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After the Fall: Ten Years After the Crash

203 points by dbcooper 8y ago

baybal2 8y ago
This writing is brilliant. A follow up: https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/ https://www.theatlantic.com/magazine/archive/2018/06/the-bir... And another one: https://www.dawn.com/news/1417420/a-new-upper-class https://www.dawn.com/news/1417420/a-new-upper-class
- ycombinete 8y ago
  The LRB always always has great writing. I've subscribed for 2 years now, and have never regretted it at all.
  - andy_ppp 8y ago
    If you guys like this I highly recommend the University of Cambridge politics department analysis of current affairs. https://www.talkingpoliticspodcast.com/ https://www.talkingpoliticspodcast.com/
amriksohata 8y ago
We use the words after the fall, but some EU countries like spain, Italy and Greece are still on the brink with massive youth unemployment
- misja111 8y ago
  The problems in Greece were not caused by the credit crisis. Sooner or later Greece's model of government spending without a solid tax regime would have collapsed, the crisis only made the underlying problems more apparent.
  - maze-le 8y ago
    Without the Euro, the greek central bank could have increased inflation and downvalued the Drachma, so the government could spend, spend, spend. This was the Modus Operandi before the Euro. I don't say, that this is a responsible way of managing a countrys finances, but if the alternative is increasing infant mortality and extreme unemployment for almost a decade, I can't see whats so bad about that.
    - isostatic 8y ago
      Greece infant mortality has been decreasing since 2004 [1] [2] [1] https://knoema.com/atlas/Greece/topics/Demographics/Mortality/Infant-mortality-rate https://knoema.com/atlas/Greece/topics/Demographics/Mortalit... [2] https://www.statista.com/statistics/806917/infant-mortality-in-greece/ https://www.statista.com/statistics/806917/infant-mortality-...
      - ataturk 8y ago
        How does infant mortality relate to deficit spending? Couldn't technological progress account for the drop in infant mortality? Or maybe they stopped counting certain deaths? I see this all the time with crime stats--you can't compare homicides between the US and Europe because many European countries don't consider a death a homicide until the case is solved. The unsolved cases fall into a black hole of "not counted" or certainly not counted as homicides, and then we get all these breathless articles about how bad crime looks in the US while really US crime rates are very low comparatively speaking. We saw this same issue with Cuba--ginning their numbers to make their wretched healthcare system look better than the US, when in fact, there is absolutely not even a comparison there. Cuba can't even get a bus back to how good the US truly is. And the media eats this shit up because they are apologists for communists and love clickbait, fake news.
      - growlist 8y ago
        So you don't dispute the extreme unemployment then?
        8y ago
- at-fates-hands 8y ago
  It doesn't help there massive amounts of refugees flooding into those countries as well. I realize people are fleeing war and violence, but they're going to countries where there isn't any jobs, and the economic situation is dire. It's the worst possible scenario. They're leaving their home countries with nothing and arriving with an even bleaker future ahead of them.
  - cubano 8y ago
    If they are leaving a place of "war and violence", I am sure some unemployment as the worst social condition hardly could be construed as an "even bleaker future ahead".
  - icebraining 8y ago
    There aren't, though. Immigration has dropped a lot in 2016, and again in 2017. Mediterranean crosses more than halved from 2016 to 2017. Last year, the EU only granted protection to 540k persons, in an EU with over 500M inhabitants.
    - at-fates-hands 8y ago
      Not according to the articles I've been reading: 25.03.2018: https://www.dw.com/en/on-the-edge-of-the-eu-refugee-flows-flood-the-evros-river/a-43068842 https://www.dw.com/en/on-the-edge-of-the-eu-refugee-flows-fl... It's not clear how many make it across. But last year alone, officials from Frontex, the EU's border agency, said they intercepted 5,500 illegal crossings, a whopping 80 percent rise compared to the previous year. During that same period, Turkish authorities told the United Nations they had intercepted nearly 21,000 people, more than triple the number reported the previous year. 29.9.2017: https://www.theguardian.com/world/2017/sep/29/surge-in-migration-to-greece-fuels-misery-in-refugee-camps https://www.theguardian.com/world/2017/sep/29/surge-in-migra... The number of people arriving, across land and sea borders, has more than doubled since the beginning of the summer. Authorities estimate arrivals are now at their highest level since March 2016, with over 200 men, women and children being registered every day. “We’re living the days of 2015,” said Pantelis Dimitriou from Iliaktida, a local NGO on Lesbos operating accommodation and support centres for the newly arrived. “The flows have become huge. From around 50 to 60 in early July they are now at more than 200 every day. 2.7.2017: https://gulfnews.com/news/europe/italy/italy-overwhelmed-by-flood-of-immigrants-1.2051986 https://gulfnews.com/news/europe/italy/italy-overwhelmed-by-... But it is also a reflection of Italy’s years on the migration front lines with little help from the rest of Europe. More than 82,000 people have arrived in Italy this year, a 20 per cent increase over the same period last year, according to the United Nations refugee agency. Under current EU rules, asylum seekers are supposed to apply for protection in the first EU country that they enter. At the height of the refugee crisis in late 2015, EU leaders set up a quota system to try to distribute some of the refugees from the main arrival nations of Greece and Italy, but it has barely gotten off the ground. The influx has strained Italian infrastructure — and the goodwill of Italian voters.
tonyedgecombe 8y ago
