2016 Economic Crisis Thread - Duck and Cover?

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Will the global economy implode in 2016?
	We're hosed - I have stocked up on canned goods
	My private security guards will shoot the paupers
	We'll be good or at least coast along
	I have no earthly clue

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icantfindaname: Jul 1, 2008

Here's a good article from 538 displaying the most of the standard liberal response to wage stagnation:

http://fivethirtyeight.com/features/the-2016-election-is-about-dividing-up-the-pie/

You've got an implicit endorsement of the Greg Mankiw Econ 101 framing of Growth vs Equality as naturally opposed, although at least they acknowledge it, an overwhelming concern with productivity growth, and an unquestioning assumption that productivity growth will lead to wage growth despite the last 40 years showing that to be false

quote:

Don�t expect that rhetoric to change any time soon, no matter what happens in November. In recent years, growth has been weak not just in the U.S. but worldwide, despite aggressive efforts by the Federal Reserve and other central banks to jump-start the economy. A growing number of economists worry that the aging population and other trends have caused the underlying growth rate of the economy to slow. Economists aren�t sure why that is, or what can be done about it. But with less growth to go around, the distribution of that growth will become an ever more important political issue.

Number of the week

American workers worked 1.8 percent more hours in the second quarter of 2016, the Bureau of Labor Statistics reported this week, but their output � the value of goods and services they produced � rose just 1.2 percent. In other words: American workers became less productive.

Productivity has now fallen for three straight quarters, the longest such streak since 1979. And the slump has been even longer than that; annual productivity growth averaged just 1.3 percent from 2007 to 2015. That�s bad news for the economy, and for workers: If employees don�t produce more per hour, over the long term, companies won�t be able to pay them more.

Experts aren�t sure what�s behind the slowdown, or even if it�s real: Some economists think official statistics are missing the impact of new technology. But unless the problem is a total fiction � and few economists think that�s the case � then this week�s data suggests that the longer-run problems facing the economy are getting worse, not better.

# ? Aug 12, 2016 18:23

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# ? May 8, 2024 10:08

Paradoxish: Dec 19, 2003; Will you stop going crazy in there?

It's not like there's anything sinister or hard to understand going on here. For most people, the solution to inequality seems really simple: get a better job or make more money at the job they already have. The easiest way for politicians to appeal to those people is to suggest that growing the economy will give everyone a bigger piece of the pie. That's how it's supposed to work. Most people don't want to radically alter the system, they just want to benefit more from it. Nobody wants to hear that that might be impossible.

# ? Aug 12, 2016 18:49

Ardennes: May 12, 2002

Paradoxish posted:

It's not like there's anything sinister or hard to understand going on here. For most people, the solution to inequality seems really simple: get a better job or make more money at the job they already have. The easiest way for politicians to appeal to those people is to suggest that growing the economy will give everyone a bigger piece of the pie. That's how it's supposed to work. Most people don't want to radically alter the system, they just want to benefit more from it. Nobody wants to hear that that might be impossible.

Isn't that a bit paternal? Don't tell the kids that Santa doesn't exist or they may ask for a raise?

# ? Aug 12, 2016 21:08

Proud Christian Mom: Dec 20, 2006; READING COMPREHENSION IS HARD

Don't peek behind the curtain please

# ? Aug 12, 2016 21:37

Lyesh: Apr 9, 2003

tsa posted:

As for Marx, I hear Venezuela is lovely this time of year. Eh, I'm being unfair, instead we should look at the successful implementations of socialism such as:

I know I'd rather be poor in Cuba than in, say, Haiti.

# ? Aug 12, 2016 21:58

Paradoxish: Dec 19, 2003; Will you stop going crazy in there?

Ardennes posted:

Isn't that a bit paternal? Don't tell the kids that Santa doesn't exist or they may ask for a raise?

I mean, what else are you going to say? Large scale institutional change really isn't on the table over the short term or, probably, ever. I doubt that there's some horrible conspiracy where evil politicians are keeping The Truth from the masses so much as politicians saying things that will let them keep their jobs while hoping that everything works out. The state of the economy is purely a political topic, so everyone is just going to read what they want to see in the data and longterm trends anyway.

