here, check this thing out. It may not be perfect, but it should help you to understand:
http://econviz.com/bsexplorer.html
http://econviz.com/bsexplorer.html
global financial crash yay!
- Thread starter sufi
- Start date
The problem with that model is that what they vaguely call "negative equity" (?) is actually future tax liabilities - the treasury's main asset. It's also a huge liability missing from the private sector balance sheets in that model. The growth in the household balance sheet isn't all equity. It's treasuries on the asset side and future taxes on the liability side
well actually there are a whole bunch of problems with it, but that's one of them
well actually there are a whole bunch of problems with it, but that's one of them
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Krugman has a good summary of the PIIGS issue up:
http://krugman.blogs.nytimes.com/2010/02/09/anatomy-of-a-euromess/
http://krugman.blogs.nytimes.com/2010/02/09/anatomy-of-a-euromess/
vimothy
yurp
Check out the comments section in this thread:
http://macro-man.blogspot.com/2010/01/how-do-you-spell-w.html
Lots of traders arguing about financial reform proposals. V. interesting.
Can see there is an issue here. Be back later when I've figured out how to frame a question.
http://macro-man.blogspot.com/2010/01/how-do-you-spell-w.html
Lots of traders arguing about financial reform proposals. V. interesting.
Can see there is an issue here. Be back later when I've figured out how to frame a question.
vimothy
yurp
BTW, quick update on where I've got to:
Obviously suggestive of current problems with the global macroeconomy, and interlinkages and couplings between states and commercial sectors, i.e. sectoral "deltas" to the global macro cycle....
This still needs to be reformulated in terms of balance sheet equity. Any thoughts? Cheers.
Why must one sector divide into two: private and public (or (C + I) and G)?
1, To fix the inherent intra-sectoral AD problem at an ultimate level;
2, To enable its solution.
There is an ultimate macro-level sectoral limit (global macro) that can always be disaggregated into two or more composite sectors that together form the aggregate macro of the initial state, and on into infinity if need be, since it is only monads all the way down.
Every individual sector can itself be thought of as a macro and disaggregated into composite sectors.
The cross-sectoral deficit dependency (US-China; public-private) can at any time hold for any two constituent sectors in a larger macro. One sector is a net addition to AD in the other sector, boosting total output in one an destroying total output in the other.
The Other Sector:
1, It *must* be present or AD remains pro-cyclical;
2, Only the government can solve the coordination problem.
1, To fix the inherent intra-sectoral AD problem at an ultimate level;
2, To enable its solution.
There is an ultimate macro-level sectoral limit (global macro) that can always be disaggregated into two or more composite sectors that together form the aggregate macro of the initial state, and on into infinity if need be, since it is only monads all the way down.
Every individual sector can itself be thought of as a macro and disaggregated into composite sectors.
The cross-sectoral deficit dependency (US-China; public-private) can at any time hold for any two constituent sectors in a larger macro. One sector is a net addition to AD in the other sector, boosting total output in one an destroying total output in the other.
The Other Sector:
1, It *must* be present or AD remains pro-cyclical;
2, Only the government can solve the coordination problem.
Obviously suggestive of current problems with the global macroeconomy, and interlinkages and couplings between states and commercial sectors, i.e. sectoral "deltas" to the global macro cycle....
This still needs to be reformulated in terms of balance sheet equity. Any thoughts? Cheers.
vimothy
yurp
Had to kind of lol at this graph before remembering that this is actually happening right now:
hucks
Your Message Here
God that Scottish guy was a smug prick. Though I kind of thought he was right, as far as I can tell
vimothy
yurp
Palley: Europe's cross of gold: http://blogs.ft.com/economistsforum/2010/02/euroland-is-being-crucified-upon-its-cross-of-gold/
Some of the stuff sounds right, intuitively, but trust me, he was very, very wrong on most of the points being discussed.
The tricky part is this: going into debt is not the same for a country as it is for you. If you go into debt, you need to get dollars from somewhere to pay it off. If a government goes into debt, it can just print dollars to pay it off (although with potential consequences for inflation). No country that issues its own currency and debt denominated in that currency can EVER go bankrupt. The problem with Greece is not really its debt, it's that Greece doesn't have its own currency that would allow it to smoothly devalue that debt and reduce real wages without deflation or a default.
If you had a printing press and a license to print money, would you be worried about paying off a $1,000,000,000,000,000 debt? I wouldn't. All you would have to do is print a $1,000,000,000,000,000 bill and hand it to your creditors.
The money quote in that whole interview is this one from Stiglitz:
"The absurdity of these speculators is illustrated by what's happening in the United States. The CDS spreads, the bets on a default in the US government are going up. Does anybody believe that the US government is going to default??? The fact is, the US government CAN PRINT MONEY. You can bet on whether there is inflation, but to bet on a default in the US is literally absurd."
It makes me really wish I had a CDS trading desk. I'd be selling those swaps by the truckload. It really is incredible that supposedly sophisticated traders are buying those swaps, which is equivalent to giving away millions of dollars for absolutely nothing in return. So much for the efficient market hypothesis