for the original article, see
http://www.marketwatch.com/news/story/seventeen-reasons-america-actually-needs/story.aspx?guid=%7B08D803FF%2D60CE%2D4868%2DBDB8%2DD0CFFE9851B0%7D
On Nov 21, 2007 6:25 PM, ken hanly <[EMAIL PROTECTED]> wrote:
>
> Interesting article and commentary. Do you have the
> URL for the original? Maybe it is there and I am blind
> but I don't see it.
>
> Cheers, ken hanly
>
> --- Jim Devine <[EMAIL PROTECTED]> wrote:
>
> > [my comments in brackets -- I corrected some errors
> > and added a final paragraph]
> >
> > 17 reasons America needs a recession Think positive,
> > this 'slow motion
> > train wreck' is good for the U.S.
> >
> > By Paul B. Farrell, MarketWatch
> >
> > Last Update: 6:53 PM ET Nov 19, 2007
> >
> > ARROYO GRANDE, Calif. (MarketWatch) -- Yes, America
> > needs a recession.
> > Bernanke and Paulson won't admit it. And investors
> > hate them. We're
> > all trapped in outdated 1990s wishful thinking about
> > a "new economy"
> > and "perpetual growth."
> >
> > But the truth is, not only is a recession coming,
> > America needs a
> > recession. So think positive: Let's focus on 17
> > benefits from this
> > recession.
> >
> > To begin with, recession may be an understatement.
> > Jeremy Grantham's
> > GMO firm manages $150 billion. In his midyear report
> > before the credit
> > crisis hit he predicted: "In 5 years I expect that
> > at least one major
> > 'bank' (broadly defined) will have failed and that
> > up to half the
> > hedge funds and a substantial percentage of the
> > private-equity firms
> > in existence today will have simply ceased to
> > exist."
> >
> > He was "watching a very slow motion train wreck." By
> > October, it was
> > accelerating: "Train hits end of track at full
> > speed."
> >
> > Also back in August, The Economist took a hard look
> > at the then
> > emerging subprime/credit crisis: "The policy dilemma
> > facing the Fed
> > may not be a choice of recession or no recession. It
> > may be between a
> > mild recession now, and a nastier one later."
> >
> > However, the publication did admit that "even if a
> > recession were in
> > America's long-term economic interest, it would be
> > political suicide"
> > for Fed Chairman Ben Bernanke and Treasury Secretary
> > Henry Paulson to
> > suggest it.
> >
> > Then The Economist posed the big question: Yes,
> > "central banks must
> > stop recessions from turning into deep depressions.
> > But it may be
> > wrong to prevent them altogether."
> >
> > Wrong to prevent a recession? Why? Because
> > recessions are a natural
> > and necessary part of the business cycle. Remember
> > legendary economist
> > Joseph Schumpeter, champion of innovation and
> > entrepreneurship?
> >
> > Economists love Schumpeter's "creative destruction:"
> > Obsolete firms
> > get destroyed and capital released, making way for
> > new technologies,
> > new businesses, like Google. And yet, nobody's
> > willing to apply
> > Schumpeter's theory to the entire economy ... and
> > admit recessions are
> > a natural part of the business cycle.
> >
> > Instead, everyone persists in the childlike fairy
> > tale that "all
> > growth is good" and "all recessions are bad," a bad
> > hangover of the
> > '90s "new economy" ideology. So for the folks at the
> > Fed, Treasury and
> > Wall Street, "eternal growth" is still America's
> > mantra.
> >
> > Unfortunately, the American investors' brain has
> > also developed this
> > blind obsession with "growth-at-all-costs," coupled
> > with a deadly fear
> > of all recessions, as if recessions are a lethal
> > super-bug more
> > powerful than Iran with a bomb.
> >
> > Our values are distorted: It's OK to be greedy and
> > overshoot the
> > market on the upside -- grab too many assets, take
> > on too much debt,
> > make consumer spending a religion, live beyond our
> > means, ignite
> > hyperinflation along the way. Growth is good, even
> > in excess.
> >
> > [!!??!! -- hyperinflation is not currently in the
> > cards. It also
> > seems unlikely, unless the US government falls
> > apart.]
> >
> > And yet, recessions are a no-no that drives
> > politicians, economists
> > and investors ballistic.
> >
> > Well, folks, you can block all this from your mind,
> > you can argue that
> > recessions are not a part of Schumpeter's thinking,
> > that they are
> > inconsistent with your political ideology. But the
> > fact is, we let the
> > housing/credit boom become a massive bubble, it
> > popped and a recession
> > is coming. So think positive, consider some of the
> > benefits of a
> > recession:
> >
> > 1. Purge the excesses of the housing boom
> >
> > No, it's not heartless. Not like wartime
> > calculations of "acceptable
> > collateral damage." Yes, The Economist admits "the
> > economic and social
> > costs of recession are painful: unemployment, lower
> > wages and profits,
> > and bankruptcy." But we can't reverse Greenspan's
> > excessive rate cuts
> > that created the housing/credit crisis. It'll be
> > painful for everyone,
> > especially millions of unlucky, mislead homeowners
> > who must bear the
> > brunt of Wall Street's greed and Washington's policy
> > failures.
> >
> > [This author should quote Andrew Mellon, Treasury
> > secretary during the
> > 1920s: "liquidate labor, liquidate stocks, liquidate
> > the farmers,
> > liquidate real estate." His whole idea is that a
> > recession would purge
> > the imbalances from the US economy -- i.e., those
> > factors that are
> > screwing up financial and real-world markets. This
> > is a very 19th
> > century way of looking at things. For example, Marx
> > saw the bankruptcy
> > of thousands and the destruction of a lot of capital
> > as the result of
> > a recession ("crisis") and also as allowing a new
> > recovery.
> >
> > [Of course, neither Mellon nor Marx anticipated that
> > a cyclical
> > recession could cause the US economy to jump the
> > rails, going from a
> > normal business cycle to a serious depression. Okay,
> > Marx had some
> > ideas along these lines. In some Marxian
> > interpretations, a serious
> > recession would encourage revolution.]
> >
> > 2. U.S. dollar wake-up call
> >
> > Reverse the dollar's free fall and revive our [i.e.,
> > US capitalist]
> > global credibility. Warnings from China, France,
> > Iran, Venezuela and
> > supermodel Gisele haven't fazed Washington.
> > Recession will.
> >
> > [I don't see why a recession would do this. If the
> > US recession "goes
> > global," it won't just be US imports that fall,
> > helping the US$. It
> > will also be foreign exports (US imports) that fall,
> > which would hurt
> > the value of the US$. ]
> >
> > 3. Write-offs
> >
> > Expose Wall Street's shadow-banking system. They're
> > playing with $300
> > trillion in derivatives and still hiding over $100
> > billion of toxic
> > off-balance sheet asset-backed securities, plus
> > another $300 billion
> > hidden worldwide. A lack of transparency is killing
> > our international
> > credibility. Write it all off, now!
> >
> === message truncated ===
>
>
> Blog: http://kenthink7.blogspot.com/index.html
> Blog: http://kencan7.blogspot.com/index.html
>
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