# ? Aug 12, 2016 22:01

Fried Watermelon: Dec 29, 2008

tsa posted:

As for Marx, I hear Venezuela is lovely this time of year. Eh, I'm being unfair, instead we should look at the successful implementations of socialism such as:

It's the same list as the successful implementations of capitalism:

# ? Aug 12, 2016 22:32

icantfindaname: Jul 1, 2008

Paradoxish posted:

I mean, what else are you going to say? Large scale institutional change really isn't on the table over the short term or, probably, ever. I doubt that there's some horrible conspiracy where evil politicians are keeping The Truth from the masses so much as politicians saying things that will let them keep their jobs while hoping that everything works out. The state of the economy is purely a political topic, so everyone is just going to read what they want to see in the data and longterm trends anyway.

I mean, to be fair nobody really has any concrete idea of how to fix the wage growth inequality problem, but I do think it's reasonable to expect a party nominally working for the economic interests of the majority of the public to act like they give even a single gently caress about the problem. You really can't say that for the people in charge of liberalism today

# ? Aug 12, 2016 22:37

ToxicSlurpee: Nov 5, 2003; -=SEND HELP=-; Pillbug

icantfindaname posted:

I mean, to be fair nobody really has any concrete idea of how to fix the wage growth inequality problem, but I do think it's reasonable to expect a party nominally working for the economic interests of the majority of the public to act like they give even a single gently caress about the problem. You really can't say that for the people in charge of liberalism today

Put regulations back on the banks. Increase minimum wage to where it should be. Tax the rich as heavily as they used to be taxed.

Really, the entire reason is that banks managed to rig the game.

# ? Aug 12, 2016 23:05

asdf32: May 15, 2010; I lust for childrens' deaths. Ask me about how I don't care if my kids die.

icantfindaname posted:

I mean, to be fair nobody really has any concrete idea of how to fix the wage growth inequality problem, but I do think it's reasonable to expect a party nominally working for the economic interests of the majority of the public to act like they give even a single gently caress about the problem. You really can't say that for the people in charge of liberalism today

Direct spending on infrastructure to prop up the labor market while fixing roads and increased taxes on the rich.

ToxicSlurpee posted:

Put regulations back on the banks. Increase minimum wage to where it should be. Tax the rich as heavily as they used to be taxed.

Really, the entire reason is that banks managed to rig the game.

No it's not really banks. At all.

# ? Aug 13, 2016 00:51

Ardennes: May 12, 2002

Paradoxish posted:

I mean, what else are you going to say? Large scale institutional change really isn't on the table over the short term or, probably, ever. I doubt that there's some horrible conspiracy where evil politicians are keeping The Truth from the masses so much as politicians saying things that will let them keep their jobs while hoping that everything works out. The state of the economy is purely a political topic, so everyone is just going to read what they want to see in the data and longterm trends anyway.

Would be a conspiracy to say maybe they just really don't care that much? Few American politicians seem to notice there is a problem and the ones that do aren't in a position (or aren't allowed) to be in a position to do anything about it.

Direct spending on infrastructure is only going to do so much, especially since the most people are employed in the service industry. It is something that should be done (every society needs infrastructure) but it is far from an actual solution to wage stagnation. Then you have issues like housing costs (especially on the West coast) where the costs of living is completely lopsided and jobs from infrastructure aren't going to matter very much. Housing costs are so bad on the West Coast there is an argument to be made people would be happy with Soviet style concrete apartment blocs as long as they were semi-affordable. Then you have the entire issue of educational debt and cost which also has no realistic solution. Health care is also still relatively hosed on top of that.

Ardennes fucked around with this message at 01:27 on Aug 13, 2016

# ? Aug 13, 2016 01:18

icantfindaname: Jul 1, 2008

ToxicSlurpee posted:

Put regulations back on the banks. Increase minimum wage to where it should be. Tax the rich as heavily as they used to be taxed.

asdf32 posted:

Direct spending on infrastructure to prop up the labor market while fixing roads and increased taxes on the rich.

Redistributing wealth by taxing and directly transferring money, while theoretically possible, would basically be as politically unfeasible as actual socialism on the scale required to make a meaningful dent in that wage vs productivity graph. The ideal solution would be to simply pay people what they deserve in the first place. Minimum wage won't have much effect on most wages, as the minimum wage won't be high enough to affect the median. Same with infrastructure spending, it's not big enough to have that great an effect.

