Comments on: More comparisons with the 1930s http://www.irisheconomy.ie/index.php/2009/04/10/more-comparisons-with-the-1930s/ Sun, 12 Feb 2012 21:40:55 +0000 http://wordpress.org/?v=2.6.3 By: Pat Donnelly http://www.irisheconomy.ie/index.php/2009/04/10/more-comparisons-with-the-1930s/#comment-4684 Pat Donnelly Fri, 10 Apr 2009 16:04:58 +0000 http://www.irisheconomy.ie/?p=1618#comment-4684 All of this was useful to predict what has happened but was not used except by those derided as "fringe". Their forecasts were sound and by not using them the regulators have allowed continued over investment into a bubble, which money was bound to be lost. Instead we got the drivel about the new paradigm etc. Even now the USA is not saying where their taxpayer funds are being directed "to save the economy". Everyone with a brain knows that the entire system is insolvent, but by delaying formal settlements by liquidation etc, the truly stupid waste yet more investments into a market which is severely hampered. Oh well, no one is to blame........ let us just watch it happen. It might even be fun! Remember Iceland! All of this was useful to predict what has happened but was not used except by those derided as “fringe”. Their forecasts were sound and by not using them the regulators have allowed continued over investment into a bubble, which money was bound to be lost.
Instead we got the drivel about the new paradigm etc.
Even now the USA is not saying where their taxpayer funds are being directed “to save the economy”. Everyone with a brain knows that the entire system is insolvent, but by delaying formal settlements by liquidation etc, the truly stupid waste yet more investments into a market which is severely hampered.
Oh well, no one is to blame…….. let us just watch it happen. It might even be fun!
Remember Iceland!

]]> By: Gregory Connor http://www.irisheconomy.ie/index.php/2009/04/10/more-comparisons-with-the-1930s/#comment-4651 Gregory Connor Fri, 10 Apr 2009 10:26:52 +0000 http://www.irisheconomy.ie/?p=1618#comment-4651 The point that the financial services industry has grown too large in terms of profit and salary shares (also in terms market values of the financial services industry equity) is certainly valid. The shrinkage of the industry (by all three measures: profits, incomes, and market values) is one of the best side-effects of the current crisis. I am not sure that this 3-date point historical comparison is decisive evidence. Other industries such as IT and candle-making have grown and collapsed spectacularly as a proportion of the economy and it means exactly nothing. So the historical evidence is very interesting but not decisive really. Examining the current environment in terms of industrial structure and the drain of human capital and other resources the shrinkage of the financial services industry definitely is to be welcomed. Economic historians ... rock on! ... it gives some useful insights but not the whole picture. The point that the financial services industry has grown too large in terms of profit and salary shares (also in terms market values of the financial services industry equity) is certainly valid. The shrinkage of the industry (by all three measures: profits, incomes, and market values) is one of the best side-effects of the current crisis. I am not sure that this 3-date point historical comparison is decisive evidence. Other industries such as IT and candle-making have grown and collapsed spectacularly as a proportion of the economy and it means exactly nothing. So the historical evidence is very interesting but not decisive really. Examining the current environment in terms of industrial structure and the drain of human capital and other resources the shrinkage of the financial services industry definitely is to be welcomed.

Economic historians … rock on! … it gives some useful insights but not the whole picture.

]]>