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‘Emerging Markets’ Take A Hit

“Emerging markets” around the world — Turkey, Argentina, South Africa, more – were supposed to be the next big wave of economic energy. Now, they’re in trouble. We’ll ask why.

The going rate of U.S. dollars and euros is displayed outside a foreign exchange business in Buenos Aires, Argentina, Monday, Jan. 27, 2014. The Argentine government announced Friday Jan. 24, it was relaxing restrictions on the purchase of U.S. dollars. The measure would start taking effect Monday, allowing Argentines to buy dollars for personal savings, reversing a 2012 restriction. (AP)

The going rate of U.S. dollars and euros is displayed outside a foreign exchange business in Buenos Aires, Argentina, Monday, Jan. 27, 2014. The Argentine government announced Friday Jan. 24, it was relaxing restrictions on the purchase of U.S. dollars. The measure would start taking effect Monday, allowing Argentines to buy dollars for personal savings, reversing a 2012 restriction. (AP)

Stock markets have been rocked all over the world in the last few weeks, and not rocked in a good way. Falling down. Japan’s Nikkei lost four percent in its last trading day. Wall Street’s been sliding. Of course, the Dow Jones was up 27 percent last year. The Nikkei 57 percent. But still, down is down. And the fingers are pointing at emerging markets. Once up-and-comers, now stumbling. Turkey, Argentina, South Africa, more. The U.S. Fed is giving them fits. But there’s more to it. Real troubles. This hour On Point: global market slide, and what’s going on with emerging markets.

– Tom Ashbrook

Guests

Mike Regan, editor-at-large for Bloomberg News. (@Reganonymous)

Scheherazade Rehman, professor of international business, finance and international affairs at George Washington University. (@Prof_Rehman)

Ian Bremmer, president and founder of Eurasia Group. Author of “Every Nation for Itself: Winners and Losers In a G-Zero World.” (@ianbremmer)

From Tom’s Reading List

The Economist: China loses its allure –”For the past three decades, multinationals have poured in. After the financial crisis, many companies looked to China for salvation. Now it looks as though the gold rush may be over.”

Wall Street Journal: Gobal Companies Address Latin American Risk — “Drooping currencies in Brazil, Argentina and Venezuela have reduced the value of sales there in dollar terms, while inflation has made it hard for many consumers to afford much beyond necessities. Argentina’s heavy government spending and a loose money policy have fueled inflation estimated at more than 25% a year. In Venezuela, inflation is running at more than 50%, and price controls are creating shortages.”

Reuters: Weak U.S. data sends dollar, equities lower — “Emerging market stocks extended a two-week selloff as weak Chinese manufacturing and services data weighed, while the Turkish lira and South African rand weakened after policymakers poured cold water on expectations of higher local interest rates.”

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  • Yar

    Then render to Caesar the things that are Caesar’s; and to God the things that are God’s.” The wealth of our world is not in the market. It is in the desires and love of its people who build community. We are in for some rapid change, where is the best place to live? Where you sense a strong sense of community.
    85 richest people in the world do not control the wealth of half the world. Your guests all profit from the fiction of markets’! I will repeat the question I asked yesterday, how do you have a discussion about addiction with an addict?

    • JobExperience

      We had that discussion with Phil Hoffman if we watched his acting. Gonna miss it.

  • Fiscally_Responsible

    With regard to South Africa’s economy, I heard that government officials are going to try and boost the service portion of their economy by opening a federally run school to teach people sign language for the hearing impaired.

    • harverdphd

      Ha! Right on, Brother!

  • George Potts

    We should do all we can to limit growth in the developing world. All they will do is add to global warming.

    The ideal world population to keep the earth from drowning is 2 billion. Let’s do all we can to get to that population goal.

    • spiral007

      Since the consumption foot print of the developed (only in economic sense) world is disproportionately huge, would you support that we start reducing (I do not know the mechanism you propose) the population of the developed (western) economies by 2/3 to get to your goal, or is your target only the Africans and the Asians?.

      • George Potts

        You could volunteer.

        • spiral007

          I suspected your post was at best a result of shallow thinking or at worst racist/xenophobic. You have confirmed my suspicion; You sir do not deserve further response from me.

  • John Cedar

    Krugman could fix the economies in all those countries.
    They just need less “austerity” in thier governments.

    • Don_B1

      No, the WORLD needs less austerity in the U.S. and Europe !:

      http://www.nytimes.com/2014/01/31/opinion/krugman-talking-troubled-turkey.html?ref=opinion

      The above is a prediction of what could happen unless the U.S. and European governments “tend to their economies” by reducing unemployment, building stronger economies, which means creating demand for goods and services that the private sector cannot now provide. That WILL mean much less austerity and soon!