It's this, at least in my opinion

Ardennes posted:

Would be a conspiracy to say maybe they just really don't care that much and the few American politicians that do notice there is a problem aren't in a position (or aren't allowed) to be in a position to do anything about it?

# ? Aug 13, 2016 01:27

Ardennes: May 12, 2002

I wanted to add, neither Mincome or a GMI is that useful of a proposal when you have strict budget restrictions in the first place as well as spiraling costs for necessary public goods. Not only is there not the funding or either program but the costs of education, housing and health care can and almost certainly eat up intended good of the program (or greatly balloon the costs).

You can already see this in effect with Obamacare where the government provides generous subsidies to private insurers but ultimately has limited to no ability to control costs.

# ? Aug 13, 2016 01:37

ToxicSlurpee: Nov 5, 2003; -=SEND HELP=-; Pillbug

Ardennes posted:

I wanted to add, neither Mincome or a GMI is that useful of a proposal when you have strict budget restrictions in the first place as well as spiraling costs for necessary public goods. Not only is there not the funding or either program but the costs of education, housing and health care can and almost certainly eat up intended good of the program (or greatly balloon the costs).

You can already see this in effect with Obamacare where the government provides generous subsidies to private insurers but ultimately has limited to no ability to control costs.

Which is really a good argument in favor of the government getting more control in the situation. What we're seeing overall right now is the horrible failure of American capitalism.

Ironically enough it worked best when the government regulated the hell out of it.

# ? Aug 13, 2016 01:41

Ardennes: May 12, 2002

ToxicSlurpee posted:

Which is really a good argument in favor of the government getting more control in the situation. What we're seeing overall right now is the horrible failure of American capitalism.

Ironically enough it worked best when the government regulated the hell out of it.

Then it goes back to the entire other issue is that while social democracy made a pretty nice middle ground, it arguably existed because of historical circumstance (especially WW2 and the Cold War). If anything you could say capitalism is a victim of its own success, sort of like a big name actor driving their Ferrari off a cliff after a drug fueled orgy.

# ? Aug 13, 2016 01:56

Ytlaya: Nov 13, 2005

asdf32 posted:

No it's not really banks. At all.

I'm actually going to agree with this some. While the banks absolutely partake in a bunch of morally questionable, if not outright corrupt, behavior, they aren't really the fundamental cause of stagnant wages and income equality. They may exacerbate the situation, but proper regulation of the financial sector alone won't come close to fixing our problems.

# ? Aug 13, 2016 02:09

Ardennes: May 12, 2002

Ytlaya posted:

I'm actually going to agree with this some. While the banks absolutely partake in a bunch of morally questionable, if not outright corrupt, behavior, they aren't really the fundamental cause of stagnant wages and income equality. They may exacerbate the situation, but proper regulation of the financial sector alone won't come close to fixing our problems.

Yeah, basically it isn't just banks that are a problem, but they still are an issue even when they are exploding. One issue is simply they are part of a massive concentration of capital that brings a similar size of political power with it. Another issue is that basically the support of the the financial industry with zero interest rates are likely to create another financial bubble if not furthering another tech/housing bubble. In both cases the system is working more or less as intended but are likely going to have catastrophic long-term effects on society.

# ? Aug 13, 2016 02:56

drilldo squirt: Aug 18, 2006; a beautiful, soft meat sack; Clapping Larry

Wrong thread.

# ? Aug 13, 2016 14:13

namaste friends: Sep 18, 2004; by Smythe

https://www.ft.com/content/e979d096-5fe3-11e6-b38c-7b39cbb1138a

quote:

Banks look for cheap way to store cash piles as rates go negative
Practice could undermine the effectiveness of using negative rates to stimulate economy

The idea of keeping piles of cash in high security vaults may sound like something from an old movie plot, but some banks and insurers have recently started considering the idea as interest rates sink below zero across much of Europe.

Europe�s highways are not yet jammed with heavily guarded trucks transporting money to top-secret locations, but if it becomes financially sensible for banks to hoard cash as rates are cut even further, the practice could undermine central banks� ability to use negative rates to boost growth.

