[PEN-L:409] Re: Re: Naive question on Japanese Debt

[Rosser Jr, John Barkley]

Michael,
    Of course.  You're the guy who reminded us that Marx 
and most earlier economists analyzed speculative bubbles 
from the standpoint of "fictitious capital."  As we know, 
bubbles can keep going as long as nobody comes along and 
somehow blows everybody's (or the relevant somebodys') 
confidence causing them to cash out.
     I think that it is only Paul Davidson and a few weird 
new classical economists like Peter Garber who don't 
believe in speculative bubbles, although some of the other 
Post Keynesians don't like the concept of a "fundamental" 
(Marx's "real capital").
Barkley Rosser
On Fri, 31 Jul 1998 10:33:29 -0700 Michael Perelman 
<[EMAIL PROTECTED]> wrote:

> I wholly agreee with Randy.  Maybe we are are crazy but this talk of a
> financial crisis seems to be constructed out of device to protect what
> Marx called fictititous capital.  Forgetting about union contracts for
> the moment, what would have happened if Chrysler had gone bankrupt and
> somebody picked up the company for a fraction of what it had been worth
> previously.  The new owner would have earned a healthy profit because
> the investment would be low.  He could afford to pay good wages.  Only
> the investors in Chrysler stock would have been hurt, along with a few
> Mercedes dealers.  A minor shock at best.
> 
> We call it rational when firms downsize; why can't the stock market be
> allowed to downsize and let the economy go on as before.
> 
> Maybe I am wrong/crazy ....  Nobody else on pen-l except Gene/Mat/and
> Randy from afar seems to be interested in this.  So maybe I should drop
> it.
> 
> Randy Wray wrote:
> 
> >> 1. someone recently told me a story of a financial official (i can't
> >> remember if it was a banker or a regulator) who had visited a mom
> >> and pop
> >> grocery store in denver to look over the books. her/his assessment
> >> was
> >> that the store was hopelessly bankrupt, and mom and pop didn't even
> >> know
> >> it. indeed, they had probably been bankrupt for years, and probably
> >> would
> >> remain so for years to come. so long as no one looked closely at the
> >> books
> >> and inventory (there had been stuff on the shelves for yrs, carried
> >> at
> >> purchase price but no longer of any value whatsoever), this store
> >> could
> >> remain in business for yrs to come. but any close analysis would cut
> >> off
> >> all bank credit and the store would close down. whaddyado?
> >>
> >> 2. another story. a regulator at the occ assured me that he could
> >> take any
> >> bank, no matter how insolvent, and cook the books to keep it open
> >> for 5
> >> years. and hey, things might turn around.
> >>
> >> --
> >
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
> 
> Tel. 916-898-5321
> E-Mail [EMAIL PROTECTED]
> 

-- 
Rosser Jr, John Barkley
[EMAIL PROTECTED]