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The Forum > Article Comments > The global financial crisis and the science of economics > Comments

The global financial crisis and the science of economics : Comments

By Marko Beljac, published 15/7/2009

A truly natural economic system would be a system that does not depend upon the state for its stability.

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One of my English born girl friends used to use the word bollocks --which is a completely apt word in this case.

This reference describes the inevitable outcome of the current system.
Summed up by Maggialong these lines----there is no such thing as society, only me and my immediate self interest and gratification

1. http://www.coteda.com/fundamentals/index.html

Plus some further quotes from the same source.

DE-regulation, or the abandonment of rightly regulated and principled life, is the fundamental individual and collective fault of humankind. In their adventure of the pursuit of egoic "self"-fulfillment through egoic "self"-indulgence, or un-regulated and boundless consumerism, human beings have personally and collectively destined themselves to chaos and death, That global idealization of the idea of universal de-regulation has now achieved its almost terminal end-time.

....

The cultural (and political, economic, and social) basis of the current world-crisis is that EVERYBODY in the world is now trying to live like Westerners did when Westerners were able to exploit all other nation-states and all of the Earth-worlds natural resources for the sake of an un-regulated and boundlessly "self"-indulgent Western society. Everybody in the world is now competing, in a dreadful situation of confrontation, for what has now become a very limited reserve of human and natural resources---like dogs competing for the same chunk of meat.
Posted by Ho Hum, Wednesday, 15 July 2009 11:02:52 AM
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Economics as a "Science".. I think not...

Economics, when there are so many conflicting theories and "expert opinions" floating around will always remain an "Art" and the product of subjective opinion rather than tangible law.

One quick description of an economist

"A person who knows how to perform every position described in the Karma Sutra perfectly but lacks a partner to perform them with".

Ho Hum “there is no such thing as society, only me and my immediate self interest and gratification”

And to correct Ho Hums misrepresentation of what Margaret Thatcher said…

"I think we've been through a period where too many people have been given to understand that if they have a problem, it's the government's job to cope with it. 'I have a problem, I'll get a grant.' 'I'm homeless, the government must house me.' They're casting their problem on society. And you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It's our duty to look after ourselves and then, also, to look after our neighbour. People have got the entitlements too much in mind, without the obligations. There's no such thing as entitlement, unless someone has first met an obligation."

Now that sets the record straight .. instead leaving the words of one of the (recently past) greatest leaders of the free-world to be misrepresented by someone who is obviously, not worthy to walk in her shadow
Posted by Col Rouge, Wednesday, 15 July 2009 11:43:59 AM
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Col, finally Thatcher's full quote.

Now that is eminently reasonable the way it's put, although one could argue that helping one's neighbour as she puts it is not that different from society, via the agency of government, protecting the homeless from cold winters, for example.

Twisting Thatcher's pattern of thinking around a bit, it could be said in response to "There's no such thing as entitlement, unless someone has first met an obligation", that the poor and powerless should only be forced to suffer so much before the state (or something else) should take the heavy burden from their shoulders.
Posted by RobP, Wednesday, 15 July 2009 3:37:17 PM
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The writer attempts to reconcile nature with the economic, political, and social system - which is ridiculous. Nor does he explain that the economists of all stripes are in the forefront and have played a leading role as advisors in the economic breakdown. The proportions of the economic crash of 2008 are vast and systemic. It is not some failure of this or that oversight, theory or policy. Nor the product of dishonest and greedy individuals. It is a crisis, a breakdown, of the economic and social order. An entire mode of global capital accumulation based on financial operations, fueled by mountainous increases in debt and worthless 'toxic paper' based on nothing more than 'liar loans' and crude speculation.
Some aspects of this crisis is that money travels around the globe at the speed of computers in search of a profit. No one knows where it comes from, who it belongs to and where it is going. In and of itself, that creates havoc on any national budgetary and financial planning. As well, you have a world monetary system and the nation state system with each against all and beggar thy neighbour. The giant banks and financial companies "big money" are exploiting the economic disaster for which they are chiefly responsible to further enrich themselves. The very people who created the economic crisis get rewarded colossally by the governments!
Posted by johncee1945, Wednesday, 15 July 2009 7:02:10 PM
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Economics is not just an artform.

There is a considerable amount of work in place to predict the results of different actions.

However, as there is so many inputs into a particular result, one requires more than just theory to analyse and predict.

With any science, there is always the basic "garbage in garbage out" scenario.

With the present GFC, in the US sub prime market, much garbage was dressed up and sold as assets.

The failure is not of the market or economics, but of a greedy banking sector flauting the rules of good economic sense.
Posted by Shadow Minister, Thursday, 16 July 2009 1:28:06 PM
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As an article that illuminates some aspect of our lives with cogent and carefully constructed images, this piece ranks only slightly higher than a 3-year-old's crayon picture of mummy.

"One of the underlying causes of the current global financial crisis is the notion that the results of standard economic theory can be considered to be scientific."

Sez who?

Normally, when making a pronouncement as sweeping and unequivocal as this, it is polite to refer to some evidence.

The author chooses to provide none.

Even "my granny once said to me..." would be a step in the right direction, since it might lead to some illumination on exactly how gran reached this conclusion. But we get... nothing.

As a result, it is impossible to engage with the argument at any level, simply because is is arguing in an empty space.

For what it is worth, I don't believe that the existence of "standard economic theory", whether perceived, structured or implemented as either a science or as an art-form, has more than a tangential influence on the financial pickle we are now experiencing.

The "Efficient Market Hypothesis" does not stand or fall on the antics of the secondary banking system, or the gyrations of derivatives, or the vulnerability of hedge fund activities to abnormal events.

The secondary banking systems, and the business they wrote, were human implementations of profit maximization regardless of risk. In fact, if anything, it underlines the importance of the "fully informed market" that underpins EMH.

Derivatives were not created from any economic theory, but from the irrational exuberance of Banks for ever more sophisticated product with which to offset transactional risk, while hedge funds operated a form of bulk arbitrage based on mathematical models created by 27 year-old PhDs.

While you could possibly argue that these last did in fact have market theory at the back of their minds when formulating their financial whizzery, it is easy to see (in hindsight) that they came unstuck by ignoring it, rather than adhering to it.

Now, where are those crayons?

I'm off to find me a three-year-old.
Posted by Pericles, Thursday, 16 July 2009 2:07:40 PM
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