Watching what happened in the UK it appeared we were making a lot of poor decisions on the hoof. In particular pushing Lloyds into buying HBOS didn't work out so well. I often wonder what would have happened if we hadn't bailed out the banks.
- arethuza 8y ago
  Well, the UK government seemed to genuinely believe that had they not bailed them out that we might have been in a pretty bad situation: looting, troops on the streets etc. https://www.bbc.co.uk/news/uk-politics-24184728 https://www.bbc.co.uk/news/uk-politics-24184728 However, with the benefit of some hindsight - I do wonder if these stories were just a bit exaggerated for political reasons. Also, if the implosion of the payment system is an existential threat to a country then why haven't done anything to ensure that this couldn't happen again? Yanis Varoufakis mentions in one of his books that he proposed a alternate government controlled payment system that could be used if Greek banks stopped functioning - why don't we have something like that prepared to fall back on in a future crisis?
  - grey-area 8y ago
    They have in the UK at least - UK Banks have been forced to ringfence core retail banking, so that other arms could be allowed to fail, but customer banking be unaffected: https://www.gov.uk/government/publications/ring-fencing-information/ring-fencing-information https://www.gov.uk/government/publications/ring-fencing-info... Similar to Glass Steagall from 1933 in the US, which was watered down over decades and eventually repealed when we reached the end of history in 1999: https://en.m.wikipedia.org/wiki/Glass–Steagall_legislation https://en.m.wikipedia.org/wiki/Glass–Steagall_legislation Unfortunately it appears history is probably going to repeat in more ways than just cycles of crisis and financial regulation. I expect trade war and then global war in the next decade - we’ve reached around 1935 by my estimation.
    - arethuza 8y ago
      Thanks - I'd never heard of that - pretty surprised that a Conservative government implemented anything like that. having said that, maybe that's why it has been kept relatively quiet?
fineline 8y ago
Interesting to see an article that recognises the role QE has played in driving inequality and disrupting political landscapes, but I wonder why Mr Lanchester doesn't consider the alternative policies that could have been enacted. i.e. if governments had focussed on spending money into the real economy instead, through infrastructure spending and real nation building projects - creating jobs, real (not paper) wealth and the platform for further economic growth - rather than spending funny money into existence supporting markets that blow up prices without any real addition of value.
- JumpCrisscross 8y ago
  > if governments had focussed on spending money into the real economy instead, through infrastructure spending and real nation building projects The Federal Reserve is an independent agency. It repeatedly implored Congress to increase fiscal spending. That didn’t happen, so monetary policy had to attempt to compensate. > creating jobs At least in America, we did a good job of this. Ben Bernanke navigated us away from an alternate history in which the GFC was a second Great Depression. In New York, the Hudson Yards are coming up as one of the biggest public works project since the Great Depression. Things could have been better, but they could easily have been a lot, lot worse without QE.
  - weirdstuff 8y ago
    We've done a pretty bad job at bringing back jobs. Labor force participation rate has fallen, while people are retiring later. Retirement/aging doesn't even help explain the drop. Especially since the younger generation has more than replaced the older one, and the older one isn't retiring at the same historic rate. We're not in great shape, employment wise. https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS11300000
    - JumpCrisscross 8y ago
      > We're not in great shape, employment wise Almost everyone who wants a job has one. And real wages have been rising for a decade. That’s pretty good shape. Labour force participation is a complicated question deeply intertwined with the opioid crisis, increased rates of college attendance, the mis-use of federal disability insurance and other factors. Quoting labour participation without reference to demographic shifts creating more retirees, moreover, mischaracterises the statistic. Demographically, there is no world in which 2018 LFP would have been higher than 2008.
exelius 8y ago
Very interesting article! I agree and have felt the tremors the author mentions throughout my own work in a related field. The last decade has taught me that corporations matter more than nations, at this point. In the case of corporate capitalism, governments act like special interest groups protecting the corporations that fund their lifestyles. To that end, if a major bank like RBS were to go belly up and now be beyond the ability of the U.K. to save, what are the chances we see a “national merger” where a country offers to absorb the losses in the banking system in exchange for absorbing the entire nation (population, economy and all)? This sounds extreme, but it’s effectively what happened in the feudal era. Wealthy nobles would support whichever king had the resources to protect them. Only thing I’m doing is replacing “wealthy nobles” with “corporations” — which are essentially “jointly owned” among the entire “nobility” (I.e. the capital class in the West). Ultimately I think we will avoid World War III because the corporations don’t want it; and they control enough of the global logistics supply chain to prevent it. So a peaceful way to transition failed governments and financial systems back to prosperity will be needed if we want to avoid a repeat of the Weimar Republic.
- cubano 8y ago
  Ultimately I think we will avoid World War III because the corporations don’t want it; ..today, it should have ended with. Tomorrow, as they say, is a whole new ball game and it's certainly hard to predict what our sociopathic corporate masters will want for us then. I agree with your premise, however. Killing your customers is usually considered "bad business" and is to be avoided most times. However, given certain political and economic conditions, I do believe corporations could easily be convinced to give the go ahead to War.