      But of course, your blind ideology will prevent you from even considering the action, so this is probably a waste of my time, except for others who may read it.

      • James

        Please don’t insult people’s political and economic objectivity while citing Paul Krugman, just don’t.

        • jefe68

          It’s amazing how the right thinks it’s fine to insult or demean people with progressive political and economic views and when it’s thrown back at them they whine and get into victim mode.

        • Don_B1

          I am NOT insulting anyone; it is you who is showing an incredible level of hubris, arrogance, and disdain for something that YOU are making obvious that you know/understand NOTHING about.

          When you have read the OpEd and can discuss it cogently, then I might consider changing my opinion.

        • Don_B1

          While you are reading Krugman, here is another one, with a link to Noah Smith’s blog, where he makes the case that Professor Krugman as an economist is much more in the mainstream than the radical right on the political spectrum like to think, because he makes mincemeat of their hard-right ideological ideas, which fail in the real world:

          http://krugman.blogs.nytimes.com/2014/02/04/moderate-me-me-me-blogging/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body

  • Shag_Wevera

    It is the president’s fault, I’ll betcha!

    • Jeff

      Take an honest look and realize that the interest rates have been sitting at zero for years on end and ask yourself if that is one of the main reasons that we had a stock market bubble and also a big reason for the rich getting richer off of their investments. Inequality manufactured by low interest rates which in turn leads to the investment class reaping most of the rewards from this sort of economy.

      • http://neilblanchard.blogspot.com/ Neil Blanchard

        We had a bubble because the stock market is not investing in real companies. Any stock buy should have to stick for at least 1 day.

        • Jeff

          You’re right, the stock market is chasing something…which is how bubbles are created…first it was housing, then energy and now the stock market…who knows where it will go next. When you have cheap money it will chase crazy things, you will create bubbles…BTW, we do have different tax rates for stocks bought and sold within a year vs stocks bought & held for over a year. The main driving force behind all of this is the historically very low interest rate set by the Fed.

        • James

          These big money stock brokers aren’t chasing bubbles because they are a bunch of rouge villains in a lair laughing manically.

        • Don_B1

          But there is a difference in the types of bubbles that have occurred over the last two decades.

          1) The “Dot.Com” bubble was a stock investment bubble, with participants who, while they were hurt when it collapsed, had relatively larger amounts of savings and were not dependent on the stock earnings for day-to-day expenses.

          2) The housing bubble, while hurting the big banks deeply, also hurt a large number of homeowners, putting them underwater on their mortgages, reducing their willingness to spend on goods and services, thus taking a huge chunk of spending out of the economy and causing a jump in unemployment leading to a self-reinforcing upward spiral of unemployment and further reductions in spending/demand. This downturn pervaded the whole economy, leaving businesses unwilling to invest in production of new/additional goods and services at levels necessary to restore a strong economy.

          Thus the second type of bubble is a much deeper balance-sheet recession, the Great Recession, needing stronger government action to help citizens deleverage from the debt they had incurred, many due to no fault of their own, as shown by the cases being won against banks, etc., for deceptive practices. While the Great Recession technically ended with the return to (low but positive) growth in GDP, it has NOT ended for the worker who faces a high unemployment economy.

  • Ray in VT

    Could it be some combination of the end of a sort of “irrational exuberance” that can come during good times when something is the next “it” thing, and the upper limits of rapid expansion of developing economies that are reaching some level of maturity? Also, what impacts could changing Fed policy be playing? I’ve heard some references to impacts, but is it the case?

    • Don_B1

      What is really scary is the bleak picture painted by Paul Krugman on Monday:

      http://www.nytimes.com/2014/01/31/opinion/krugman-talking-troubled-turkey.html?ref=opinion

      where he shows that the financial crises are occurring more frequently with deeper effects as the world marches on without constraints on the private economy where the wealthy with too much money looking for “investments” and not enough good things to invest in, because there is not enough aggregate demand for new goods and services. Thus a “herd mentality” develops, sending boatloads of money to weak countries in the hopes of big “killings” but then rushing away when the first signs of failure show up.

      • Ray in VT

        That would certainly be a bad scenario if it turns out to be the case.

        • Don_B1

          Predictions are generally made to give people the opportunity to make changes and avoid the bad consequences of the predictions.

          It is not clear that U.S. and European politicians will rise to the occasion this time.

