Economics

[Rake]

North Korea is pursing a policy of appearing dangerous, crazy and weak. The point of which is to bring the US to the negotiating table where they would make concessions that would continue to help prop up the regime. Unfortunately for them, everybody is getting sick of them. Even China (which uses NK as a buffer state to protect them from having US/SK forces on their border) has been making noises about how annoying NK is. The upshot is that NK has to be more extreme in order to get the same attention which is making everything more risky. Plus the new guy, as Squid said, needs to show that he has big balls like daddy did. So one of three things might happen:

1) The US and SK come to the negotiating table
2) NK changes its strategy
3) War

War is the least desirable result for all sides as it would lead to damage to SK, the destruction of NK and huge numbers of refugees everywhere.

The burden placed on SK by reunification with NK would be so extreme as to retard or collapse SK's economic development. They would need the help of the rest of the world or, as I think is more likely, they would have to run NK as a separate country with a separate currency for 20-30 years in order to bring them up to speed. To emphasize the comparison that others have already made, East Germany was one of the most developed states of the USSR and its reunification was, and still is, a tremendous burden on the West Germans. NK, by comparison, is so stuffed up that it is a toxic waste dump inside a swamp inside a black hole. Check out this picture

http://www.globalsecurity.org/milita.../dprk-dark.htm

Imagine having to pay for that basket case.

Remember when I said that it would be catastrophic for the Chinese and harmful for Canada/Australia? It was smaller back then. Didn't someone argue here that the government would be able to slow pop the bubble? The last time such an obvious bubble got so much attention it was in 1993 when people wondered if Japan actually was going to surpass America, three years after their banks had collapsed and the causes of this collapse had happened five years prior.

I was suggesting that the housing bubble in Australia could deflate slowly enough that it would not harm Australia's broader economy. So far, I was right. Australia's housing prices are going down or holding steady and unemployment remains low. This could still change in the future but, for now, it seems to be going fine.

7) In order to cope with uncompetitiveness, Europe is having to scale back from its precious socialism, almost across the board. Seems like Socialism isn't competitive. If only there were other economies that had a collapsed in the past that could've told us this would happen.

We have discussed before that the word Socialism is essentially meaningless because no one can agree on its definition. If you are simply referring to government spending, then many countries in Europe have been pursuing austerity for some time. On the other hand, countries in the north of Europe have very high levels of government spending and they are doing fine. The crisis in Europe is largely caused by the trade imbalance of Germany as discussed in the excellent book:

http://www.amazon.com/The-Great-Reba...at+rebalancing

The Scandinavian countries, being outside the Euro, are much less affected.

Meanwhile, Squibb's prediction that the American economy would spiral down into catastrophe resulting in a civil war the likes of which we world has never seen, has yet to take shape.

Depends on your definition of civil war really:

http://www.youtube.com/watch?v=kV4grZ_Lw5s
http://www.pbs.org/wgbh/pages/frontl...transcript-37/

[TheEconomist]

1) I was referring to China's property bubble and Genopath's comments on it, not yours. I've been slouching on the economics front so I don't know whats going on in Australia at the moment, but I never really made a major prediction about Australia, only that it would suffer. I do still keep up with China, and my prediction is proving to be more and more accurate.

2) I'm referring to the fact that socialism protects workers at the expense of the economy just for the sake of saying, hey, we take care of our people, even the lazy worthless ones. Warm fuzzy feelings for all along with destruction of wealth. Don't worry, Squibb is still able to spend his free time playing games instead of improving himself. Crisis averted.

The crisis in Europe is largely caused by the trade imbalance of Germany as discussed in the excellent book

I posted that book. I plan to read it and have already read every article Michael Pettis has posted on his website. When he says its a trade imbalance with Germany, he's basically saying that the rest of Europe cannot compete with Germany. The US doesn't have this problem. Not a 1:1 comparison but blaming Germany or saying if only Germany weren't so competitive is exactly the kind of problems I'm talking about the minds of socialists.

Depends on your definition of civil war really

No, it really doesn't. America has wealth inequality by design. I've written many a walls of text on this, in this topic.

We still have the highest standard of living on average, the 3rd highest HDI, and one of the greatest opportunities to improve your living.