- emodendroket 8y ago
  Before the first World War people also imagined that there could never be another big war because the world's economies were so connected.
- darpa_escapee 8y ago
  War has always been great for plunder and profit. Some of the biggest corporations are in the war racket. Arms dealers arm both sides in a conflict, sit back and rake in the profits. Corporations constantly stoke the WWIII fire, little people like us are lucky that a situation beyond our ability to contain it hasn't developed.
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NVRM 8y ago
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crwalker 8y ago
The ten-year anniversary is a good moment to look at the Case-Schiller index today and compare it to the peak of the bubble in 2006. https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA I think there will be some great deals in real estate by 2021.
- jeffreyrogers 8y ago
  Maybe, but it's hard to predict. I don't think real estate prices are going to crash unless mortgage delinquency rates go up dramatically, which hasn't started yet: https://fred.stlouisfed.org/series/DRSFRMACBS https://fred.stlouisfed.org/series/DRSFRMACBS At least not nationally, maybe in some metro areas it has. Mortgage lending standards have started to loosen though, but I think it'd take a while for that to have a substantial effect. Housing prices tend to increase because good land is scarce in most places people want to live.
  - ra1n85 8y ago
    >prices tend to increase because good land is scarce in most places people want to live. Prices are driven by demand. A crash will inevitably reduce demand. Just like equities, real estate involves speculation. It may not be as bad as 2008, but we will still see a significant drop in real estate prices.
    - jeffreyrogers 8y ago
      I don't think this analysis tells the whole story because it doesn't explain where the crash would come from. Demand is high (and likely to remain high) because good land is scarce. Developers can't create large amounts of new housing because of zoning and also because if they create too much they won't be able to make a profit (they take out loans to finance their projects too). So supply is likely to be less than demand for the foreseeable future in most locations. Supply could increase rapidly if the mortgage delinquency rate rises rapidly. There aren't signs of this happening soon that I'm aware of, although mortgage lending standards have lowered a bit. I don't see good evidence for an imminent crash, and saying prices will decline if a crash occurs is tautological.
emodendroket 8y ago
I read this piece last week and I liked it a lot. Anyone read his book?
fullshark 8y ago
“What if the governments of the developed world turned to their electorates and explicitly said this was the deal? The pitch might go something like this: we’re living in a competitive global system, there are billions of desperately poor people in the world, and in order for their standards of living to improve, ours will have to decline in relative terms.” This is a guaranteed losing platform
- dbatten 8y ago
  It's also preposterous. Wealth isn't a zero-sum game. Compared to our ancestors in, say, 1000 BC, the vast majority of humanity is far, far, wealthier while the few who are arguably no better off are not worse off either. That's all wealth we've created. We can talk about whether it's a good or moral idea to transfer wealth, but let's not pretend like that's the only way to deal with poverty.
  - ionised 8y ago
    > Wealth isn't a zero-sum game I keep seeing people say this but is there not a finite amount of wealth in the world at any given time? There are also the finite land and natural resources required for wealth creation.
    - fullshark 8y ago
      There's also human ingenuity, technology, and gov't stability which are multipliers on those finite land/natural resources. Skyscrapers increase real estate/land for example, courts protect property rights enabling one to invest capital in venture X.
  - dragonwriter 8y ago
    > Wealth isn't a zero-sum game. It expressly refers to relative, not absolute, wealth, which necessarily is zero-sum. (There's also quite a lot of evidence that relative, not absolute, wealth is the more important driver of exoerienced utility: humans are strongly programmed to be satisfied or not based on performance relative to expectations set by social environment, not absolute material condition. For this reason relative wealth is generally more important.)
olivermarks 8y ago
"...According to calculations that Zucman himself says are conservative, the missing money amounts to $8.7 trillion, a significant fraction of all planetary wealth. It is as if, when it comes to the question of paying their taxes, the rich have seceded from the rest of humanity." A sobering reality...especially when you consider the ultra rich design and run the political systems that define the tax bases and laws the rest of the world are organized under...
- hippich 8y ago
  http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/ http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-loo... "A Pew Research Center analysis of IRS data from 2015, the most recent available, shows that taxpayers with incomes of $200,000 or more paid well over half (58.8%) of federal income taxes, though they accounted for only 4.5% of all returns filed (6.8% of all taxable returns)."
  - olivermarks 8y ago
    That report is parochial research of onshore tax payers who are in the US system. The vast majority of the elites wealth is parked offshore
    - padobson 8y ago
      I agree with this. Folks earning $200k-$500k are paying most of the taxes because they have little-to-no political influence, and they're easy scapegoats because most people make less than them. This is the glass ceiling of the US tax code.
      - hippich 8y ago
