[PEN-L:410] Re: Re: Naive question on Japanese Debt

[Rosser Jr, John Barkley]

Michael,
     A bit more.  In principle nobody ought to get hurt.  
But, somehow when major bubbles burst there is often damage 
to the financial system that then feeds back on real 
investment.  Both Mill and Marx saw that as a major factor 
in macro downturns.
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]