  • Human2013

    Emerging markets? Are these markets suppose to follow the lead of Wall Street and model themselves after the US economy? Enough Said… ..

  • nj_v2

    Yet another program on economics, yet another round of discussion taking place in abstract terms centering on the mantra of “growth” as the unquestioned goal of the game.

    As if we aren’t running up against the limits of finite resources. As if all major ecosystems aren’t stressed, failing, or collapsing under the weight of human overuse or abuse. As if peak fossil fuels don’t threaten to threaten the entire infrastructure of “developed” countries. As if global climate change won’t economically challenge communities around the globe, with the those in “underdeveloped” countries affected the most.

    • Human2013

      So true. How do we consume our way out of this problem when resources are limited?

    • http://neilblanchard.blogspot.com/ Neil Blanchard

      We cannot eat gold or breathe smog or drink oil. All life matters, and all life is interdependent.

      37 million bees suddenly died in Ontario.

      http://www.buzzfeed.com/ashleyperez/why-the-death-of-37-million-bees-matters-to-you

    • Don_B1

      The world’s population is growing, I think everyone will agree. If everyone is going to at least keep around the same level of income, then the world’s GDP has to grow.

      But people’s income does not have to all be spent on items that deplete the world’s resources. People can watch more plays, movies, take courses at libraries or community colleges, read books.

      Energy to pursue these less resource-intensive activities can be generated in sustainable ways from the sun’s energy as it reaches the Earth, through PV and concentrated (heat collecting) methods and through wind turbines. Geothermal energy can be used for bulk and residential heating and cooling.

      It is the form of the growth in GDP that matters!

  • TFRX

    “United States, where are you?”

    Well, Wal-Mart’s profits are going down because the people who shop there are running out of money.

    The travails of other companies whose target demos aren’t reached by ads in the NYT Bidness section are well-known.

    And all that purchasing isn’t being shunted off to Amazon, eBay, Etsy and Newegg.

    • Jeff

      Any suggestions on how to fix that problem?

      • Don_B1

        Ensure that the low- and middle-income workers earn a living wage, with the money to purchase goods and services that will make their lives more meaningful.

        Which means efforts on a number of issues: an increased minimum wage, higher EITCs, and in the short term, until a stronger economy arrives, higher SNAP and TANF payments along with extended unemployment insurance.

        • Jeff

          So force big companies to pay low skilled workers more? Doesn’t that just create more of an incentive to automate? Not much of a solution…

          • jefe68

            If it is cheaper to automate do you not think this will be done anyway?
            Your argument does not hold wait. And, if wages are so low that people with jobs need more government services such as SNAP and Medicaid does that not cost tax payers in the long run?

          • Don_B1

            One Walmart store (in WI, I believe) costs some $900,000/year in government support to its workers with income below the poverty level.

          • TFRX

            WI? Don’t you mean ScottWalker’sWisconsin?

          • Don_B1

            Exactly!

          • Jeff

            Sure, it probably will happen sooner or later…but my point is that if you start demanding a $15 minimum wage it will happen a decade sooner than a modest increase (to $8-$9/hr). The economy needs time to evolve and train in the lower skilled workers to gain more skills…we need an education system reform and we need it ASAP.

          • jefe68

            Except that history of labor is against your argument. Labor and capital work better when one does not fully dominate the other. What we have now is pretty much total domination of capital over labor.

          • Don_B1

            Sure it does provide an automation incentive! And some of those jobs should be automated.

            But raising the minimum wage also puts more money in lower-wage workers’ pockets, which they spend immediately, increasing demand and thus employment of other workers.

            Many studies have shown that significant but not outrageous increases in the minimum wage have benefits that outweigh the costs of the small amount of job loss, particularly in the beginning. And after the wage increase has settled in, the economy has strengthened and provides jobs at a higher level than before.

          • Jeff

            What should the minimum wage be? Why shouldn’t it be higher than the number you pick?

          • Don_B1

            It should be enough that someone working a 40-hour week at that wage is above the poverty line.

            That is the way that at least most of those advocating a higher minimum wage set their numbers, and I have not seen anything to suggest something “better.”

  • James

    Anybody else as tired as I am about hearing about how great the fed is how great this recovery has been? Employment participation rates are down and it wasn’t a projected drop due to baby boomer retirements

    • Jeff

      Here’s a number the media will never discuss and never reveal…11% unemployment rate if we simply applied the same participation rate to the economy that we had in the last month of 2008. Please, talk about this number, reveal it for all to see! One single curious member of the media please, just do some basic math and have a little curiosity.

