The Global Nature of the Recession

Paul Gillespie writes on this topic in today’s Irish Times, covering Kevin’s recent work and some of the other work cited on this blog: here.

6 replies on “The Global Nature of the Recession”

Its wonderful to see the pro ultra liberal, globalized market economic gurus who were part of the cheerleading crew THAT LED TO THIS DEBACLE now lineing up to diagnose the ailing economic patient,when so recently they couldnt even predict that he was sick!.like a banker who gives you an umbrella when it stops to rain O Rourke and crew are good at being experts after the horse has bolted.Its interesting to note how an explanation of Ireland great economic success has recently been removed from O Rourkes list of web published articles,

Excellent article by Gillespie as usual.

Another interesting aspect of this global crisis is the use of models that did not adequately take account of low probability / high consequence events, fat tail events, such as LTCM, The Wall Street Crash, the Great War, etc.

Nassim Taleb’s interview on Econ Talk discusses this modelling problem: Nassim Taleb talks about the financial crisis, how we misunderstand rare events, the fragility of the banking system, the moral hazard of government bailouts, the unprecedented nature of really, really bad events, the contribution of human psychology to misinterpreting probability and the dangers of hubris. The conversation closes with a discussion of religion and probability.

Also, George Soros’ latest book, ‘The New Paradigm for Financial Markets: The credit crisis of 2008 and what it means’, and his theory of reflexivity says that supply and demand curves are not independently determined and that rational expectations theory does not hold, the prices in markets can feed expetations & can cause temporary madness, e.g. increasing housing supply & increasing prices in Ireland.

Does George Soros’ very success in the markets demonstrate that these economic theories do not hold? What does this crisis mean for economic theory and models? The global crisis surely provides evidence.

Calan: you can get my cv on my website. It has a full list of my publications. I gather that he is talking about a textbook chapter published in 2000, co-authored with that wild-eyed libertarian extremist Cormac Ó Gráda, in which we argued that Ireland’s catch-up in the 1990s was a delayed version of the catch-up which the rest of Western Europe had experienced in the 1950s and 1960s, based on — as in their case — social partnership and exporting to the European market. It’s news to me that I’ve recently removed it from my website, but then again professors are notoriously absent-minded.

While one can clearly disagree with the analysis of the chapter, the more important point is that it is obviously evidence of an ultraliberal market fundamentalist mindset.

In reading the very different analyses of the on-going economic and financial downturn I have come across only one commentator who appears to have observed a significant (possible) cause.

Reflecting back to 1930- 1938 – what were the real internal and external differences to today?

May I ask a favour? Would each contributor state what their economic Model-in-Use is? If it is Permagrowth, perhaps you might want to re-view it.

Brian P

The massive bubble was nurtured by the keeper of the reserve currency and the largest economy, the one with armed forces in 90% of “free” countries…..Greenspan was the titular head, but the policy is designed to produce a level playing field, ie economic disruption. Most economists could and did see it coming.
So why was it brought about? What is this NWO? More economic slavery for the poor nations or a genuine attempt at a United Nations?
And why are all the “oeconomists” so cowed by it?
We have all we need; who needs more and what is his unseen hand up to at the moment?

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