        https://www.dailysignal.com/2017/10/18/rich-pay-fair-share-numbers/ https://www.dailysignal.com/2017/10/18/rich-pay-fair-share-n... "The top 1 percent of income earners, those having an adjusted annual gross income of $480,930 or higher, pay about 39 percent of federal income taxes. That means about 892,000 Americans are stuck with paying 39 percent of all federal taxes." Another source about who is not paying any taxes, and who receives money from government - https://nypost.com/2016/02/24/45-percent-of-americans-pay-no-federal-income-tax/ https://nypost.com/2016/02/24/45-percent-of-americans-pay-no... How much exactly should be top 1% be paying to no longer be blamed for not paying taxes?
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mcguire 8y ago
"A crackdown on international evasion is difficult because it requires international co-ordination, but common sense tells us this would be by no means impossible. Effective legal instruments to prevent offshore tax evasion are incredibly simple and could be enacted overnight, as the United States has just shown with its crackdown on oligarchs linked to Putin’s regime. All you have to do is make it illegal for banks to enact transactions with territories that don’t comply with rules on tax transparency." Like Switzerland?
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nimbius 8y ago
hindsight is 20/20, but does anyone recall some of the ludicrous things we actually did to prop up some of our structurally too-big-to-fail institutions? as an automotive mechanic the one institution during this crisis that stuck out in my mind was "cash for clunkers." Essentially the government subsidized ordinary americans to trade in whatever car they had so long as it got relatively poor gas mileage and wasnt more than 25 years old. This was a 3 billion dollar program designed largely to get anericans to start spending money on cars --any car-- by bribing them to destroy their own car. Two studies basically declared the program a failure. https://en.wikipedia.org/wiki/Car_Allowance_Rebate_System https://en.wikipedia.org/wiki/Car_Allowance_Rebate_System But I have still a deep sense of chagrin when I remember mixing sandy batches of "engine disablement compound" and pouring them directly into a perfectly good truck or minivan. Sure, it might not win an award for climate change but these cheap cars and trucks could have gotten a single mother to and from the grocery store or school once or twice a week as needed. We intentionally destroyed them all. For those thinking the process was sane and simple, it wasnt. Doing this is loud, dirty, and throws a cloud of smoke you can see for a mile or more. https://www.youtube.com/watch?v=M2Sz5vtfanw https://www.youtube.com/watch?v=M2Sz5vtfanw We were even so desperate to fix the economy that the government basically started cutting people checks. The idea being they would spend the money on a shopping trip to the mall or something... https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 I spent my check on groceries when I got it, and put the rest into savings.
- lkrubner 8y ago
  "I spent my check on groceries when I got it, and put the rest into savings." That is entirely appropriate. When the economy is depressed, we want people to both spend more and pay off any debts they might have, so your mix of spending and savings is just what the economy needed. The boost to consumption helps the economy get going again. And to the extent that people are paying off debts, their debts are moved on to the ledger of the government. Since the government pays a lower interest rate than private citizens, this reduces the overall burdens on the economy, and, again, helps the economy get going again. Both aspects of this help.
  - 8y ago
sf01 8y ago
Here's a discussion with the author, if anyone's interested: https://www.youtube.com/watch?v=-HFIa_szx_U https://www.youtube.com/watch?v=-HFIa_szx_U
mcguire 8y ago
"From a sociological point of view, the crisis exacerbated faultlines running through contemporary societies, faultlines of city and country, old and young, cosmopolitan and nationalist, insider and outsider. As a direct result we have seen a sharp rise in populism across the developed world and a marked collapse in support for established parties, in particular those of the centre-left." Weirdly, the "winners"[1] of the populism have been rural, older, nationalist, and very much insider[2]. Think of both Trump and Brexit supporters. I'm not entirely sure, but these don't seem to have been the people hurt the most by the economic crash. The whole situation has an incredibly strong disconnect between what's actually going on and the facade or veneer of what they think about it. Ideology trumps reality? [1] I'm using "winner" because I can't think of anything better, but the "victory" is Pyrrhic. Not only are they shooting themselves in the foot, even if they weren't they would not have a good end game. [2] Yes, the rhetoric is about outsiders, clearing the swamp and that sort of thing. But those are the most inside outsiders I've ever seen.
- speeder 8y ago
  A really bizarre data that I saw during US elections, was that during pooling (before actual elections) the map of Trump voters, was almost identical to the map of places with high death rates. Also largest trump voter demographic, as the media currently keep harping all the time as "racist whites males", is the only demographic in US with rising death rates. I don't know why certain US demographics started since 2008 to die at such speed, suicides for example rising unusually fast, and "gun crime" when you actually split homocides and suicides, also show ludicrous numbers of suicides (while gun homicides are less than with other weaponry, like knives and bats). So whatever happened, it affected a certain demographic epically bad... And when someone propose to be a saviour, no matter how much you hate that person, you will vote for it... When people have literally nothing to lose and next "step" in their life, is death, anything else is better. EDIT: tried to find original source, failed, but found this article instead... still make the same point: http://www.businessinsider.com/maps-counties-where-opioid-deaths-are-high-trump-2016-crisis-2017-10 http://www.businessinsider.com/maps-counties-where-opioid-de...