      • hennorama

        Jeff — have you ever heard of demographics?

        Please tell us your theory of why the LFPR has declined, including for all the years since 2000.

        • Jeff

          Retired people do not count in the numbers, this isn’t demographics this is an evolving economy and our current slow education system is simply leaving vast groups behind…not able to work or find a job.

          • hennorama

            Jeff — thank you for your response. Please demonstrate your knowledge by defining the LFPR, and who is and is not counted in the labor force, how workers can enter and leave it, etc.

            (Hint: one way workers leave the labor force is retirement)

          • Jeff

            Hmmm, why do we have a lower number of retired people at age 55+ then? Here’s a nice chart for you…

          • Don_B1

            The Baby Boom generation is big enough that the increased numbers that are eligible for retirement each month swamps the increased, but relatively small, number of eligible workers that are not “retiring.”

            Please do a more complete analysis before just cherry-picking a few “numbers” to attempt to prove your point when the full analysis does not show it.

          • Jeff

            I provided numbers…you did not. If you disagree, provide new numbers to back up your point instead of calling my numbers “cherry picked”. They are directly out of the BLS data set.

          • hennorama

            Jeff — you actually only provided percentages, not numbers.

            (Hint: you might want to change “numbers” to “figures.”)

          • hennorama

            Don_B1 — as they say, “when they give you percentages, ask for the numbers,” and vice versa.

          • Jeff

            Percentages are always the best measurement when discussing GDP, work force values and unemployment…numbers are meaningless when we have continually growing economy…just like measuring debt itself is useless because it’s always increasing…the debt as a percentage of GDP is what is important. Anytime someone gives you a hard number (not a percentage) when discussing an economy they are attempting to deceive you, so watch out!

          • http://neilblanchard.blogspot.com/ Neil Blanchard

            GDP is terrible – it doesn’t actually measure anything meaningful.

          • hennorama

            Jeff – thank you for your response.

            You wrote, “Percentages are always the best measurement when discussing GDP, work force values and unemployment…numbers are meaningless …”

            Fine. If you want to only use percentages, then please compare the percentages of the Civilian non-institutional population in the three age ranges in your charts in 2007 and 2012.

            If you feel that “numbers are meaningless,” please explain why your charts use such wide ranges of ages, and do not examine narrower age cohorts, especially of those age 55 and over, which now include the peak of the Baby Boomers.

            Perhaps it’s only a coincidence that the Baby Boom peaked in 1957, and those born that year just happen to be turning 55 in 2012. Perhaps it’s only a coincidence that large numbers of persons moved out of the “Age 25-54” range and into the lower end of the “Age 55+” range, and that those in the lower end of the “Age 55+” range are much less likely to be retired.

            The Baby Boomers are an exceptionally large population cohort. Exceptionally large (and exceptionally small) cohorts have an out-sized impact on the overall LFPR as they move through the age categories. When exceptionally large cohorts are in age categories with above-average LFPRs, (ages 25 to 54, for example), they raise the overall rate. The reverse is true as they move through age categories with below-average LFPRs, (ages 55 and over, for example).

            Civilian non-institutional population (CNP) Trends, demonstrating how the Baby Boomers are moving through age categories of the Civilian non-institutional population (Numbers in thousands):

            Age of Baby Boomers

            1992 28 to 46
            2002 38 to 56
            2012 48 to 66

            Total, 16 years and older

            1992 192,805
            2002 217,570
            2012 243,284

            55 and older (number and percent distribution)

            1992 50,783 26.3
            2002 60,151 27.6
            2012 80,187 33.0

            Smaller groups of the 55 and older CNP:

            55 to 64 (number and percent distribution)

            1992 20,604 10.7
            2002 26,343 12.1
            2012 38,317 15.7

            65 to 74

            1992 18,012 9.3
            2002 17,999 8.3
            2012 23,654 9.7

            75 and older

            1992 12,167 6.3
            2002 15,809 7.3
            2012 18,216 7.5

            Source:
            http://www.bls.gov/emp/ep_table_302.htm

          • Jeff

            So you’re saying people live longer? Yep I agree, but where’s the conclusion? Percentages are what matters so you’re saying higher percentage of the population is in the 55+ category, so what? If that category has a lower number of retired percentage than that isn’t the reason that participation rate has gone down…it’s because more people simply gave up looking for work.

          • hennorama

            Jeff — thank you for your response.

