"This time is different" - Rogoff & Reinhart

[kevsta]

Who's read this? is it credible in the eyes of formally educated people?

http://press.princeton.edu/titles/8973.html

I'm reading it at the moment and its certainly interesting, and especially so in the context of the general mirth with which the phrase is used here as a definitive argument winner.

I have a PDF presentation based on it, if anybody wants a copy PM me.

 

[Startz]

Who's read this? is it credible in the eyes of formally educated people?

http://press.princeton.edu/titles/8973.html

I'm reading it at the moment and its certainly interesting, and especially so in the context of the general mirth with which the phrase is used here as a definitive argument winner.

I have a PDF presentation based on it, if anybody wants a copy PM me.

It's very highly thought of.

 

[kevsta]

It's very highly thought of.

thank you.

 

[The Central Scrutinizer]

Of course it's different this time. It always is.

 

[kevsta]

Of course it's different this time. It always is.

would you like a copy?

 

[paiute]

Who's read this? is it credible in the eyes of formally educated people?

http://press.princeton.edu/titles/8973.html

I'm reading it at the moment and its certainly interesting, and especially so in the context of the general mirth with which the phrase is used here as a definitive argument winner.

I have a PDF presentation based on it, if anybody wants a copy PM me.

Looks like they have discovered that economies are at the whim of human nature. Do people in the business school talk to people in the psychology department? Do MBAs think that pieces of eight have an autonomous guiding force?

 

[psionl0]

There is an interesting finding in the PDF:

The empirical relationship between (gross central) government debt and real GDP growth is fairly weak for debt/GDP ratios below 90 percent of GDP. At or above 90 percent, growth deteriorates markedly, with median growth rates falling by 1 percent and average growth rates falling considerably more.

Surprisingly, we find that the threshold for public debt is similar in both advanced countries and emerging markets.

The PDF also draws the following conclusion:

Countries that rely heavily on short term borrowing to fund growing debt levels are particularly vulnerable to crises of confidence. At the very minimum, this would suggest that traditional debt management issues should be at the forefront of public policy concerns.

 

[kevsta]

that was fairly widely discussed in the news a while back, its what piqued my interest in the book actually, especially in the light if this

U.S. Debt Now Exceeds 100% of GDP

News reports indicate that the U.S. debt shot up $238 billion after the government’s debt ceiling was lifted—which means that, for the first time ever, U.S. debt has surpassed 100 percent of GDP. Our debt now exceeds the value of our entire economy. In other words, we’re like a homeowner whose house is worth less than their mortgage—our country is officially “underwater.”

http://blog.american.com/2011/08/u-s-debt-now-exceeds-100-of-gdp/

but don't worry, this time, really IS different

 

[kevsta]

The PDF also draws the following conclusion:
Quote:
Countries that rely heavily on short term borrowing to fund growing debt levels are particularly vulnerable to crises of confidence. At the very minimum, this would suggest that traditional debt management issues should be at the forefront of public policy concerns.

Rickards also said the same thing, more or less in Currency Wars

“Because debt and deficits are now so large, the United States has run out of dry powder.

If the United States were struck by another financial crisis or a natural disaster of the magnitude of Hurricane Katrina or greater, its ability to resort to deficit spending would be impaired. If the United States were confronted with a major war in the Middle East or East Asia, it would not have the financial wherewithal to support a war effort as it had done in World War II.

Vulnerability to foreign creditors is now complete. In the face of any one of these crises–financial, natural or military–the United States would be forced to resort to emergency measures, as had FDR in 1933 and Nixon in 1971.

Bank closing, gold seizures, import tariffs and capital controls would be on the table. America’s infatuation with the Keynesian illusion has now resulted in U.S. power being an illusion.

America can only hope that nothing bad happens. Yet given the course of events in the world, that seems a slim reed on which to lean.” -Currency Wars p. 188

 

[kevsta]

Of course it's different this time. It always is.