203 points by dbcooper 8y ago

This writing is brilliant. A follow up: https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/ https://www.theatlantic.com/magazine/archive/2018/06/the-bir... And another one: https://www.dawn.com/news/1417420/a-new-upper-class https://www.dawn.com/news/1417420/a-new-upper-class

ycombinete 8y ago
The LRB always always has great writing. I've subscribed for 2 years now, and have never regretted it at all.
- andy_ppp 8y ago
  If you guys like this I highly recommend the University of Cambridge politics department analysis of current affairs. https://www.talkingpoliticspodcast.com/ https://www.talkingpoliticspodcast.com/

amriksohata 8y ago

We use the words after the fall, but some EU countries like spain, Italy and Greece are still on the brink with massive youth unemployment

misja111 8y ago
The problems in Greece were not caused by the credit crisis. Sooner or later Greece's model of government spending without a solid tax regime would have collapsed, the crisis only made the underlying problems more apparent.
- maze-le 8y ago
  Without the Euro, the greek central bank could have increased inflation and downvalued the Drachma, so the government could spend, spend, spend. This was the Modus Operandi before the Euro. I don't say, that this is a responsible way of managing a countrys finances, but if the alternative is increasing infant mortality and extreme unemployment for almost a decade, I can't see whats so bad about that.
  - isostatic 8y ago
    Greece infant mortality has been decreasing since 2004 [1] [2] [1] https://knoema.com/atlas/Greece/topics/Demographics/Mortality/Infant-mortality-rate https://knoema.com/atlas/Greece/topics/Demographics/Mortalit... [2] https://www.statista.com/statistics/806917/infant-mortality-in-greece/ https://www.statista.com/statistics/806917/infant-mortality-...
    - ataturk 8y ago
      How does infant mortality relate to deficit spending? Couldn't technological progress account for the drop in infant mortality? Or maybe they stopped counting certain deaths? I see this all the time with crime stats--you can't compare homicides between the US and Europe because many European countries don't consider a death a homicide until the case is solved. The unsolved cases fall into a black hole of "not counted" or certainly not counted as homicides, and then we get all these breathless articles about how bad crime looks in the US while really US crime rates are very low comparatively speaking. We saw this same issue with Cuba--ginning their numbers to make their wretched healthcare system look better than the US, when in fact, there is absolutely not even a comparison there. Cuba can't even get a bus back to how good the US truly is. And the media eats this shit up because they are apologists for communists and love clickbait, fake news.
    - growlist 8y ago
      So you don't dispute the extreme unemployment then?
      - 8y ago
at-fates-hands 8y ago
It doesn't help there massive amounts of refugees flooding into those countries as well. I realize people are fleeing war and violence, but they're going to countries where there isn't any jobs, and the economic situation is dire. It's the worst possible scenario. They're leaving their home countries with nothing and arriving with an even bleaker future ahead of them.
- cubano 8y ago
  If they are leaving a place of "war and violence", I am sure some unemployment as the worst social condition hardly could be construed as an "even bleaker future ahead".
- icebraining 8y ago
  There aren't, though. Immigration has dropped a lot in 2016, and again in 2017. Mediterranean crosses more than halved from 2016 to 2017. Last year, the EU only granted protection to 540k persons, in an EU with over 500M inhabitants.
  - at-fates-hands 8y ago
    Not according to the articles I've been reading: 25.03.2018: https://www.dw.com/en/on-the-edge-of-the-eu-refugee-flows-flood-the-evros-river/a-43068842 https://www.dw.com/en/on-the-edge-of-the-eu-refugee-flows-fl... It's not clear how many make it across. But last year alone, officials from Frontex, the EU's border agency, said they intercepted 5,500 illegal crossings, a whopping 80 percent rise compared to the previous year. During that same period, Turkish authorities told the United Nations they had intercepted nearly 21,000 people, more than triple the number reported the previous year. 29.9.2017: https://www.theguardian.com/world/2017/sep/29/surge-in-migration-to-greece-fuels-misery-in-refugee-camps https://www.theguardian.com/world/2017/sep/29/surge-in-migra... The number of people arriving, across land and sea borders, has more than doubled since the beginning of the summer. Authorities estimate arrivals are now at their highest level since March 2016, with over 200 men, women and children being registered every day. “We’re living the days of 2015,” said Pantelis Dimitriou from Iliaktida, a local NGO on Lesbos operating accommodation and support centres for the newly arrived. “The flows have become huge. From around 50 to 60 in early July they are now at more than 200 every day. 2.7.2017: https://gulfnews.com/news/europe/italy/italy-overwhelmed-by-flood-of-immigrants-1.2051986 https://gulfnews.com/news/europe/italy/italy-overwhelmed-by-... But it is also a reflection of Italy’s years on the migration front lines with little help from the rest of Europe. More than 82,000 people have arrived in Italy this year, a 20 per cent increase over the same period last year, according to the United Nations refugee agency. Under current EU rules, asylum seekers are supposed to apply for protection in the first EU country that they enter. At the height of the refugee crisis in late 2015, EU leaders set up a quota system to try to distribute some of the refugees from the main arrival nations of Greece and Italy, but it has barely gotten off the ground. The influx has strained Italian infrastructure — and the goodwill of Italian voters.

