Understanding and Navigating the Economic Crisis
February 26th, 2009One of Cryptogon’s core contributors created this presentation. He will be showing this to executives at a large financial organization. (He asked me not to say which one.) He’s very interested in getting feedback on this:
I’ve included my comments below:
Hi [Deleted],
This presentation is very good. For a mainstream audience of [Deleted],
this goes pretty far. I’m quite surprised they would be at all receptive
to anything like this…
If it was me presenting this, I would focus a little more on the role
that exotic derivatives have played in this. The commoditization of
traditional loan products, and the resulting derivatives became an
addiction that most banks (and many other financial entities, pension
systems, municipalities, NORWAY! etc) simply could not resist. That’s
what’s different about this “bust” cycle. It could be orders of
magnitude worse than anyone thinks because this type of leverage has
never been used before.
Also, as to the question of why other countries continue to provide
credit to the U.S., yes, the U.S. military is an issue, but I would
argue that it’s a house of cards. In my opinion, the core of it is
economic. Look at economies like Germany and Japan. Where would they be
without the U.S. to dump finished goods? Many countries are heavily
dependent on exporting finished goods to Americans who can no longer
keep the Ponzi scheme expanding.
This is an endemic flaw in the system. This is structural. It has been
allowed to continue over decades, and it is now off the rails.
I love the Long Term Scenarios matrix on slide 17. Man, nobody said it
was going to be easy!
I can’t agree with you more on slide 19, How to Heal the Economic
System. That’s it. That’s what has to happen.
I feel as though a new economic paradigm could spring up around JUST
food and clean energy projects. It wouldn’t be limited to that, of
course, but these are areas of massive importance to everyone. Areas
where people can participate by the millions. Of course, doing things
that make sense along these lines are illegal, or have compliance issues
associated with them to make them impossibly expensive and cumbersome to
consider.
What about currency exchange rate manipulation, esp. between china and the us? Its responsible for the undervaluation of chinese imports and the bloated service sector, the revaluation and adjustment of which is going to cause a lot of pain.
Also, centralization of political power is ultimately at the root of the incentive structure that created this situation (even corporations would comparatively powerless if they didn’t have a large centralized state to get cozy with), but you don’t mention it in those terms.
Kevin,
As presented here and on Solari the slideshow zooms by REALLY FAST. I don’t know how to slow it down. I am not techo enough to figure out how to slow it down.
Damn I wish I could read slide 17 and 19.
HELP.
Another great online resource (books) for Slide 22 is Gene Callahan’s _Economics for Real People_:
http://mises.org/books/econforrealpeople.pdf
Eileen: First start the play by clicking on the main image. Then hit the pause button in the middle (looks like || ). Then advance one slide at a time by clicking on the darkened forward triangle just to the right of center. At least that’s what worked for me. Also, the little slide screen icon makes it full screen, which helps with legibility.