            Again, you seem unaware of how the LFPR is actually calculated. It is somewhat telling that you:

            - complain about some lack of media curiosity
            - post a chart from Heritage that you say contains “numbers … directly out of the BLS data set
            - do not know the BLS definitions
            - inaccurately write multiple times, that “retired people don’t count” in LFPR calculations

            Perhaps it is you who lack curiosity.

            Thanks again for your response.

          • Jeff

            The best part is that ONLY WORKING AGE PEOPLE…

            Typically “working-age persons” is defined as people between the ages of 16-64. People in those age groups who are not counted as participating in the labor force are typically students, homemakers, and persons under the age of 64 who are retired. In the United States the labor force participation rate is usually around 67-68%.

            Today the labor force participation rate is less than 63%! Retired people who are retired or over the age of 64 simply don’t count!

            http://economics.about.com/od/unemploymentrate/f/labor_force.htm

          • hennorama

            Jeff — thank you for your response.

            As expected, and implied by a polite request that you define the LFPR, you are using a different definition altogether. Your definition ignores everyone over age 64, including all those who are working and looking for work, to name just two groups.

            You might want to check the BLS definition of the LFPR, which in essence is Civilian Labor force/Civilian non-institutional population.

            See:
            http://www.bls.gov/bls/glossary.htm#L

          • Jeff

            This is what the glossary says: “The labor force includes all persons classified as employed or unemployed in accordance with the definitions contained in this glossary.”

          • hennorama

            Jeff — TY again for your response.

            By way of reply, please allow me to quote your own words:

            “…please, just do some basic math and have a little curiosity.”

          • Jeff

            Good numbers you provided, amazing numbers! Learn how to write a counterpoint involving logic, facts and statistics.

      • Ray in VT

        “The BLS lists the following factors as primary drivers of the decline in the LFP rate since 2000: (1) the aging of the baby boomer cohort; (2) the decline in the participation rate of those 16-24 years old; (3) the declining LFP rate of women (since its peak in 1999), and (4) the continuous decline of the LFP rate of men (since the 1940s).”

        http://www.stlouisfed.org/publications/re/articles/?id=2419

        • Jeff

          See my other post…we have a 2% drop in retired people age 55+…explain how that works if you’re saying we have more retired people now.

          • Ray in VT

            I think that Don may have a valid point regarding the size of the baby
            boom generation, and it may very well be that some of these workers who
            are staying around longer are depressing the LFPR among 16-24 year olds.

            “The continued gradual increase in the labor forceparticipation rate of this age group, multiplied by the sheer number of baby boomers in the group, is expected to partially compensate for the multiple other factors pushing the rate to lower levels and is expected to keep it from declining even further in the future.”

            http://www.bls.gov/opub/mlr/2012/01/art3full.pdf

    • hennorama

      James — if, as you wrote, “Employment participation rates are stilll [sic] down dramatically and it wasn’t a projected drop due to baby boomer retirements,” then please educate everyone by explaining the decline, which has been going on since the year 2000.

      • James
        • hennorama

          James — you do realize that the linked article is by a user of that website who uses the name of Brad Pitt’s character in the movie “Fight Club,” right?

          You’ll excuse me for not taking this individual blogger very seriously, especially since the fact of the Baby Boomer cohort moving through the various age categories was not even mentioned in the linked article. One also must note the ultimate paragraph, which needed some cleaning up to be posted here, and which has a clear agenda:

          “So enough with all this ‘they are retiring’ [BS], and call it for what it is: millions of Americans of all ages, but mostly of prime working age, bailing out of the labor force by the millions because of equal or better opportunities elsewhere, opportunities which almost without exception are increasingly reliant on the ever more unsustainable and insolvent US welfare state.”

  • Coastghost

    What US President, elected in 2008 and re-elected in 2012, could possibly be contributing to perceptions of US foreign policy retreat? A US President who dithers on approving the KXL pipeline with Canada, a US President so secure in his re-election victory he couldn’t attend last fall’s Asia-Pacific economic conference, a US President whose national security apparatus has disgruntled people and their leaders from Germany to Brazil?
    What pusillanimous US President could possibly be offering such leadership?

    • Shag_Wevera

      Because attending a photo-op conference would have changed everything. You would have criticized him if he went because of the expense, or because he took his wife and kids. Our president can NEVER win with some folks.

      • Coastghost

        And, arguably, he deserves to LOSE with more folks: his great success is his service as an emissary of loss, failure, and incompetence, when he’s not demonstrating mastery of glibness, recklessness, and cowardice.