tonyedgecombe 8y ago

Watching what happened in the UK it appeared we were making a lot of poor decisions on the hoof. In particular pushing Lloyds into buying HBOS didn't work out so well. I often wonder what would have happened if we hadn't bailed out the banks.

arethuza 8y ago
Well, the UK government seemed to genuinely believe that had they not bailed them out that we might have been in a pretty bad situation: looting, troops on the streets etc. https://www.bbc.co.uk/news/uk-politics-24184728 https://www.bbc.co.uk/news/uk-politics-24184728 However, with the benefit of some hindsight - I do wonder if these stories were just a bit exaggerated for political reasons. Also, if the implosion of the payment system is an existential threat to a country then why haven't done anything to ensure that this couldn't happen again? Yanis Varoufakis mentions in one of his books that he proposed a alternate government controlled payment system that could be used if Greek banks stopped functioning - why don't we have something like that prepared to fall back on in a future crisis?
- grey-area 8y ago
  They have in the UK at least - UK Banks have been forced to ringfence core retail banking, so that other arms could be allowed to fail, but customer banking be unaffected: https://www.gov.uk/government/publications/ring-fencing-information/ring-fencing-information https://www.gov.uk/government/publications/ring-fencing-info... Similar to Glass Steagall from 1933 in the US, which was watered down over decades and eventually repealed when we reached the end of history in 1999: https://en.m.wikipedia.org/wiki/Glass–Steagall_legislation https://en.m.wikipedia.org/wiki/Glass–Steagall_legislation Unfortunately it appears history is probably going to repeat in more ways than just cycles of crisis and financial regulation. I expect trade war and then global war in the next decade - we’ve reached around 1935 by my estimation.
  - arethuza 8y ago
    Thanks - I'd never heard of that - pretty surprised that a Conservative government implemented anything like that. having said that, maybe that's why it has been kept relatively quiet?

fineline 8y ago

Interesting to see an article that recognises the role QE has played in driving inequality and disrupting political landscapes, but I wonder why Mr Lanchester doesn't consider the alternative policies that could have been enacted. i.e. if governments had focussed on spending money into the real economy instead, through infrastructure spending and real nation building projects - creating jobs, real (not paper) wealth and the platform for further economic growth - rather than spending funny money into existence supporting markets that blow up prices without any real addition of value.

JumpCrisscross 8y ago
> if governments had focussed on spending money into the real economy instead, through infrastructure spending and real nation building projects The Federal Reserve is an independent agency. It repeatedly implored Congress to increase fiscal spending. That didn’t happen, so monetary policy had to attempt to compensate. > creating jobs At least in America, we did a good job of this. Ben Bernanke navigated us away from an alternate history in which the GFC was a second Great Depression. In New York, the Hudson Yards are coming up as one of the biggest public works project since the Great Depression. Things could have been better, but they could easily have been a lot, lot worse without QE.
- weirdstuff 8y ago
  We've done a pretty bad job at bringing back jobs. Labor force participation rate has fallen, while people are retiring later. Retirement/aging doesn't even help explain the drop. Especially since the younger generation has more than replaced the older one, and the older one isn't retiring at the same historic rate. We're not in great shape, employment wise. https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS11300000
  - JumpCrisscross 8y ago
    > We're not in great shape, employment wise Almost everyone who wants a job has one. And real wages have been rising for a decade. That’s pretty good shape. Labour force participation is a complicated question deeply intertwined with the opioid crisis, increased rates of college attendance, the mis-use of federal disability insurance and other factors. Quoting labour participation without reference to demographic shifts creating more retirees, moreover, mischaracterises the statistic. Demographically, there is no world in which 2018 LFP would have been higher than 2008.

exelius 8y ago

Very interesting article! I agree and have felt the tremors the author mentions throughout my own work in a related field. The last decade has taught me that corporations matter more than nations, at this point. In the case of corporate capitalism, governments act like special interest groups protecting the corporations that fund their lifestyles. To that end, if a major bank like RBS were to go belly up and now be beyond the ability of the U.K. to save, what are the chances we see a “national merger” where a country offers to absorb the losses in the banking system in exchange for absorbing the entire nation (population, economy and all)? This sounds extreme, but it’s effectively what happened in the feudal era. Wealthy nobles would support whichever king had the resources to protect them. Only thing I’m doing is replacing “wealthy nobles” with “corporations” — which are essentially “jointly owned” among the entire “nobility” (I.e. the capital class in the West). Ultimately I think we will avoid World War III because the corporations don’t want it; and they control enough of the global logistics supply chain to prevent it. So a peaceful way to transition failed governments and financial systems back to prosperity will be needed if we want to avoid a repeat of the Weimar Republic.