After the European Central Bank�s most recent rate cut in March, private-sector banks are paying what amounts to an annual levy of 0.4 per cent on most of the funds they keep at the eurozone�s 19 national central banks. This policy, which has cost banks around �2.64bn since ECB rates became negative in 2014, is intended to spark economic growth by giving banks the incentive to lend money out to businesses instead of holding on to it.

European central bankers say they could cut rates again should economic conditions worsen, but private bankers and insurers are already thinking of creative ways to avoid those charges altogether.

One way is by turning the electronic money they keep at central banks into cold, hard cash. Munich Re has experimented successfully with storing a double-digit million sum of euros in cash at what the insurer describes as a manageable cost. A few other German banks, including Commerzbank, the country�s second-biggest lender, have also considered taking the step. But when a Swiss pension fund attempted to withdraw a large sum of money from its bank in order to store it in a vault, the bank refused to provide the cash, according to local media reports.

If this practice becomes widespread, it would have big economic implications. If banks are not paying central bank interest charges, then they will not be as affected by further official interest rate cuts. They therefore would not be spurred to lend out more money.

Fortunately for central banks, the hoarding of cash creates a host of other costs.

Part of it is storage and transport, though they are not the biggest problems. A withdrawal of a large amount of cash in one swoop would keep transport costs low, while the high value of the largest denominations of euro and Swiss franc notes mean that large amounts can be stored in small volumes.

Even when the ECB stops issuing the �500 note in 2018 and banks will have to use the smaller denomination �200 notes, there is enough space in vaults, according to private bankers.

Bank robbers, earthquakes and other unforeseen disasters, on the other hand, are a problem. Or rather, the delicate issue of finding an insurer willing to take on those risks while charging a reasonable fee.

�No one stores cash for large amounts of time. At the moment, cash comes in and then goes out quickly to ATMs,� said a German banker, who has looked into the costs of switching to bank notes. The banker estimated that the insurance cost would probably be between 0.5 per cent to 1 per cent of the value of the banknotes being stored. That would be higher than the ECB�s negative rate, but in line with Switzerland�s minus 0.75 per cent, which is one of the lowest in the world.

There is also the issue of whether private-sector banks would be able to hoard cash on a large scale without the tacit approval of their national central banks. If a bank in the eurozone wanted to switch its reserves into banknotes, the first step would be to contact the national central bank at which its account is held.

Each of the national central banks must agree to swap the electronic money for banknotes in the denominations chosen by the bank. If several banks decided to hoard cash, the amount of banknotes in circulation would jump. At the moment, there are euro notes worth �1.087tn in circulation. Banks have almost the same amount (�988.1bn) that they could demand from the central bank.

The national central banks stockpile banknotes, and the ECB has measures in place to supply them on short notice if demand soars. A spokesperson for the ECB said: �Rest assured that the ECB and the eurosystem will continue to make all necessary arrangements to ensure a smooth functioning of cash as a means of payment and a store of value.�

The German banker said it is unlikely that cash hoarding would become a widespread practice. Rather, it is a good way of registering banks� protest over the impact of negative rates. �It would be sensible for two or three banks � to make clear that there is a lower bound for interest rates,� he said. �I don�t think the Swiss National Bank will be able to cut rates again without insurers and banks trying to hoard cash.

�[Hoarding cash] is in nobody�s interests. It would cost banks a lot and would clearly mean that central banks can�t really do anything to lower interest rates at the moment. Every side wants to avoid it.�

Amazing.

# ? Aug 17, 2016 05:40

Paolomania: Apr 26, 2006

So all the interest in blockchain is really about saving money on storage vaults.

# ? Aug 17, 2016 06:28

Dawncloack: Nov 26, 2007; ECKS DEE!; Nap Ghost

I am really amazed that the article says that hoarding cash would undermine negative rates. It doesn't seem to me like they have had any traction, so I don't understand what's there to undermine.

Am I wrong on this one?

# ? Aug 17, 2016 08:40

Lucy Heartfilia: May 31, 2012

Helicopter money instead of negative rates, please. Companies won't lend money from banks unless they think people will buy their products.

# ? Aug 17, 2016 17:57

rscott: Dec 10, 2009

Lucy Heartfilia posted:

Helicopter money instead of negative rates, please. Companies won't lend money from banks unless they think people will buy their products.