  • Government_Banking_Serf

    If you liked the elite lawlessness of Paulson, Bernanke, Geithner and all the Wall St. CEOS meeting in the middle of the night when the US engineered bubble was bursting, to create taxpayer funded bailouts and ensure all the consequences were shifted, from those who made the mess to us, your going to LOVE it at the Global level.

    Enjoy!

    Even the lefties will look back longingly at a Constitutional, Rule of Law, Liberty-cherishing, Self-Governing country, when we have a One world governance that puts that quaint experiment to bed.

    We’ll all be Government Banking Serfs and we’ll like it!

    • Government_Banking_Serf

      I guess if you don’t like the term government bureaucrat for your cog in the wheel appointed position (ahem, Serf), you could call yourself a member of the “ruling class”, if it makes you feel better.

  • http://neilblanchard.blogspot.com/ Neil Blanchard

    Mr. Bremmer is completely missing the point. We *have* to stop digging the hole …

  • Government_Banking_Serf

    We don’t have all the answers. And that’s a surprise?

    This notion that we should, or could, have all the answers in our political-economic life is nuts.

    It allows the replacement of freedom and self-governance and organic markets, by naive and corrupted Central Planning attempts that give politicians and the financial elites cover for simply maintaining their concentrated wealth and power.

    They hate real competition and accountability.

    • Shag_Wevera

      I hate slavish devotion to free markets, and I also hate capitalist accountability (More accountability for the poor and disadvantaged than for the rich and powerful). Some degree of central planning and authority is required to manage our baser tendencies. I’d be in favor of much more central authority. Freedom is relative, never forget that.

      • Government_Banking_Serf

        This is the big question Shag, and IMO we are moving to the wrong side of the balance. Think and read hard about the generation of the financial bubble, and the systematic way the risk was socialized and the profits privatized, both on the way up, and particularly during the bailout phase.

        You CANNOT give power elites unlimited discretionary powers, believing they are smart enough, or well meaning enough, not to 1) become corrupted by the power 2) already be corrupt 3) make human errors, with massive consequences given the level of power they wield.

        They are LAWLESS. They are accountable to nobody.

        Power corrupting is History 101.

        Our Founding principles, as a way of decentralizing power as much as possible, has been the best system for maximizing individual opportunity and restraining centralized power abuse (tyranny). That is a fact.

        It is NOT perfect. But it is BETTER than handing power to unaccountable centralized authorities whom you must trust to do the right thing.

        HISTORY is REPLETE with examples. This is not controversial.

        The fact that you and many trust power elites with interests that are based on pure political and financial power at the international level, MORE than you trust your fellow citizens, is very disappointing, and frightening.

      • Government_Banking_Serf

        A) We don’t have free markets
        B) We don’t have accountability

        So you are hating the non-existent, which is thoroughly counterproductive.

        Hate corruption, hate cheating, hate “above the law” notions, hate market rigging, hate bailouts, hate cronies, hate non-prosecuting DOJs, hate slavish devotion to Keynesism on steroids and malinvestment bubbles, hate the policy makers who support them to have economic illusions to get reelected with, hate colluding Wall St banks who get rich trading all the funny money as if its productive….

        If your going to hate, at least aim well. :)

      • William

        We have a great deal of central planning but little if any accountability for it’s failure. While the free market is not perfect it does have a record of punishing or destroying failure if allowed too.

        • Don_B1

          If that punishment affected only the culprits in the failure, I would agree with you. But from the days of Adam Smith, economists have recognized the occurrence of externalities, positive and negative that affect people that are not involved in financial transactions.

          Right now, the wealthy are saying that they should be indemnified against any recompense for externalities from their actions.

          • William

            I agree the rich got away with robbing the bank the last 6 years. Nobody in Congress stood up to this massive bailout of Wall Street because they were all bought off.

          • Government_Banking_Serf

            “Right now, the wealthy are saying that they should be indemnified against anyrecompense for externalities from their actions.”

            Yes, you just described bailouts.

            Which previously I think you defend.

          • Don_B1

            I defended the need to restore the functionality of the big investment banks, but I did not defend the fact that there was no “quid pro quo” such as requirements for the banks to revisit the loans they had made and where they took advantage of the mortgagees, make amends.

            That could have helped mortgagees deleverage and get the economy back a lot faster, and brought some of the costs of the financial crisis to those who created it.

      • Human2013

        Yes, It seems like we are only free to work, pay bills and accrue debt.

        • Government_Banking_Serf

          How would a homesteading life look? I like the idea, but its not all leisure. You would be free to work or perish.

          Still no such thing as free lunch.

