“Households seem to be cutting back on other purchases rather than borrowing more as their petrol bill goes up, so perhaps the household savings rate isn’t veering into more negative territory. Painful, sure. But ultimately healthy.”

Didn’t you argue the contrary case recently?

“A free market in software, recoded music and video material, and most importantly prescription drugs, would likely make capitalism considerably kinder and reduce inequality. Perhaps no one is allowed at the World Economic Forum, at Davos, who would have made this point when Bill Gates made his plea, but presumably nothing prevents the Wall Street Journal, or other news outlets from pointing out this obvious fact.”

Dean Baker (dixit)

The problem Twofish is what free market we are talking about.

There are a lot of Mozillos over there acting otherwise.

T: “People miss the reason why corporations are so profit centered. If you have a bunch of people from different backgrounds in a room, making money is often the only thing they can agree on. ”

Yeah, money is not patriotic, ask to swiss banks or offshore banks. Greed is king in corporations, but they need someone to exploit not for social gains elsewhere, but to exploit harder for exponencial earnings.

The middle class is in between eating the losses.

I don’t think so. There is so much wealth out there that there isn’t that much need or desire to concentrate it. Once you make $1 million/year, you pretty much can have every material need a human being can want. At that point the usefulness of the next $1 million/year goes way down for anything except score keeping.

Quite honestly, I’ve never gone to any “let’s impoverish the middle class meetings” nor have I met anyone on Wall Street that thinks that way, but I think that what does get discussed at meetings would make a lot of people feel uneasy.

One thing that *is* true is that people in the financial centers do look at things globally, so there isn’t any particular sense of loyalty to the *American* middle class as opposed to say the *Belgian* middle class. So if jobs move from the United States to India the social cost to the United States is going to be balanced against the social gain to India, and if you don’t argue that Americans are somehow privileged, it’s really, really hard to argue against this on ethical grounds.

I think the degree to which multi-national companies don’t pay particular notice to the interests of Americans is something that a lot of people in the US would find shocking. The trouble here is that complaining about “national disloyalty” won’t work since a lot of the people who make these decisions aren’t Americans. There’s no particular reason that someone who is Belgian or Saudi would pay special attention to the needs of the American middle class.

People miss the reason why corporations are so profit centered. If you have a bunch of people from different backgrounds in a room, making money is often the only thing they can agree on.

If the US were to go home tomorrow, there would be utter chaos in East Asia, and I suspect the same would be true for the Middle East. China would have to deal with North Korea, a nuclear Japan, and an unleashed Taiwan, and that would be a set of headaches that Beijing just does not want.

Being a superpower is a pain in the rear end. People get mad at you. You end up spending huge amounts of money on weapons. You get yourself in all sorts of wars. That’s why the Saudis and the Chinese would much rather have the US do the dirty work.

Whether the US voter really wants this is the type of thing that people should be debating, but my suspicion is that most American voters would rather have the US stay a superpower even if it messes up the economy. There’s something about being “number one” that causes people to pay these sorts of costs.

Chomsky has this idea that somehow the American public is brainwashed by multi-national corporations. In reality, most MNC’s are sufficiently multi-national that they really don’t care if the US remains a superpower or not, since they will be perfectly happy to make deals with the post-US power. I think that there is something about the idea of “US is number one” that will keep the American voter to keep spending blood and treasure so that they can keep feeling good about waving the flag.

We’ll see how well Ron Paul does……..

“We’ve seen very heavy selling in the past few days and right now the market’s taking a moment to pause,” said Yuuki Sakurai, who helps manage the equivalent of $54 billion in assets at Fukoku Mutual Life Insurance Co. “The break-even point for most exporters is around 105 yen to the dollar and investors will be more comfortable if we see the yen pull back closer to 110.”

Hi Brad,

I can’t find the exact quote off the articles i received…but managed to get something off bloomberg…think there is a jpy breakeven survey of major japanese exporters think the level is around 105-106…

Officially, the Japanese MOF has denied “any large fx intervention” but has yet to flatly rule out any fx intervention.

There is a very easy way of rebalancing the US economy (politically incorrect). And, by the way, to avoid a roubiniesque hard landing:

— First, take the military forces out of Iraq. That would rebalance oil going from 60 to 90 and it would be left a bit else to expend discretionary.

— Second, this vast military force (with a $623 billion budget for 2008), would do a very much appreciated job building rotten bridges and new railroads and repairing general infrastructure (out of their own budget, of course). So, we could avoid increasing unemployment and, as USA is plenty of empty houses, the government could give them a comfortable rest-place everyday in the spot they are working.

— Third, all the money going to Blackwater and so, could be used in giving food and rest-places to military workforces rebuilding the infrastructure, which would bring down unemployment recession time.

— Fourth, all the stimulus money from the fed should be used in food-coupons for poor, unemployment and healthcare help.

— Fifth, a dollar for gallon tax on petrol to everybody, to reduce oil consume.

— Sixth, spend the petrol tax in building green energy sources and employing unemployed people.

— Reorder the progressive taxes with +5% and remove GWB tax-cuts.

It’s not so difficult. In 3 or 4 years US would be in a good shape.

And the rest of the world would be much more friendly with USA and a sheriff less.

-:)

Best whishes

PS: I’m probably a Martian!

USDJPY, well it seems that the Japanese are well aware of their problems. Being export based economy, the strong JPY is hurting them, at least from an expectations point of view. We have seen numerous speeches and actions well suggesting that there might be some intervention should the JPY “overly” strengthens.