I have very little sympathy for people that can't make it on their own in America. Especially not people like in the beginning of that documentary, who, shall we say, are not starving to death by a long shot. Besides, nit picking during the worst recession in 70 years hardly means anything. The people living below the poverty line in America are still richer than the average GDP per capita of all of Europe combined, nevermind the rest of the world. in America, the less productive suffer, in Europe everyone suffers, until the whole thing collapses.

I wonder why it is that Europe nit picks on the unemployed in America and talk about how they take care of their unemployed but then say nothing of the fact that they've always had about twice the unemployment that America has at any given moment. I guess making sure people are comfortable as they fail is more important than making sure they are actually able to produce. And why is it that the "suffering of the poor" is always focused on and not the poor that America takes care of. Why wasn't something like this included in this documentary,



Never worked, has fifteen kids, gets 6500$+ for food, free rent, furniture and education. Oh the humanity!

I also find it odd that Europeans bitch about this "problem" more than the American unemployed do. I guess when you can't get your standard of living up even close to America's you might as well focus on the bad to make you feel better. What? The Euro challenge to the dollar was a catastrophic failure? Well, at least when I lose my job someone'll take care of me. Self-reliance is simply something they still don't get it. They'll be taught that lesson soon though.

[Rake]

I posted that book. I plan to read it and have already read every article Michael Pettis has posted on his website. When he says its a trade imbalance with Germany, he's basically saying that the rest of Europe cannot compete with Germany. The US doesn't have this problem. Not a 1:1 comparison but blaming Germany or saying if only Germany weren't so competitive is exactly the kind of problems I'm talking about the minds of socialists.

I know, I put it up there as a shout out to you and a thanks for the recommendation. You are right that he says that Germany isn't a problem for the US, he is saying that China is a problem for the US. His thesis is that the origins of both crises are in the policies of Japan, China and Germany.

No, it really doesn't. America has wealth inequality by design. I've written many a walls of text on this, in this topic.

I apologize for the civil war dig.

We still have the highest standard of living on average, the 3rd highest HDI, and one of the greatest opportunities to improve your living.

I had a quick look through the thread and I couldn't find your reference to this, only the education expenditures. Would you be able to post a standard of living reference?

Especially not people like in the beginning of that documentary, who, shall we say, are not starving to death by a long shot.

These days obesity is a sign of poverty, not the other way round. All the cheapest food has a billion calories and no protein.

I wonder why it is that Europe nit picks on the unemployed in America and talk about how they take care of their unemployed but then say nothing of the fact that they've always had about twice the unemployment that America has at any given moment.

I also find it odd that Europeans bitch about this "problem" more than the American unemployed do.

The reason is that the rest of the developed world (it is not just Europe) has very different attitudes to poverty than America does. America essentially says that it is all an individuals responsibility and fault. Non-Americans say it is the societies fault. Since there can be no such thing as a universal morality system it is impossible to say either is good or bad, but they do have different consequences. Higher unemployment rates are probably one of those consequences, but so is the working poverty that you get in America.

Never worked, has fifteen kids, gets 6500$+ for food, free rent, furniture and education. Oh the humanity!

That was a sad, sad video. That the media reported it like that is an indictment on those who produced it.

The Euro challenge to the dollar was a catastrophic failure? Well, at least when I lose my job someone'll take care of me.

The Euro was never intended as a challenge to the dollar. It was originally put together to ensure peace in Europe, especially between Germany and France (in my view this was unnecessary, peace comes from democracy not from economics). It was expanded (foolishly as it turned out) in a burst of economic enthusiasm for the expanded trade it would bring.

[TheEconomist]

The reason is that the rest of the developed world (it is not just Europe) has very different attitudes to poverty than America does.

Europe is harsher in their criticism and more arrogant in their assumptions so I focus on them. Plus, I get tired of the additional CA/AU typing. But, it's easy to have a different opinion on attitude when the people you'd be paying for are mostly from your same race and culture and will be staying there. Plus, "the rest of the developed world" pays a hefty prices for their attitudes on poverty. But, that's for previous large walls of text.

The Euro was never intended as a challenge to the dollar.

