The handling or mishandling of the debt crisis by the EuroCrats proves one thing. The Process is the Problem.
From the IMF we learn that the set of policy choices that are economically viable and politically feasible is shrinking. That is a bold admission.
Further, the IMF acknowledges the market’s negative response but chooses to stay the course. This is wrong.
Still, the bold admission is a good thing. Oftentimes people don’t take bold action until a crisis is impending. Bureaucrats never do.
Now with Belgium, Italy, and Spain heading toward a crisis, why embrace a proven Policy of Failure? One glaring point: A cash infusion into banks that suffered losses due to the debt crisis will only cause the banks to continue to lose what others infuse.
Meanwhile, there is a call for taxpayers to bolster…..! Any call for taxpayers to bolster anything is a lose—lose situation.
If the plan fails, the crisis deepens.
If the plan succeeds, those who pay for the success of others will harbour a deep resentment. If you don’t believe me: Parliament Hampers Merkel Deal Making.
EuroBanks stand to lose €630 Billion. Banks are starting to not trust each other or lend to each other. That is not a good sign either.
The IMF goes on to say that the Global Credit Crisis moved into the Political Phase. Therein lies the punishment for using political considerations to solve the problem in the first place.
Greece and Europe suffer from problems of Austere Proportions.
As I previously stated, “Analysts conceded a €110 Billion bailout for Greece on the assumption that the Greek economy would grow. Then, they called for sanctions to punish Greece because their assumptions were wrong.”
The austerity measures to be imposed by (upon) Greece include a move to reduce public employment.
“There are no unintended consequences, only unwanted consequences.” –Slim Fairview
Such a move will
Reduce tax revenue.
Strain the social safety net,
Negatively impact the multiplier effect; if there is one.
[ http://www.slideshare.net/slimfairview/the-multiplier-effect-4962273 ]
Greece may consider some alternatives
Sell state owned assets [to Greek citizens].
Seek Foreign Investors instead of Foreign Lenders. [Asia. Brazil]
Encourage, promote, and support, entrepreneurship for the Greek people.
The Nanny-State mentality in Europe has less to do with benefits and more to do with business. It is easy for a society to become complacent if the jobs are already there whether provided by Big Government or by Big Business. SMEs provide jobs, growth, economic stimulus, and prosperity. Don’t believe me? The headline in the NY Times reads: India Nurtures Entrepreneurship.
Economic Stimulus by Metaphor
http://slimviews.blogspot.com/2011/06/economic-stimulus-by-metaphor.html
Greece can also follow my prescription for the American housing crisis. Only they may wish to expand upon it—tailor it to Greek needs.
Stop Foreclosures
Rewrite Loans at a lower payment rate
Add a balloon payment. [2018, 2019, 2020]
Will all this work?
Did your efforts fail?
The EuroCrats are Intelligent, Educated, and Experienced.
Q: Why the failure?
A: The Process
The meeting of the minds emphasises consensus. The EuroCrats do not need consensus. The EuroCrats need acknowledgement.
“The fact that you cannot predict the future is not a proper rebuff to the one who tells you to get off the tracks a train is coming.” –Slim Fairview
Sincerest regards,
Slim
Copyright © 2011 Slim Fairview
Showing posts with label economists. Show all posts
Showing posts with label economists. Show all posts
Thursday, September 22, 2011
Monday, July 25, 2011
We Can Fix the Economy. This is why we don't.
Am I an optimist? Usually. However, when it comes to fixing the economy, the fact that I keep beating a dead horse is more in indicator of my willingness to embrace hopelessness.
The metaphor I created for experts in economics involves this:
One economist works for a company that sells red paint. He says, "If you want to improve your business, paint the walls red."
Another economist works for a company that sells blue paint. He says, "If you want to improve your business, paint the walls blue."
That much may be obvious. The difficulty arises when they cite the statistics.
The Red Paint economist says, "Our study shows that red paint motivates employees. They produce more widgets. Your productivity will go up."
The Blue Paint economist says, "Our study shows that blue paint creates a greater sense of well-being. Your employees will make fewer mistakes and the quality of your widgets will go up."
What each side does not tell you, is that with red paint, the employees work faster, make more errors, and reduce the quality of the output; and, is that with blue paint, the employees make fewer mistakes and produce higher quality widgets, but make fewer widgets and reduce the quantity of the output.
To further the explanation, as most people don't understand economics, I posted several monographs, using metaphors, to explain the concepts.
1. A Primer in Economics.
2. The Multiplier Effect.
3. Economic Stimulus
4. How to fix the economy.
5. Another monograph on the economy
The Several Monographs on Economics will help non-economist visualise what happens in the economy.
http://slimviews.blogspot.com/2011/07/understanding-economics-introduction-by.html
The metaphor I created for experts in economics involves this:
One economist works for a company that sells red paint. He says, "If you want to improve your business, paint the walls red."
Another economist works for a company that sells blue paint. He says, "If you want to improve your business, paint the walls blue."
That much may be obvious. The difficulty arises when they cite the statistics.
The Red Paint economist says, "Our study shows that red paint motivates employees. They produce more widgets. Your productivity will go up."
The Blue Paint economist says, "Our study shows that blue paint creates a greater sense of well-being. Your employees will make fewer mistakes and the quality of your widgets will go up."
