Sunday Posts

It is always poor people's fault. The world seems precarious at this moment. The neo-liberal activism since the 80s have destroyed the foundations of the Liberal system, its system of nations sustained by the welfare state: The neat structures of the world order seem to be withering away.  A Russian president openly talks about the possibilities of nuclear war; the leaders of Britain and Germany precariously hang on to power in the face of right-wing revolutions while the prospect of a left revolution looks real in France; in the United States, private interests of the President trump his public duties. At the turn of 2018, chaos reigns. If the newspapers have to be believed, it is all due to immigrants or poor people. In fact, it is immigrants AND poor people: Globalization unleashed people movements - from South and Central America to North America, from North Africa and the Middle East to Europe and from East to West Europe - and this has made the poor people i...

There are people who would proclaim 'End of Capitalism' as each new crisis breaks, only to be proved wrong. Just as Marx did in his time, they see this end coming in every war or revolution, and indeed, in big and small financial crisis - from great depressions to currency crisis to stock market crashes. They see germination of an alternative from the triumph of socialist agenda in Vietnam or Venezuela, or a general apocalypse in climate change or a Russian face-off. In short, they seem to expect a definitive, episodic end of capitalism. But nothing yet has come of it. 'Capitalism', the beast these thinkers aspired of killing, has only come back stronger, proving its resilience through defying the odds. Stock markets that went down went up eventually, financial crisis dissolved into stability, revolutionary regimes decayed into business as usual and the apocalypse failed to arrive. Ironically, as it defied misplaced expectations of its demise, it seemed Capitalism...

Alan Greenspan has recently written a 48 page paper for the Brookings Institution explaining why the Asset Bubble and subsequent collapse happened, reports The Economist. Greenspan's argument rests on one central point - that with the end of Cold War and reforms in China [and in India], hundreds of millions of workers were absorbed in the global economy; 'as the GDP growth in emerging economies soared, their consumption could not keep up with income, and savings rose. The rise in desired global savings relative to desired investment caused a global decline in long term rates, which became delinked from the short term rates that the central banks control.' [A draft of the paper, The Crisis , can be found here ] As The Economist article points out, this is broadly similar to the theory of Global Savings Glut, as espoused by Ben Bernanke . There seems to be a consensus among American Central bankers that the global decline of long term rates resulted in a speculative bubble...