That would raise the spectre of inflation and apparently fighting inflation is more important than the economy actually growing

# ? Aug 17, 2016 18:01

Accretionist: Nov 7, 2012; I BELIEVE IN STUPID CONSPIRACY THEORIES

Can't run afoul of classism, either. Free money to the rich and well-connected? Yes, please. Free money to the demand-side? What is wrong with you (loving hippie)

# ? Aug 17, 2016 23:02

Ytlaya: Nov 13, 2005

Accretionist posted:

Can't run afoul of classism, either. Free money to the rich and well-connected? Yes, please. Free money to the demand-side? What is wrong with you (loving hippie)

I find that usually if you bring this up, conservatives (and many liberals as well) will say something along the lines of "well I'm also against corporate welfare." I'm sure it's just a total coincidence that 99.9% of what they talk and complain about is welfare for the poor.

edit: Actually, the liberals will often deny it's corporate welfare in the first place and just say "no it's not corporate welfare, it is sophisticated economic policy necessary to grow the economy"

Ytlaya fucked around with this message at 00:10 on Aug 18, 2016

# ? Aug 18, 2016 00:07

ToxicSlurpee: Nov 5, 2003; -=SEND HELP=-; Pillbug

Ytlaya posted:

I find that usually if you bring this up, conservatives (and many liberals as well) will say something along the lines of "well I'm also against corporate welfare." I'm sure it's just a total coincidence that 99.9% of what they talk and complain about is welfare for the poor.

edit: Actually, the liberals will often deny it's corporate welfare in the first place and just say "no it's not corporate welfare, it is sophisticated economic policy necessary to grow the economy"

In the case of Republicans they'll typically say that subsidies don't count because they're paying the business to do something. It's fine to pay somebody to do something (unless it's the government hiring employees for their agencies, of course) but it's wrong to pay somebody to do nothing.

# ? Aug 18, 2016 02:34

wateroverfire: Jul 3, 2010

Helecopter money seems like a hard genie to put back in the bottle.

# ? Aug 18, 2016 16:51

Paradoxish: Dec 19, 2003; Will you stop going crazy in there?

wateroverfire posted:

Helecopter money seems like a hard genie to put back in the bottle.

It's not like we're ever going to normalize monetary policy anyway. Every time the Fed even suggests that it might happen the markets throw a tantrum and Yellen dials back the rhetoric almost immediately. Last year's tiny rate hike nearly caused a panic all by itself. Helicopter money in some form or another is going to be the only option left if the economy dips into legitimate contraction while the Fed still have their foot to the floor.

# ? Aug 18, 2016 17:03

Dead Cosmonaut: Nov 14, 2015; by FactsAreUseless

Why are Sweden, Switzerland, and Denmark running higher negative interest rates than the Eurozone?

# ? Aug 18, 2016 17:05

A Buttery Pastry: Sep 4, 2011; Delicious and Informative!

Dead Cosmonaut posted:

Why are Sweden, Switzerland, and Denmark running higher negative interest rates than the Eurozone?

If I recall (and understand) correctly, the Danish interest rate was lowered in 2012 as a response to currency speculation, specifically the bet that the Danish krone would be forced to unpeg from the Euro. Presumably, maintaining it at a lower level than the Eurozone is seen as a necessary precaution against future currency speculation.

# ? Aug 18, 2016 17:40

Poil: Mar 17, 2007

Dead Cosmonaut posted:

Why are Sweden, Switzerland, and Denmark running higher negative interest rates than the Eurozone?

Probably to keep our house bubble floating for just a little longer. :sweden:

# ? Aug 18, 2016 17:52

Dead Cosmonaut: Nov 14, 2015; by FactsAreUseless

icantfindaname posted:

Well, I will say that after witnessing liberals and Democrats play down and ignore the inequality issue, seeing a purestrain Republican "poor people have refrigerators! refrigerators didn't even exist 200 years ago!" is refreshing in a weird way

Did anyone really think liberals were anything but capitalists? Forget even the neoliberal label. They are pro free market through and through.

