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CharlieMcmenamin

Listed below are comments made by CharlieMcmenamin between Wednesday, 24th September 2008 and Thursday, 9th October 2008.

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A New Bretton Woods? Where is Keynes? Where is Dexter White? 11:02am on 09 Oct 2008 I think the events of yesterday deserve a wartime analogy.

This is genuinely a '1940' moment for Britain. Either these moves stave off the 'threat of invasion'- for which read the collapse of the banking system - or they don't. Given the reception by mainstream economists I suspect there is a fair chance this will be realised. But 'staving off an invasion' is a long way from 'wining a war', as it were. The economy survives - we're not in the strange Icelandic world of national bankruptcy – but turning this around will require huge further shifts, which almost no-one in power seems presently to even be prepared to contemplate.

What the economists call a structural adjustment is required - a different way of running the economy because it's broken for most of us. There is no way of getting there painlessly and we can certainly expect higher prices, more unemployment and lower standards of living.

Eventually, of course, a 'new peace', to stay with the analogy, will require a new Bretton Woods. But first, as Paul suggests, we have to get rid of the leaderships which brought us to this situation. Here the 1940 analogy breaks down because it is a lot more complicated that replacing Halifax with Churchill. There is almost no-one in any leadership position in any major Western country who isn't, in some way, implicated with going along with the neo-liberalism which brought us to this point.
So I'd say unless the BRIC countries discover a hitherto well hidden capacity for global leadership (and America is too enfeebled to prevent them exercising it) we'll wait for a generation for any new Bretton Woods.....
How to blow the head off this crisis? 11:09am on 07 Oct 2008 There are a spectrum of possible reasons for government to either take a stake in a bank or go for temporary nationalisation. The two ends of this spectrum might be described thus::

1. To restore confidence in the market. On this view the government doesn't necessarily have to do anything at all in terms of getting the banks to change their behaviour, simply stand behind them to give everyone confidence and then our otherwise perfect money markets start working again...
2. Because the bankers and other Masters of the Universe have made such a total pigs-ear of the economy they simply can't be trusted to go back to what they were previously doing without being told how to behave by government acting on behalf of the rest of us.

I rather tend to the 2nd view. But in practice, it is the first view which forms the end of currently 'acceptable' policy debate. But, pragmatically speaking, I really doubt that any nationalisation would be *temporary* on the Swedish model.

Britain- the most indebted of all the major Western economies - is a medium sized country with a world sized financial sector. We're way, way out on a limb in our role as a kind of giant 'offshore' casino for the world's hot money. That money will flee as soon as it can get it's value restored and won't come back without massive reassurances - reassurances which can only come, in the medium term, from moves against social spending and the restoration of the obscene differentials in income once provided by our casino economy. But if the government rescues the casino on such a basis there will be massive social upheaval.
Big picture: crisis, crash, depression? 10:59am on 06 Oct 2008 Paul, you very fairly ask,
"Can governments act decisively and in collaboration to stem the panic?"

You seem to be implying a need for a 'new Bretton Woods'. Surely any such international conference on finance effectively be a cover for the formal recognition of a decline in American power in favour of China and the BRIC countries more generally?

Hands up who thinks that's likely to acceptably within the Beltway or in the Westminster/Whitehall/Square Mile triangle.
We're not doomed. Discuss. 6:17pm on 24 Sep 2008 Paul,
That's a very generous offer you've just made @ #37.

So here's a seemingly simple set of questions:

- what's different between this financial crisis and the Great Crash of 1929?
- how automatic is the link between a financial crisis and a massive downturn in the general economy, in the manner of the Depression of the 1930s following the Crash of 1929
- What would Smith, Richardo, Marx and Keynes made of all this?

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