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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

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August 13, 2007

Is the US economy more about massive consumption on borrowed money than one based on saving, investment and production? Does it matter?

Bruce Petty

Not really. Not for the free market boys who comment on the market. They are talking in terms of central banks' actions as the confidence booster the market needed". "Rationally it wasn't necessary, but because markets fire on confidence rather than rational explanation, you need this as a circuit-breaker.

The self-correcting mechanisms need a confidence boost to get working , and there is nothing wrong with the market that requires any form of form of regulation.

| Posted by Gary Sauer-Thompson at 7:13 AM | | Comments (7)


usa has been living on capital for a long time. someone in asia will tap the 'sell usd button' a little one day, and usd will lose 1/2 it's value, or more. no one wants to start this, everyone wants to 'diversify'.

interesting times in the reserve banks. rather like russian roulette. and you thought bankers led boring lives...

When companies hurt: those of the Market Faith demand instant largesse. Perhaps the action of governments to bolster the market should be withdrawn after a time so the market does not become skewed.

The US housing market is in a major downturn--the real estate boom has gone bust and house prices are falling.So it is harder to borrow against home values.

if the central banks in the global economy are on credit watch, then the economy is really dominated by capital martkets. They rule .They are not a sideshow.

Some are concerned about the large amount of U.S dollars held by china.

Rightly so. THe USA borrows from China to pay for its twin deficits. China could invest elsewhere and downgrade its US dollar holdings.

I see that Arthur Sinodinos, John Howard's former Chief of Staff and now at Goldman Sachs HJBWere, warned of a blacklash against Howard at a gathering of industry chiefs in Canberra.

He said that some people are under pressure and this is where the Oppostion mantra about working families comes from.

He adds that there is no doubt that that globalization is putting real political pressure on the system.

The debate we are having in Australia today---if you strip away the headline issues of housing, cost of living, and the like [including] the role of Workchoices--they're coming down to how people are coping in this more globalised workplace, what security or insecurity they feel in the workplace and how sensitive they are to even small changes in their particular circumstances. They feel more at risk

Sinodinos warned of a US-style voter backlash driven by union-stoked fears about globalisation.