About twelve presidents of France would disagree with you.

Plus, I could write a dissertation arguing the contrary, but, since I'm getting ever more lazy in my arguing, I'll just point you over to Stratfor.

That the media reported it like that is an indictment on those who produced it.

As a landlord in the same general area, I can attest to the fact that there are thousands and thousands just like her and they all deserve to be treated more harshly than they are.

There's absolutely ZERO justification for paying for the children of someone who has fifteen kids, doesn't work, and already receives an impressive amount of aid yet still spits in the face of those who are trying to help her.

Nevertheless, the video needs context. The report I showed you was made after another report was made where she got on television and continuously blasted the people that had been trying to help her. And, no matter how much they gave her, she kept demanding more and having more kids. She's basically want to make popping out babies her career and force the government to employ her. This report was a follow-up, I guess about a year later, on whats changed since she got on TV and blamed the government for all of her problems. Which is a perfect example of the problems of telling people they are entitled to great living without working.

I know, I put it up there as a shout out to you and a thanks for the recommendation.

Haha, I wasn't actually trying to take credit for it or anything. I had originally said that I had read the book but then realized it was his other book I had read and hastily retyped.

All the cheapest food has a billion calories and no protein.

Such in the general knowledge, and true, but you can also find cheap healthy food. I, myself, eat nothing but the mostly healthy of foods and I get by on less than 16,500$ a year on all of my expenses minus education. If I were working minimum wage, I'd be living it up, assuming I didn't have kids and expect the government to pay for all of the difference.

So, basically, even though I have plenty of money to spend lots and lots more, I still chose to live like I work at McDonald's and it's fucking great. Granted, I don't have a lot of the oblgiations and other expenses people do, but most of those people don't HAVE to have those expenses either.

[TheEconomist]

And what do you think about China's reform? Would it be successful or not?

Little update on this too.

http://finance.yahoo.com/news/chinas...073009986.html

Smaller, non-SOE loans were probably the primary tenant of reforms in China and the primary driver of investor optimism in the country.

I am shocked to learn that the Chinese have lied to us.

[Rake]

About twelve presidents of France would disagree with you.

Plus, I could write a dissertation arguing the contrary, but, since I'm getting ever more lazy in my arguing, I'll just point you over to Stratfor.

"Historically, European integration was supposed to solidify Germany's economic strength and France's role as a political leader."
http://www.stratfor.com/analysis/ger...ening-eurozone

I suppose you could say that French presidents thought that if they had 'leadership of Europe' then they could challenge America, but seriously, the French are crazy. They still believe in 'La Grande Nation'. How they thought they could politically dominate Europe, in which Germany was destined to become the greater economic power, is beyond me. Therefore, I have always emphasized the benefits to peace and prosperity in my analysis of the Eurozone. Though frankly I think that the peace benefits are overstated as democracy is a better predictor of peaceful relations than trade. Though trade helps:

http://thediplomat.com/the-naval-dip...less-conflict/

Such in the general knowledge, and true, but you can also find cheap healthy food. I, myself, eat nothing but the mostly healthy of foods and I get by on less than 16,500$ a year on all of my expenses minus education.

lol, we have similar lifestyles.

While I agree agree that an individual can find healthy food in any developed country for a reasonable price, the fact is we are not discussing an individual, we are discussing populations. Therefore we need to look at the factors that influence populations. Let us take a step sideways and look at something that has been more clearly researched than unhealthy food: smoking.

Research has shown that smoking rates are only affected by two things: price and availability. The only way to reduce smoking is to increase taxes on cigarettes and reduce the numbers of places that sell them through licensing restrictions. Things like education campaigns make no difference which is why cigarette companies always support these measures.

Let us translate this to food, which is more complicated. People with less resources (including money, time, and knowledge) will tend to choose food that is easily available and cheap. In the current state of affairs this is high-calorie, low nutrient food. Therefore obesity becomes a signal of poverty not of wealth. To change this situation it is not enough to rely on individuals changing their behavior (though this would be beneficial from their point of view), but to change the economic signals. For food this is best done through taxation. The money raised can be directed to healthcare or subsidies for healthy food.