# ? Aug 18, 2016 17:57

Inferior Third Season: Jan 15, 2005

A Buttery Pastry posted:

If I recall (and understand) correctly, the Danish interest rate was lowered in 2012 as a response to currency speculation, specifically the bet that the Danish krone would be forced to unpeg from the Euro. Presumably, maintaining it at a lower level than the Eurozone is seen as a necessary precaution against future currency speculation.

It is not so much that anyone thought they would unpeg the krone from the Euro, but the fact that Denmark unilaterally could unpeg whenever they feel like it makes it a strictly better store of value to large investors, and thus can have lower rates to reflect this difference. In addition, there are fewer physical DKK in the world than Euros, making cash hording even more difficult, and therefore lower negative rates more possible.

# ? Aug 18, 2016 18:06

wateroverfire: Jul 3, 2010

Paradoxish posted:

It's not like we're ever going to normalize monetary policy anyway. Every time the Fed even suggests that it might happen the markets throw a tantrum and Yellen dials back the rhetoric almost immediately. Last year's tiny rate hike nearly caused a panic all by itself. Helicopter money in some form or another is going to be the only option left if the economy dips into legitimate contraction while the Fed still have their foot to the floor.

or anything, but I think if it comes down to printing money and handing out stacks of it, the whole system is just going to break down. Like...it will be the only option but taking that option will begin a slide into dollar devaluation that the Fed won't be able to rein in.

# ? Aug 18, 2016 20:13

rscott: Dec 10, 2009

wateroverfire posted:

No or anything, but I think if it comes down to printing money and handing out stacks of it, the whole system is just going to break down. Like...it will be the only option but taking that option will begin a slide into dollar devaluation that the Fed won't be able to rein in.

Yeah but they were saying the same poo poo about QE and inflation is still flat as a rail

# ? Aug 18, 2016 21:07

Franks Happy Place: Mar 15, 2011; It is by weed alone I set my mind in motion. It is by the dank of Sapho that thoughts acquire speed, the lips acquire stains, stains become a warning. It is by weed alone I set my mind in motion.

rscott posted:

Yeah but they were saying the same poo poo about QE and inflation is still flat as a rail

Core inflation perhaps, but there are asset bubbles all around the world.

# ? Aug 18, 2016 21:19

Best Friends: Nov 4, 2011

Beyond what central banks can do via monetary stimulus, governments can engage in fiscal stimulus via spending. Unfortunately we have Republicans here though, and in Europe where austerity is still somehow seen as a good idea, even the center leftists are well to the right of Republicans on that issue.

# ? Aug 18, 2016 21:54

Munkeymon: Aug 14, 2003; Motherfucker's got an
armor-piercing crowbar! Rigoddamndicu𝜆ous.

icantfindaname posted:

Redistributing wealth by taxing and directly transferring money, while theoretically possible, would basically be as politically unfeasible as actual socialism on the scale required to make a meaningful dent in that wage vs productivity graph. The ideal solution would be to simply pay people what they deserve in the first place. Minimum wage won't have much effect on most wages, as the minimum wage won't be high enough to affect the median. Same with infrastructure spending, it's not big enough to have that great an effect.

It's this, at least in my opinion

icantfindaname posted:

I mean, to be fair nobody really has any concrete idea of how to fix the wage growth inequality problem, but I do think it's reasonable to expect a party nominally working for the economic interests of the majority of the public to act like they give even a single gently caress about the problem. You really can't say that for the people in charge of liberalism today

So they don't care but are still trying something that's politically feasible, unlike naked redistribution, just not enough in your opinion?

# ? Aug 18, 2016 22:39

rscott: Dec 10, 2009

Franks Happy Place posted:

Core inflation perhaps, but there are asset bubbles all around the world.

Yes that is what happens when you give banks a bunch of money to stimulate lending in an economy with a fundamental demand deficit (cuz everyone but the top quintile is broke as gently caress)

# ? Aug 18, 2016 23:08

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# ? May 8, 2024 10:08

icantfindaname: Jul 1, 2008

Munkeymon posted:

So they don't care but are still trying something that's politically feasible, unlike naked redistribution, just not enough in your opinion?

They're trying things that won't fix the problem, knowing they won't fix the problem, and not seeming like they would do more but for political realities. So yes, I think it's fair to say they don't particularly care

# ? Aug 18, 2016 23:42

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