Elephant at New Ruskin College
www.NewRuskinCollege.com
Commentary
from Safe Haven . com
The Elephant in the Living Room
http://www.safehaven.com/article-3113.htm
It is becoming increasingly obvious that there are fundamental economic challenges facing the global economy and especially the economies of the western world. These include unprecedented US trade and current account deficits, record debt levels, rising oil prices, the prospect of rising interest interest rates and an increasingly vulnerable global reserve currency.
The possibility of a burgeoning financial crisis has been spoken and written about by a litany of the most respected economic figures and institutions in the world today.
Alan Greenspan, his predecessor Paul Volker, Robert Rubin, Sir Tony O'Reilly, George Soros, Stephen Roach (chief economist of Morgan Stanley), Bill Gross (manager of the largest bond fund in the world), US Comptroller General David Walker, Warren Buffet, Martin Wolf (Associate Editor and Chief Economics Commentator, Financial Times) the editors of the Washington Post and New York Times and institutions such as the Bank of England, IMF, World Bank and OECD have all warned of the serious macroeconomic challenges we all face. The reaction of many economic commentators has been to ignore the warnings and the substantive points being made about the risk posed by the significant macroeconomic risks.
Economic wishful thinking is fine and of course we all hope there is a gradual readjustment in the large financial imbalances in the global economic system and the recent economic paradigm of low inflation and high growth continues. However, it is highly irresponsible not to acknowledge these fundamental economic realities. Ignoring the 800 pound gorilla or the elephant in the living room and putting a false benign spin on economic reality helps to lull people into a false sense of economic security. These people become non rational economic agents resulting in a non rational market place. This distorted marketplace results in misallocations of capital and increasing bubbles in various asset classes.
Occasionally lesser mortals than the illustrious men listed above who have voiced similar economic warnings advising financial caution and prudence have been dismissed as 'Cassandras or being 'gloomy'. This is a way of 'attacking the man and not the ball' in order to detract from and avoid the substantive economic issues at stake and shows a level of irresponsiblity.
It is worth noting that Cassandra herself did have the gift of prophecy and was right in her predictions and her terrible affliction was that despite knowing what would befall her countrymen no one would listen to her. Cassandra correctly warned not to allow the 'Trojan Horse' into the city and prophesised the fall of her native Troy and no one listened to her. The irony is that had her prophecies and explicit warnings been listened to and cautious and prudent measures taken in advance her warnings and prophecies might not have come true.
It is also worth noting that the first sellers of comprehensive health insurance in the US - Massachusetts Health Insurance of Boston in 1847, were also called 'cassandras' who focussed on the 'negative' possibility that one could get seriously ill in order to garner profit. Modern sellers of car, health and other forms of insurance no longer have to spell out the blindingly obvious reality that there are unforeseen, non linear events that occasionally happen such as September 11th, the Boxing Day Tsunami and the Stock Market Crash of 1987. And that one should take precautions against such possible eventualities.
It is now taken for granted that one should be cautious and prudent and always have insurance 'just in case'.
Many economic commentators are reluctant to discuss these challenges. Some are naive and ill informed while with the majority there is a forlorn hope that these economic realities will gradually correct themselves and we can all return to the massive levels of economic growth and prosperity experienced by the First World in the 1990's.
Hoping for a continuance of this economic status quo is understandable. Ignoring economic realities is not.
Whether those dismissed as modern day economic pessimists are proved right or wrong is irrelevant. What is relevant is how we react to these economic realities in order to protect ourselves materially 'just in case' those issuing warnings are proved correct.
Oriental Hands
Oh, yes let us leave it in “oriental hands” that will be much better. Yes, thank God we have such a genius in the Oval Office. Thank God! . . . "I worry about a world in which cloning becomes acceptable," Bush said. (You see? This deep thinker knows more than you or I. He worries about “cloning.” I expect that is what he ruminates on. He bicycles around and around, hours on end, having ruined his knees with his obsessive compulsive jogging, so now he bikes, hour after hour worrying about CLONES!) . . . The President has made it clear to Congress that he opposes the use of federal money "to promote science which destroys life in order to save life. And therefore, if the bill does that, I will veto it." . . . (If only we could think as deeply as that great man! His “destroys life” is so , so, deep. See? He knows that there is that littl’ thingy in there, in them cells, see, that littl’ bitty thing, there, that is you know, . . . life. And see how persuasive and eloquent he is. Clearly he has thought deeply about this issue. So deep!) --- “Typically, scientists suck out the nucleus using a hollow needle, but the Korean team instead made a small tear in the egg and gently squeezed out the nucleus. They then inserted a skin cell through the tear. A jolt of electricity fused the skin cell with the egg, and began cell division. Apparently, the process takes a steady hand. "This work can be done much better in Oriental hands," Hwang told Nature Medicine. "We can pick up very slippery corn or rice with the steel chopsticks." Hwang also told the journal that his lab works seven days a week.” (Wired)
Federal Reserve Chairman Alan Greenspan said Friday that some regional housing markets were showing signs of unsustainable speculation and "froth" and that there were "a lot" of local housing bubbles. The comments were Greenspan's most detailed description yet of risks in the booming real estate market, and reflected the Fed's growing concern about the need to tighten mortgage lending standards. . . . But Greenspan's remarks may be "too little, too late," said Christopher Thornberg, a senior economist at the UCLA Anderson Forecast who has been among the few economists to emphatically describe California's housing market as a bubble.
www.NewRuskinCollege.com
Commentary
from Safe Haven . com
The Elephant in the Living Room
http://www.safehaven.com/article-3113.htm
It is becoming increasingly obvious that there are fundamental economic challenges facing the global economy and especially the economies of the western world. These include unprecedented US trade and current account deficits, record debt levels, rising oil prices, the prospect of rising interest interest rates and an increasingly vulnerable global reserve currency.