cubano 8y ago
Ultimately I think we will avoid World War III because the corporations don’t want it; ..today, it should have ended with. Tomorrow, as they say, is a whole new ball game and it's certainly hard to predict what our sociopathic corporate masters will want for us then. I agree with your premise, however. Killing your customers is usually considered "bad business" and is to be avoided most times. However, given certain political and economic conditions, I do believe corporations could easily be convinced to give the go ahead to War.
emodendroket 8y ago
Before the first World War people also imagined that there could never be another big war because the world's economies were so connected.
darpa_escapee 8y ago
War has always been great for plunder and profit. Some of the biggest corporations are in the war racket. Arms dealers arm both sides in a conflict, sit back and rake in the profits. Corporations constantly stoke the WWIII fire, little people like us are lucky that a situation beyond our ability to contain it hasn't developed.

couponstechi 8y ago

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NVRM 8y ago

https://www.tradingview.com/chart/BTCUSD/YyPhfM9s-Revised-Bitcoin-Stance-Overall-Bitcoin-s-last-gasp-for-air-12K/ https://www.tradingview.com/chart/BTCUSD/YyPhfM9s-Revised-Bi...

crwalker 8y ago

The ten-year anniversary is a good moment to look at the Case-Schiller index today and compare it to the peak of the bubble in 2006. https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA I think there will be some great deals in real estate by 2021.

jeffreyrogers 8y ago
Maybe, but it's hard to predict. I don't think real estate prices are going to crash unless mortgage delinquency rates go up dramatically, which hasn't started yet: https://fred.stlouisfed.org/series/DRSFRMACBS https://fred.stlouisfed.org/series/DRSFRMACBS At least not nationally, maybe in some metro areas it has. Mortgage lending standards have started to loosen though, but I think it'd take a while for that to have a substantial effect. Housing prices tend to increase because good land is scarce in most places people want to live.
- ra1n85 8y ago
  >prices tend to increase because good land is scarce in most places people want to live. Prices are driven by demand. A crash will inevitably reduce demand. Just like equities, real estate involves speculation. It may not be as bad as 2008, but we will still see a significant drop in real estate prices.
  - jeffreyrogers 8y ago
    I don't think this analysis tells the whole story because it doesn't explain where the crash would come from. Demand is high (and likely to remain high) because good land is scarce. Developers can't create large amounts of new housing because of zoning and also because if they create too much they won't be able to make a profit (they take out loans to finance their projects too). So supply is likely to be less than demand for the foreseeable future in most locations. Supply could increase rapidly if the mortgage delinquency rate rises rapidly. There aren't signs of this happening soon that I'm aware of, although mortgage lending standards have lowered a bit. I don't see good evidence for an imminent crash, and saying prices will decline if a crash occurs is tautological.

emodendroket 8y ago

I read this piece last week and I liked it a lot. Anyone read his book?

fullshark 8y ago

“What if the governments of the developed world turned to their electorates and explicitly said this was the deal? The pitch might go something like this: we’re living in a competitive global system, there are billions of desperately poor people in the world, and in order for their standards of living to improve, ours will have to decline in relative terms.” This is a guaranteed losing platform

dbatten 8y ago
It's also preposterous. Wealth isn't a zero-sum game. Compared to our ancestors in, say, 1000 BC, the vast majority of humanity is far, far, wealthier while the few who are arguably no better off are not worse off either. That's all wealth we've created. We can talk about whether it's a good or moral idea to transfer wealth, but let's not pretend like that's the only way to deal with poverty.
- ionised 8y ago
  > Wealth isn't a zero-sum game I keep seeing people say this but is there not a finite amount of wealth in the world at any given time? There are also the finite land and natural resources required for wealth creation.
  - fullshark 8y ago
    There's also human ingenuity, technology, and gov't stability which are multipliers on those finite land/natural resources. Skyscrapers increase real estate/land for example, courts protect property rights enabling one to invest capital in venture X.
- dragonwriter 8y ago
  > Wealth isn't a zero-sum game. It expressly refers to relative, not absolute, wealth, which necessarily is zero-sum. (There's also quite a lot of evidence that relative, not absolute, wealth is the more important driver of exoerienced utility: humans are strongly programmed to be satisfied or not based on performance relative to expectations set by social environment, not absolute material condition. For this reason relative wealth is generally more important.)

olivermarks 8y ago

"...According to calculations that Zucman himself says are conservative, the missing money amounts to $8.7 trillion, a significant fraction of all planetary wealth. It is as if, when it comes to the question of paying their taxes, the rich have seceded from the rest of humanity." A sobering reality...especially when you consider the ultra rich design and run the political systems that define the tax bases and laws the rest of the world are organized under...

hippich 8y ago
http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/ http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-loo... "A Pew Research Center analysis of IRS data from 2015, the most recent available, shows that taxpayers with incomes of $200,000 or more paid well over half (58.8%) of federal income taxes, though they accounted for only 4.5% of all returns filed (6.8% of all taxable returns)."
- olivermarks 8y ago
  That report is parochial research of onshore tax payers who are in the US system. The vast majority of the elites wealth is parked offshore
  - padobson 8y ago
    I agree with this. Folks earning $200k-$500k are paying most of the taxes because they have little-to-no political influence, and they're easy scapegoats because most people make less than them. This is the glass ceiling of the US tax code.
    - hippich 8y ago
      https://www.dailysignal.com/2017/10/18/rich-pay-fair-share-numbers/ https://www.dailysignal.com/2017/10/18/rich-pay-fair-share-n... "The top 1 percent of income earners, those having an adjusted annual gross income of $480,930 or higher, pay about 39 percent of federal income taxes. That means about 892,000 Americans are stuck with paying 39 percent of all federal taxes." Another source about who is not paying any taxes, and who receives money from government - https://nypost.com/2016/02/24/45-percent-of-americans-pay-no-federal-income-tax/ https://nypost.com/2016/02/24/45-percent-of-americans-pay-no... How much exactly should be top 1% be paying to no longer be blamed for not paying taxes?

