is very far from knowing how to calculate the rates of return. The following is a list of investments with their approximate rates of return from Post-Science Institute http://www.post-science.com:
1. Venture capital investments (rate of return = 100% per year)
2. Small business (40%)
3. Commercial real estate (15%)
4. Large corporations and banks (10%)
5. Houses (10%)
6. Road and bridge building (5%)
7. Toxic assets, insurance companies and banks (-50%)
Additionally, Post-Science Institute would like to modify your statement "This world has the same economic resources" to "he same economic resources minus the real estate industry, auto industry, and, most important, and Internet industry explosive growth, and plus two toxic banking and insurance industries."
Post-Science Institute would like to recommend strongly spending part of the bailout money on revitalizing the Internet explosive growth, which is the main innovation of our current generation, but disrupted by the Fed, with its supporting innovations in multi-media, wireless technology, nanotechnology, etc.
All the other untested emerging innovations, such as new energy sources and environmental projects, should only be funded publicly after their rates of return have been calculated. Thus, a valuation industry should take one of the highest priorities. [this comment will also be submitted to the Fed.] 10-12-2008
Why don't the hedge fund/crap shooters declare themselves bankrupt and take their 'gambling debts' off the books? Debts need to be reorganized as in bankruptcy reorganization for the general welfare not hedge fund welfare Why don't you ask Lyndon LaRouche for some straight answers?