The possibility of a burgeoning financial crisis has been spoken and written about by a litany of the most respected economic figures and institutions in the world today.
Alan Greenspan, his predecessor Paul Volker, Robert Rubin, Sir Tony O'Reilly, George Soros, Stephen Roach (chief economist of Morgan Stanley), Bill Gross (manager of the largest bond fund in the world), US Comptroller General David Walker, Warren Buffet, Martin Wolf (Associate Editor and Chief Economics Commentator, Financial Times) the editors of the Washington Post and New York Times and institutions such as the Bank of England, IMF, World Bank and OECD have all warned of the serious macroeconomic challenges we all face. The reaction of many economic commentators has been to ignore the warnings and the substantive points being made about the risk posed by the significant macroeconomic risks.
Economic wishful thinking is fine and of course we all hope there is a gradual readjustment in the large financial imbalances in the global economic system and the recent economic paradigm of low inflation and high growth continues. However, it is highly irresponsible not to acknowledge these fundamental economic realities. Ignoring the 800 pound gorilla or the elephant in the living room and putting a false benign spin on economic reality helps to lull people into a false sense of economic security. These people become non rational economic agents resulting in a non rational market place. This distorted marketplace results in misallocations of capital and increasing bubbles in various asset classes.
Occasionally lesser mortals than the illustrious men listed above who have voiced similar economic warnings advising financial caution and prudence have been dismissed as 'Cassandras or being 'gloomy'. This is a way of 'attacking the man and not the ball' in order to detract from and avoid the substantive economic issues at stake and shows a level of irresponsiblity.
It is worth noting that Cassandra herself did have the gift of prophecy and was right in her predictions and her terrible affliction was that despite knowing what would befall her countrymen no one would listen to her. Cassandra correctly warned not to allow the 'Trojan Horse' into the city and prophesised the fall of her native Troy and no one listened to her. The irony is that had her prophecies and explicit warnings been listened to and cautious and prudent measures taken in advance her warnings and prophecies might not have come true.
It is also worth noting that the first sellers of comprehensive health insurance in the US - Massachusetts Health Insurance of Boston in 1847, were also called 'cassandras' who focussed on the 'negative' possibility that one could get seriously ill in order to garner profit. Modern sellers of car, health and other forms of insurance no longer have to spell out the blindingly obvious reality that there are unforeseen, non linear events that occasionally happen such as September 11th, the Boxing Day Tsunami and the Stock Market Crash of 1987. And that one should take precautions against such possible eventualities.
It is now taken for granted that one should be cautious and prudent and always have insurance 'just in case'.
Many economic commentators are reluctant to discuss these challenges. Some are naive and ill informed while with the majority there is a forlorn hope that these economic realities will gradually correct themselves and we can all return to the massive levels of economic growth and prosperity experienced by the First World in the 1990's.
Hoping for a continuance of this economic status quo is understandable. Ignoring economic realities is not.
Whether those dismissed as modern day economic pessimists are proved right or wrong is irrelevant. What is relevant is how we react to these economic realities in order to protect ourselves materially 'just in case' those issuing warnings are proved correct.
Oriental Hands
Oh, yes let us leave it in “oriental hands” that will be much better. Yes, thank God we have such a genius in the Oval Office. Thank God! . . . "I worry about a world in which cloning becomes acceptable," Bush said. (You see? This deep thinker knows more than you or I. He worries about “cloning.” I expect that is what he ruminates on. He bicycles around and around, hours on end, having ruined his knees with his obsessive compulsive jogging, so now he bikes, hour after hour worrying about CLONES!) . . . The President has made it clear to Congress that he opposes the use of federal money "to promote science which destroys life in order to save life. And therefore, if the bill does that, I will veto it." . . . (If only we could think as deeply as that great man! His “destroys life” is so , so, deep. See? He knows that there is that littl’ thingy in there, in them cells, see, that littl’ bitty thing, there, that is you know, . . . life. And see how persuasive and eloquent he is. Clearly he has thought deeply about this issue. So deep!) --- “Typically, scientists suck out the nucleus using a hollow needle, but the Korean team instead made a small tear in the egg and gently squeezed out the nucleus. They then inserted a skin cell through the tear. A jolt of electricity fused the skin cell with the egg, and began cell division. Apparently, the process takes a steady hand. "This work can be done much better in Oriental hands," Hwang told Nature Medicine. "We can pick up very slippery corn or rice with the steel chopsticks." Hwang also told the journal that his lab works seven days a week.” (Wired)
Federal Reserve Chairman Alan Greenspan said Friday that some regional housing markets were showing signs of unsustainable speculation and "froth" and that there were "a lot" of local housing bubbles. The comments were Greenspan's most detailed description yet of risks in the booming real estate market, and reflected the Fed's growing concern about the need to tighten mortgage lending standards. . . . But Greenspan's remarks may be "too little, too late," said Christopher Thornberg, a senior economist at the UCLA Anderson Forecast who has been among the few economists to emphatically describe California's housing market as a bubble.
www.NewRuskinCollege.com
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