What each side does not tell you, is that with red paint, the employees work faster, make more errors, and reduce the quality of the output; and, is that with blue paint, the employees make fewer mistakes and produce higher quality widgets, but make fewer widgets and reduce the quantity of the output.
To further the explanation, as most people don't understand economics, I posted several monographs, using metaphors, to explain the concepts.
1. A Primer in Economics.
2. The Multiplier Effect.
3. Economic Stimulus
4. How to fix the economy.
5. Another monograph on the economy
The Several Monographs on Economics will help non-economist visualise what happens in the economy.
http://slimviews.blogspot.com/2011/07/understanding-economics-introduction-by.html
Regards,
Slim
PS. I am not Paul Harvey. However, I am open to becoming a commentator, columnist, or paid blogger.
If you’ve found anything I said to be helpful, please don’t hesitate to send me one of those tricked-out laptops and to tuck a few dollars into the envelope along with the thank you note.
Sincerest regards,
Slim
Copyright © 2011 Slim Fairview
Monday, July 18, 2011
Wolf Blitzer Buys a New Suit: How to fix the economy
Wolf Blitzer Buys a New Suit
For those who still have no grasp on how to fix the economy, another metaphor.
Wolf Blitzer wants to buy a new suit. This, he figures, will attract more viewers [customers]. He borrows the money from John King—a CNN colleague.
Mr. Blitzer’s ratings [revenue] go up. He repays Mr. King.
Mr. King, seeing Mr. Blitzer’s success, uses the profits from his lending venture to buy a new suit. His ratings [customers] go up.
Upstairs, Mr. Turner is looking over the balance sheets. He sees this uptick in [revenue]. He asks his accountant what happened. His accountant tells him. Mr. Turner gets an idea. He issues a memo to his on air people.
CNN will make low interest loans to those who want to go out and buy a new outfit to wear on the air.
Ratings go up. Revenue goes up. Mr. Turner issues another memo.
Up until now, in the cafeteria, employees could buy a meal [breakfast, lunch, or dinner] for $10. Due to the increased revenue, we are going to charge you [tax you] only $5.
As a result, the employees have more money to spend. John King buys a new tie. Gloria Borger buys a new scarf. Candy Crowley buys a necklace. Don Lemon buys a new shirt.
This upgrade in the “metaphorical image” generates more viewers [customers]. Revenues go up. Salaries are increased. All is well in CNNtopia.
However, what if all were not so enlightened.
What if Wolf Blitzer had borrowed the money for his new suit from Bret Baier?
Well, Mr. Blitzer would still have a new suit. However, the profits would have gone to Mr. Baier who would have used his profits to buy a new suit. Mr. King, not having the profits from his loan to Mr. Blitzer, would have had to go to Shepard Smith for a loan to buy his new suit.
Now, Bret Baier and Shepard Smith could use their profits to invest in a business partnership to lend money to fellow Fox News Anchors. They would have a spiffed up image and more viewers [customers] generating more revenue.
Back to CNN.
With Mr. Blitzer and Mr. King having to pay interest on the loans to people at Fox, they have to cut back on expenditures. Now, instead of buying lunch or dinner in the cafeteria, they brown-bag it. Revenues in the cafeteria fall. CNN issues a memo. Due to lost revenues, the cafeteria will have to raise prices [taxes] on lunches and dinners. This affects the other employees. No shirts, no scarves, no ties, no necklaces, declining image, lost customers, decreased revenues—CNNistant.
What is the crucial difference between CNNtopia and CNNistan? That is the difference between solving the US economic crisis and not solving the US economic crisis.
Now, on to Economic Experts.
In another monograph, I referred to selling blue paint. I chose blue because blue is my favourite colour. As Freud said, “Sometimes a cigar is just a cigar.”
However, there is an opportunity to create a metaphor.
You watch CNN. You watch as experts explain the economy.
One economist works for a company that makes red paint. He says, “If you want to sell more widgets, paint the walls of your company red.”
Another economist works for a company that makes blue paint. He says, “If you want to sell more widgets, paint the walls of your company blue.”
Well, the bias is obvious. Less so, the supporting facts.
Red: “We have a study that says employees in companies with red walls are more pumped up and make more widgets—increased productivity.
Blue: We have a study that says employees in companies with blue walls are more serene and make fewer mistakes—higher quality.
What both sides don’t say:
Employees in companies with red walls make more widgets but make more mistakes resulting in many widgets rejected for poor quality.
Employees in companies with blue walls make higher quality widgets with fewer mistakes, but make fewer widgets which results in lower productivity.
You can say both the Red Economist and The Blue Economist told the truth, half the truth, or half a lie [by omission].
Both sides misled the customers of the benefits of the paint they sell.
How do you fix an economy?
Here are a few easy to understand monographs on the topic. Will this help you fix the economy? Well, is fixing the economy your job? What it will do is protect you from the politicians trying to sell you paint you don’t need to fix a problem that can’t be fixed with a can of paint.
Will $1 Billion Dollars create 7,000 jobs? Yes and No.
Economic Stimulus, by Metaphor
The Multiplier Effect
Regards,
Slim
PS. I am not Paul Harvey. However, I am open to becoming a commentator, columnist, or paid blogger.
If you’ve found anything I said to be helpful, please don’t hesitate to send me one of those tricked-out laptops and to tuck a few dollars into the envelope along with the thank you note.
Sincerest regards,
Slim
Copyright © 2011 Slim Fairview
Subscribe to:
Posts (Atom)