My point of saying all of this is that individual responsibility is not the whole story. Social context, which is modified by political decisions, is an important factor. It is not simply the fault of obese people that they are obese, especially if they are poor. It a result of people making understandable human decisions within a social system that is, in this case, unhealthy.

Note that this applies all across the modern world where obesity is a problem.

There's absolutely ZERO justification for paying for the children of someone who has fifteen kids, doesn't work, and already receives an impressive amount of aid yet still spits in the face of those who are trying to help her.

At first I thought I might argue against this on principle, but I decided I would just lay out my 'ideal' welfare system and see how close we are on that. It might be that we have similar opinions, just different way's of expressing them. If not then we at least have something clear to discuss.

Government payments for:
1) Maintenance of a simple, but dignified life (ie. basic accomadation, simple food, health care)
2) Maintenance of children in the same manner
3) Free or subsidised education (especially for areas of economic skills shortage)
4) Extra payments for socially helpful work (cleaning, helping old people etc.) that is only provided if work discipline is maintained (turning up for work on time, proper work ethic, proper presentation) in order to provide a 'work reference' for the long term unemployed.

Note that this system would only apply to citizens with no assets. So you can't spend all your money on a $200,000 house and then claim money from this system.

I am shocked to learn that the Chinese have lied to us.

I am amazed and appalled that a totalitarian government would fiddle its figures to its own advantage. What is the world coming to?

[Rake]

Is the West's middle class being hollowed out by free trade and computers/robotics? Can we expect Western economies to recover economically but without producing the long-term, well paid jobs that provide financial security? Have the historical increases in financial equality in the West been a historical blip or will it return?

[TheEconomist]

Oh jeez, another question you asked that I just can't seem to get around to doing. Been trying to muster up the energy to make a couiple walls of text, but I just don't have it in me anymore.

So, I'll leave a short response (by my standards).

I expect the West to continue to lose lower and middle class jobs until there is a big breakthrough in robotics. One of the biggest problems with bubbles and the misallocation that cause, is that it prevents changes elsewhere and makes it more difficult to adapt. To put it shortly, the poorer parts of the world (China, East Asia, India, Africa, Latin America) will have an advantage on the lower end for some time. Once the robotics revolution comes, however, this advantage will quickly become a disadvantage for various political, social, and economic reasons I wish I could get into right now. Long story short, as long as we do not export all of a our advantages to the third world again, the West will jump ahead again. Up until now it's been all about free trade, which, yes, has been detrimental to those on the highest and lowest end, but, hey, what's good for the Empire is rarely good for the Republic. Back on-topic, The West and Japan are primed for the robotics revolution, a country like, say, China, not only lacks the technology, but also the ability to absorb the changes in employment. I wouldn't be surprised if it would easier for China to have another semi-revolution than to adapt to robotics. In fact, if progress goes in the way that I've read from various sources, including Stratfor, America's almost total dominance of the robotics field in the future will be a huge boon for the West and will be just about the only thing that could redeem the middle east wars. Once, we stop losing jobs to the rest of the world, the gaps in income in the West will be restored. Admittedly, this will also cause problems with the extremely poor given that they will be even less useful to the system than they already are, which makes it all the more important that we get the groundwork for an education system to meet these demands. I believe Michael Pettis wrote a bit about this as well, but I think my opinion differed from his in a few areas, but, in absense of my own well-explained argument, I suggest you look for his argument.

[TheEconomist]

If you take a look at any market website, you'll see lots of headlines about crises of currency in emerging markets. Just as I said before, the average opinion of the oh so elite economists has quickly gone from "Don't worry, man!' to "Oh fucking fuck, shit fuck god damnit. What the fuck." I dare say part two of what we've been talking about in this topic is finally getting started. It's hard to predict when it will happen since I have access to even less information than banks do but the reactions seem to be point to the fact that its time. Or, else, it'll just get even bigger and be even worse when it happens. Either way is good for me and America. For the rest of the world ... Tag, you're it!

Unsurprising/10

[Hellgrinder]

Okay, different topic, but still economics-related. On a scale on 1 to 10, how naive is this:
http://en.wikipedia.org/wiki/The_Venus_Project

(1 being "slightly", 10 being "completely detached from reality".)