Bloomberg Event: Kenneth Rogoff and Niall Ferguson
If you missed last nights special Bloomberg event, the full podcast is available at their site or on ITMS.
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The global financial crisis hasn’t ended, said Harvard University professors Kenneth Rogoff and Niall Ferguson, who challenged assertions made by Group of 20 leaders at their meeting in Pittsburgh last month.
“The G-20 is right that it’s over for all the banks they guaranteed,” Rogoff, 56, a former chief economist at the International Monetary Fund, said yesterday in an interview with Bloomberg Radio. Even so, as a consequence of bailouts and stimulus measures, “the financial crisis may eventually morph into a government-debt crisis.”
G-20 leaders last month adopted a framework for more durable economic growth as they sought to prevent a replay of the worst crisis since the Great Depression.
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See also:
Rogoff, Ferguson Say Global Financial Crisis Is Not Yet Over
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGbRse3KUmgU
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October 29th, 2009 at 2:50 pm
“…the financial crisis may eventually morph into a government-debt crisis…” …or it may not.
October 29th, 2009 at 3:05 pm
“…the financial crisis may eventually morph into a government-debt crisis.”
May?
I suppose there are alternatives. Perhaps it becomes a wholesale collapse of Western liberal democracy, much the same as was the Soviet Union’s collapse. From what I understand, the Soviet economy was, as the West’s economies have become, nothing more than an extension of the state. Of course there will not be another financial crisis in the private sector. There is no private sector anymore.
October 29th, 2009 at 3:10 pm
Fortunately, this post is related to the others posted earlier today (specifically: Is the Recession Over ? posted at 7:09AM), and regarding the ostensible end of the financial crisis (BR and I have been dealing w/tech problems today).
If the recession/financial crisis is over, it happened randomly, and not due to the actions of TPTB, as those actions have consisted in nothing but printing new money and handing it out to their cronies. There have been no policies put in place to prevent a recurrence of the bust. Structurally and fundamentally, the situation is worse than it was before.
October 29th, 2009 at 3:13 pm
Rogoff has demonstrated significant expertise in econometrics, Ferguson has demonstrated significant expertise in keeping himself in the limelight and, by reputation at least, knows some economic history. What Rogoff says is probably worth listening to, the other not so much. What was the question again?
October 29th, 2009 at 3:27 pm
See! Mention the work Bloomberg in a headline and the RSS feed pops.
October 29th, 2009 at 3:42 pm
Unfortunately, I listened to this broadcast last night and became bored with the liturgy it offered. The repetitious cant about “government bad, rich people good” became tiresome. All the questioners were concerned with was whether or not their tax preferences could be expected to be continued. They have no interest in actually participating in the economy, only how much they extract out of it.
I like Tom and Ken, but their producers are a one note band. They have not had anything close to a liberal economist, even one of those holding Nobel prizes, on any of the programs they host. Instead, we are served the same tired rehash of Chicago school economics despite its failure in practice. I hope their producers realize they need to provide a more balanced fare.
October 29th, 2009 at 3:46 pm
Growth requires that new debt be taken on. No new debt, no growth.
Clearly, growth is out unless government takes on debt, and even then that can only last for so long.
All hail the end of growth.
October 29th, 2009 at 4:06 pm
Aye, I don’t even believe the part about the banks being out of the woods.
October 29th, 2009 at 4:45 pm
Makes no real difference to me, just go by what I see and hear. State gubments putting the hammer down on employee’s, now when the state is laying off and the worker bee’s are concerned, makes you go hmmmmmmmm. Hearing money for existing projects okay, no one talking about future projects, and they have been given orders to cut XYZ from there budgets, no if and or buts. My contacts are fine do to seniority, yet, they are saying anyone less than 10 years along with a few nicks on the file are going to be the first ones too go.
October 29th, 2009 at 5:00 pm
scepticus,
“Growth requires that new debt be taken on. No new debt, no growth.”
I don’t quite agree. Summarized demand in an economy equals government income spent plus private income spent plus new government debt plus new private debt (leaving the export/import term aside). Thus, growth in demand can come from an income increase or an increase in new debt (i.e., the second derivative of the total debt is positive). If there isn’t any increase in income and if new debt stays the same from one period to the next there won’t be GDP growth from new debt alone according to this equation. New debt isn’t sufficient. New debt has to increase, instead. On the other hand, a decrease in new debt from one period to the next will provide a negative contribution to GDP growth.
rc
October 29th, 2009 at 6:38 pm
It’s always great to hear from the Harvard elite. It’s a shame these people don’t have the gonads to tell it like they know it is. God forbid they risk their upper middle class lifestyle for living the truth.
Another wonderful example of the complete sell-out of the American professional/intellectual class.
October 29th, 2009 at 6:50 pm
RC.
yes, new debt=old debt paid down is equivalent to
total spending = total saving.
That is a zero growth scenario. The banking system will be stable under such conditions at very low irates depending on velocity. However unemployment will be high in such circumstances. Prob ~15%.
As you say for growth new debt must exceed previous debt. i.e. growth means leveraging up. I don’t see this as a realistic possibility in the long term tho for now we could grow through gov leveraging beyond existing. That won’t last long.
Hence, end of growth. The key problem here is unemployment. The solution, negative nominal rates. Maybe in 5 years time after gov led growth falls apart.
October 29th, 2009 at 7:55 pm
“The solution, negative nominal rates.”
How does that work?