      • tbphkm33

        Essentially more in line with the northern European economic model of a mix between central planning and capitalism. I’m all for it, if anything, US crony capitalism has only proven its failure to The People over the past 30 years.

        • Government_Banking_Serf

          “US crony capitalism has only proven its failure to The People over the past 30 years.”

          I think the majority of Amercians would elect to give Non-Crony Capitalism and Rule of Law a good try for once before we go down the road of Democratic Socialism.

          The elites and bureaucrats will always disappoint us. Their leveraged human nature is worse than our individual human failures, especially when the rest of us are bound by Rule of Law.

  • Shag_Wevera

    I absolutely LOVE the fact that Ian Bremmer referred to himself as “rich”. It is refreshing as opposed to the denials we usually hear.

  • Government_Banking_Serf

    Please lay it out Carol. I like the IDEA of steady state economics, The question comes with how does it become imposed?

    If you can convince, with patience and discourse and education, people to freely move in that direction, that’s great.

    But if someone thinks that such a noble goal deserves to be imposed on a population that doesn’t understand/want it, that is a recipe for conflict (not unlike the way we are behaving today).

    Just because our ideas may be “good” doesn’t mean they can be imposed unconstitutionally.

    Todays good ideas could be tomorrows horrid ones.

    The constitution protects us from imposition of bad ideas, but also slows down the good.

    But thats the best system available for PEACEFUL coexistence of a DIVERSE people. That is the genius of Constitutional Rule of Law and Self Governance.

    While Benevolent dictatorship can delver “good” ideas much more rapidly and thoroughly, it is also historically guaranteed to bring conflict and strife.

    We cannot impose a perfect world.

  • Don_B1

    Your point is made in the graph in this post:

    http://krugman.blogs.nytimes.com/2014/01/30/istanbearish/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body

    As I have linked in other posts on today’s program blog, a more complete discussion of the dangers in the current economy is presented here:

    http://www.nytimes.com/2014/01/31/opinion/krugman-talking-troubled-turkey.html?ref=opinion

  • William

    Not all cultures are the same and some are superior to others.

    • Don_B1

      Many would say that it depends on the definition of “superior.” Certainly different criteria can result in the reversal of the rankings.

    • Government_Banking_Serf

      Sure to draw ire with that one, but in the sense that we, for example, fought a revolution against a tyrannical monarchic government, and then battled to hammer out a Constitution to protect individual liberty against that happening again, fought in world wars to keep totalitarianism at bay, etc, expending our wealth and lives to protect such a “culture”, it is true.

      That is why open borders is not possible now, and why the trade deals we discussed that pretend we have a level playing field are corrupt, crony-capitalistic exploitation of “inferior” cultures (above context).

      Of course I don’t expect many to handle the context given and to jump and froth because we uttered the words superior and inferior.

      I hope other cultures can become “superior” too, but don’t support going to war around the globe to make it happen.

      There is luck where you are born, that is for sure. But cultures or societies that embrace Classically liberal values and Rule of Law are conscious choices that didn’t happen by accident.

      Cosmic unfairness? yes. Easy solution? no.

    • tbphkm33

      I would not say any one culture is superior to any other, but individual cultures do excel in specific situations. Look at the German culture, an economic powerhouse that out performs Chinese and US manufacturing. The hype in the US is to look at how the Asian economies are pulling “it” off, when in reality, the US should be looking at the German model. Especially in terms of high school vocational partnerships with industry.

    • jefe68

      Hmmm, that idea has been used by nations and empires throughout history to make the domination of one culture over another a justifiable ideal. Such as manifest destiny and the idea of racial superiority. Treating people as others or lesser than and so on. It’s not the most enlightened outlook.

    • George Potts

      Economically superior.

  • tbphkm33

    “Emerging markets” was always rooted closer to Wall Street propaganda than reality. Akin to any other stock market bubble. Anyone with their nose to the ground knows that a country like India will not transform overnight. China to some extent transformed (yet, leaving millions behind in poverty), but only pulled it off due to central planning. A democracy like India cannot function in a similar way.

    What always surprises me is how often The Economist gets things wrong. People extoll the publication, but most of the time it seems their predictions are nothing more than hype. Written by ivory tower semi-academics, who are great economists, but lack the sociology and critical thinking to grasp the full picture.

    Having said that, Argentina is a puzzlement. They have sever fiscal issues and need to get away from micro-managing their currency market. Still, the demographic data and infrastructure would indicate that Argentina should be doing much better. If you want to bet on an emerging market, Argentina is a good one to watch.