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mcguire 8y ago

"A crackdown on international evasion is difficult because it requires international co-ordination, but common sense tells us this would be by no means impossible. Effective legal instruments to prevent offshore tax evasion are incredibly simple and could be enacted overnight, as the United States has just shown with its crackdown on oligarchs linked to Putin’s regime. All you have to do is make it illegal for banks to enact transactions with territories that don’t comply with rules on tax transparency." Like Switzerland?

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nimbius 8y ago

hindsight is 20/20, but does anyone recall some of the ludicrous things we actually did to prop up some of our structurally too-big-to-fail institutions? as an automotive mechanic the one institution during this crisis that stuck out in my mind was "cash for clunkers." Essentially the government subsidized ordinary americans to trade in whatever car they had so long as it got relatively poor gas mileage and wasnt more than 25 years old. This was a 3 billion dollar program designed largely to get anericans to start spending money on cars --any car-- by bribing them to destroy their own car. Two studies basically declared the program a failure. https://en.wikipedia.org/wiki/Car_Allowance_Rebate_System https://en.wikipedia.org/wiki/Car_Allowance_Rebate_System But I have still a deep sense of chagrin when I remember mixing sandy batches of "engine disablement compound" and pouring them directly into a perfectly good truck or minivan. Sure, it might not win an award for climate change but these cheap cars and trucks could have gotten a single mother to and from the grocery store or school once or twice a week as needed. We intentionally destroyed them all. For those thinking the process was sane and simple, it wasnt. Doing this is loud, dirty, and throws a cloud of smoke you can see for a mile or more. https://www.youtube.com/watch?v=M2Sz5vtfanw https://www.youtube.com/watch?v=M2Sz5vtfanw We were even so desperate to fix the economy that the government basically started cutting people checks. The idea being they would spend the money on a shopping trip to the mall or something... https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 I spent my check on groceries when I got it, and put the rest into savings.

lkrubner 8y ago
"I spent my check on groceries when I got it, and put the rest into savings." That is entirely appropriate. When the economy is depressed, we want people to both spend more and pay off any debts they might have, so your mix of spending and savings is just what the economy needed. The boost to consumption helps the economy get going again. And to the extent that people are paying off debts, their debts are moved on to the ledger of the government. Since the government pays a lower interest rate than private citizens, this reduces the overall burdens on the economy, and, again, helps the economy get going again. Both aspects of this help.
- 8y ago

sf01 8y ago

Here's a discussion with the author, if anyone's interested: https://www.youtube.com/watch?v=-HFIa_szx_U https://www.youtube.com/watch?v=-HFIa_szx_U

mcguire 8y ago

"From a sociological point of view, the crisis exacerbated faultlines running through contemporary societies, faultlines of city and country, old and young, cosmopolitan and nationalist, insider and outsider. As a direct result we have seen a sharp rise in populism across the developed world and a marked collapse in support for established parties, in particular those of the centre-left." Weirdly, the "winners"[1] of the populism have been rural, older, nationalist, and very much insider[2]. Think of both Trump and Brexit supporters. I'm not entirely sure, but these don't seem to have been the people hurt the most by the economic crash. The whole situation has an incredibly strong disconnect between what's actually going on and the facade or veneer of what they think about it. Ideology trumps reality? [1] I'm using "winner" because I can't think of anything better, but the "victory" is Pyrrhic. Not only are they shooting themselves in the foot, even if they weren't they would not have a good end game. [2] Yes, the rhetoric is about outsiders, clearing the swamp and that sort of thing. But those are the most inside outsiders I've ever seen.

speeder 8y ago
A really bizarre data that I saw during US elections, was that during pooling (before actual elections) the map of Trump voters, was almost identical to the map of places with high death rates. Also largest trump voter demographic, as the media currently keep harping all the time as "racist whites males", is the only demographic in US with rising death rates. I don't know why certain US demographics started since 2008 to die at such speed, suicides for example rising unusually fast, and "gun crime" when you actually split homocides and suicides, also show ludicrous numbers of suicides (while gun homicides are less than with other weaponry, like knives and bats). So whatever happened, it affected a certain demographic epically bad... And when someone propose to be a saviour, no matter how much you hate that person, you will vote for it... When people have literally nothing to lose and next "step" in their life, is death, anything else is better. EDIT: tried to find original source, failed, but found this article instead... still make the same point: http://www.businessinsider.com/maps-counties-where-opioid-deaths-are-high-trump-2016-crisis-2017-10 http://www.businessinsider.com/maps-counties-where-opioid-de...