House of Paine

my lies and damn lies

 oh what makes me do this ...

i'm as bad as pinky...sometmes 



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  famous blogger  writes: 
 
"as for what would lead to 
more investment in US manufacturing 
(or service exports)
 and less in housing,
 I tend to believe ......

        changes 
in relative prices 
are the most important variable" 

 i read that
 and i can't just click off  ...

i  must comment 


" i assume u mean 
international prices 
ie exchange rate sensitive prices
 
hence 
the cry  

" blow out the peg " 
 
but if we are really  
sitting inside of  
a system 
that is largely  
a stack of  
more or less 
informal 
and un co ordinated  
national  
sector by sector  
 international trade rationing  systems 
 
best noticed today
if indeed we are in one

by   
 what we  occidentals 
       call  
asian export restraints  
 
this  proposed 
relative price fix 
of yours  
to rebalance payment flows 
ultimately  
by stimulating 
the US 
to
re industrialize  
may prove 
very very very slow indeed  
 
 
like the 33-40 new deal job recovery 
ultimately 
a success ...after a fashion 
 
but not on its own  humane
civilian terms  
and not by its own dreamed of
civilian  means  
 
aren't we seeing 
a tip of this  non effect
of price changes
emerging 
today in the sino-euro nexus  
 
if as i suspect 
bilateral trade 
is left to the "market" 
  contrary to expectations

the relative value 
of the yuan 

and 

prc exports 
to the euro zone 
will  both continue  
to rise 

in  nasty tandem  
 
and here's my extremest point :

perhaps 
even  rise
at very close 
to the same rate  
as if the yuan hadn't appreciated  
vis a vis the euro  
            at alllllll 
 
moral of the tale 

there are 
 hands pulling strings here 
 
the global trade system  
i solemnly believe  
still runs effectively  
thanx to its 
 understated if not unstated 
                   ration system  
 
and its the legacy of  
this systems prior interventions 
ie 
its residual "distortions" 
both as to prices and quanities  
that largely 
 govern  the play 
  
even in good times 
 when all seems to be moving 
towards greater balance 
 
then 
come the next local crunch  
one sees the flash of the strings
as they  get jerked 

so times
the puppeteers 
  even go public 
 
( sector by sector  
this happens pretty regularly  
today its textiles  
yesterday steel  
tomorrow sugar  
or auto parts )  
 
so  bingo  

nice math models 
using flexible price responses
and  as a consequence 
the  full reign 
   of  
relative prices 
as the basis of decisions  
 gets
 swept aside  
and the rations system 
with all its personality 
strides forth   
 to the plate  
 
and  does what??

to what and  to who ???

most importantly 
for who ??


well things could be worsew
couldn't they

wage structures could be boneless wonders

and jobs spread wide and thin as puddles 

or is that what we have any way 

whatever they decide for us

this we know 

its all the blessings
  
this system offers 
to
the rioters of paris france 
and 
the woikahs of toledo ohio 

-----------------------

notice flexible 
here has no up 
it means lowerable  
or removable  
 
also 
 
the pound can flex the mark... 
well its gone isn't it 
 
notice the nordics and saxons who stayed out of the procrustean bed called the euro 
have compared quite well 
with their bedded brethern 
-----------
my Rx for the franco german heart of old europe 
 
bust the euro by violating the fiscal deficit caps  
 
make work jobs if necessary  
 
bond ratings??? 
all go italian  
 
force the frost giants at the ECB  
to snap 
like saplings  
 
remember  
 
"i'm sparticus " 
 
i love mister hugh 
 
he's smart 
thoughtful 
polite  
 
but i can't hear his hands wringing 
 
 
and as to his policy reommendations 
 
they are sensible indeed  
so much so  
he reminds me of ramsey macdonald  
 
a man with todays fears 
but yesterdays solutions 

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bradspeak: 
 
" the strong pound.
 UK MNCs use their current strong pounds
 to invest elsewhere where 
other reasources are cheap ... " 
 
right on brother !!!! capital export 
 
that's how you get a gnp way larger then gdp  
 
 
"flexibility need not be a euphisism
  for reducing wages -- " 
 
ah yes  
but dear sir 
out there in factland  
show where it t'ain't  
 
"it can generate a process  
where workers shift from a low productivity 
to a high productivity sector 
       (china, ag to industry)" 
 
generate a process indeed 
 
where high wage jobs disolve here in the US of A 
 
and re appear in china as  jobs  
which would  seem vry very  low paid  here  
 
 
but even so  
strictly speaking  

this not 
what is  now called 
on the bizz wizz pages
     wage/job flex  
                     is it ??? 
 
yes  of course
     in the prc
there are no barriers 
   to a healthy  flowof toilers
 out of the  agi peon plot allotments
            and into 
         the   ad hoc
      fringeless  urban  contract jobbery 
   
 
but why would there be ??? 
 
generally and coherently 
barriers are erected  
to protect  wages and  jobs  
           and 
always
in a threatened 
 existing high wage sector  
 
like us public works contracts 
requiring payment of the sky high
           "prevailing " union wage rates 
 
 
"labor released by technology  
moves into other sectors" 

and  to lower wages  
 
" that can lead to higher aggregate wages".
 

sly fudge indeed 

 flexible labor forces 
 are ones which 
 " exchange "  
more 
if worse paying  futuretotal  job hours  
 
for less better paying  present total jobs hours 
 
and yes the aggregate  wage fund 
 may  well rise 
if "the elasticity "
nets  out positive  
 
now isn't this 
the lovely  shadow play 
we've witnessed  
for 30 years here in america ????

de industrializing  
while simultaneously  
commercializing  
bigger and  
bigger chunks  
of what was once 
intra- household service production ???? 
 
fast food service  
for home cooked
kid and elder day care for mom's 
domestic tlc 
             etc etc etc  
 
upshot: 

a higher participation rate  
 
and 

a bottom job majority 

going at best  
                  30 years side ways  
                 errrrr...
                                rate wise that is  
 
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beautiful post brad 
 
"Why couldn't China use public funds 
to recapitalize its banks,
 and rather than raise taxes 
to pay for the higher (on budget) interest bill, 
instead run a larger fiscal deficit? 
 
And why is it more important
 for China to take steps 
to make its labor markets more flexible 
rather than develop a stronger system
 of social insurance 
to reduce precautionary savings?
 It seems to me that one of China's problems
 is that it got rid of the social insurance
 provided by the old iron ricebowl state
-owned firms without putting much 
of a new system in place ... " 
 
 
for what a nut'z endorsement  
is worth to u  
I agree totally  
 
 
short run 
the prc gubmint watch word should be 
 
" if the people wanna save 
so gd much  
 
we better borrow just as gd much " 
 
long run 
 
build  
a great wage based 
tax and transfer system  
 
like  
we built  
a great canal and a great wall  
 
and for very similar reasons  
broader safety and prosperity  
 
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question : 
 
doesn't the imf 
 
always cry "fiscal restraint" ? 
 
its the sound of the prudent banker cuckoo 

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