    • ToyYoda

      Actually, I have a subscription to The Economist. Anyways, can you please give me specific predictions that were false and what dates (roughly) that they appeared? I’m curious to know.

  • marygrav

    SOUND WOULD HELP. Why post the show online without the sound?

    • http://neilblanchard.blogspot.com/ Neil Blanchard

      Patience, grasshopper, patience. ;-)

      • marygrav

        Patience belong in a hospital, not online when the technology is there. Grasshoppers are for roasting after they’ve eaten all the crops.

        I stand by my proposition, why post online without the Sound. One time is an accident; two times is incompetence; the rest is for history or his story.

        • http://neilblanchard.blogspot.com/ Neil Blanchard

          Mary, if my memory serves, they usually have the podcast up at about 2pm.

          Patients do have to have patience, you’re right. I’m probably showing my age – I was referring to Kung Fu …

          • Don_B1

            Next to the “Listen” box, there used to be a statement announcing the 2:00 p.m. availability, but I don’t even see the “Listen” box right now. I assume it will appear when the soundtrack is available.

            It was probably just a typing error if it was there earlier without the statement or the sound.

  • marygrav

    American people are a lot less sophisticated than Europeans and the majority of the so-called Third World peoples. This is why Tom has his knicker in a twist as to what is happening on Wall Street. John Edward tried to make US understand that the Stock Market has nothing to do with US 47% at the bottom and even those standing in the true Middle.

    What is need here is for Tom and the rest of US is to rad The End of the Future: The Waning of the High-Tech World by Jean Gimpel published in 1995. The last paragraph in the book: The End of White Supremacy predicts the Rise of China, the fall of Europe, and the Crash of the Tiger. “China will progressively dominate the Pacific Basin and beyond for the second tome in her long history….

    This book is written by a White Frenchman, not some radical black waving his fist. What we Americans must do is to learn more about the world. This is why paying more attention to what happens at places like DAVOS WORLD ECONOMIC FORUM. None of our media seem to think that paying attention to what goes on in the international billionaire conferences has anything to do with US. Iran and Nigeria were both there.

    John Kerry is giving lip service, but THEY KNOW better. The only thing that the US is preoccupied with is Israel-Palestine which is a lost cause. There will not be no Two State Solution.

    But what should be understood is that by not solving or admitting this, Iran will get the upper-hand with the Europeans. Listen to what is being said about the European economies. Iran has over 70 million people, must under 25 because of the Iran-Iraq War. Europe has goods to sell and 70 million customers in Iran.

    Israel, has a miniscule population and lives in a neighborhood that considered it an interloper. It is well armed but has used this and its position as an US ally to abuse the Palestinians, depending on your point of view, that is.

    The Europeans are colonizers by nature. Europe got rich through colonization and lost out after WWII to the US. The US has its own large market with its own population supplying 70% of its profits when the T-Party/GOP will allow it to recover fully. The Europeans have no 70% and not a large number of innovators, but they have the personal touch/foreign experience to deal with the Middle East. They don’t have a heavy hand like John Kerry in dealing with foreign markets.

    It is not an Iran armed with atomic weapons that worries Netanyahu, it is a Europe desperate for economic recovery that is the most dangerous to Israel and its desire to have all the land. The Europeans can be held in thrall but if one studies history, one will understand more than appears on the surface. Desperate markets call for desperate economic means. And 70 million people drinking one bottle of Pepsi Cola a day can be tempting. And Multinationals have no conscience or devotion to Israel.

    Nothing is disconnected. Listen to the BBC World Service for a sophisticated view of the world. Don’t forget they do broadcast to the world. The Chinese government, unlike the US Government will listen to their people or else. Americans are taught that WE are Exceptional, not just a bunch of sheep that sit around blaming each other while the top 1% get away with murdering our children’s prospects for the future by not helping the 99% in the present.

    Notice to that Argentina is having problems because its government does not identify with its people. Maybe this is Netanyahu’s problem also. He was educated in the United States and that Israel too is suffering from Income Inequality.

    Don’t cry for Argentina. Cry for US.

    • Avril111

      My Uncle Aiden got an almost new cream Lincoln MKS Sedan by
      working part time off of a laptop. have a peek here B­u­z­z­3­4­.­ℂ­o­m

    • Florian Miyagi

      so we are “colonizers by nature”, aye? interesting point of view.

    • thomascuevas

      - Notice to that Argentina is having problems because its government does not identify with its people.- Wrong. It’s government does not identify with its capitalist.

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