20th century sovereign debt defaults



so given that the evidence shows that 90% debt to GDP is the tipping point beyond which growing your way out of the problems is extremely unlikely, we can probably conclude that further major defaults are inevitable in many cases

http://www.cnbc.com/id/30308959/The_World_s_Biggest_Debtor_Nations?slide=2

the only real question is the form the default will take.

 

[mhaze]

20th century sovereign debt defaults

[qimg]http://www.internationalskeptics.com/forums/imagehosting/thum_178524ed5e3c569813.png[/qimg]

so given that the evidence shows that 90% debt to GDP is the tipping point beyond which growing your way out of the problems is extremely unlikely, we can probably conclude that further major defaults are inevitable in many cases

http://www.cnbc.com/id/30308959/The_World_s_Biggest_Debtor_Nations?slide=2

the only real question is the form the default will take.

Will it be a fire breathing dragon? A strange alien spacecraft descending over Washington? Or a swarm of Jurrasic Park Raptors, with scaley skin made of small dollar bills?

Inquiring minds would like to know.

What form will it take?

Verily, the earth may split asunder and the heavens part, and on that day of reckoning, the wise who squirreled away shall walk the earth rewarded, and the foolish made poor in spirit and pocket. Thou take heed, and plant thine seeds carefully, as that day of reckoning comes quickly, but cannot be prophesized as to when. Only the Great, and the Glorious Bernanke knows such mysteries, lest the mob overtake his vision, and reduce him to no more than common rabble.

 

[psionl0]

Will it be a fire breathing dragon? A strange alien spacecraft descending over Washington? Or a swarm of Jurrasic Park Raptors, with scaley skin made of small dollar bills?

Nothing to worry about?

 

[daenku32]

that was fairly widely discussed in the news a while back, its what piqued my interest in the book actually, especially in the light if this



http://blog.american.com/2011/08/u-s-debt-now-exceeds-100-of-gdp/

but don't worry, this time, really IS different

Technically the government's public debt is still well below the GDP. I'm simply making this point because things like this book is referring to debt held by public when they talk about government debt as percentage of GDP. Same goes for annual budget deficit figures as reported by the CBO.

Furthermore, reading this on the the blog post:

The message conservatives need to send is this: Stimulus spending will not create jobs. To the contrary, by increasing the debt, stimulus spending actually hurts job creation. If we are going to get the economy growing again, we must begin reducing our national debt.

makes it sound like the blog writer doesn't understand macro economics and the current economic climate.

 

[mhaze]

Nothing to worry about?

Can we study the history of economic catastrophes in Argentina, Brazil, or the Soviet Union?

Sure.

There's no need for speculation. It's all happened before.

....reading this on the the blog post:

Quote:
The message conservatives need to send is this: Stimulus spending will not create jobs. To the contrary, by increasing the debt, stimulus spending actually hurts job creation. If we are going to get the economy growing again, we must begin reducing our national debt.

makes it sound like the blog writer doesn't understand macro economics and the current economic climate.

Then again, he may and you may not.

Hmmm......

 

[kevsta]

Will it be a fire breathing dragon? A strange alien spacecraft descending over Washington? Or a swarm of Jurrasic Park Raptors, with scaley skin made of small dollar bills?

Inquiring minds would like to know.

What form will it take?

Verily, the earth may split asunder and the heavens part, and on that day of reckoning, the wise who squirreled away shall walk the earth rewarded, and the foolish made poor in spirit and pocket. Thou take heed, and plant thine seeds carefully, as that day of reckoning comes quickly, but cannot be prophesized as to when. Only the Great, and the Glorious Bernanke knows such mysteries, lest the mob overtake his vision, and reduce him to no more than common rabble.

intelligent minds already know. it will come in the form of financial repression, as it always does.

inflation based default is their choice, print money, capital controls, steal the people's wealth, tax them harder, the usual stuff.

their only problem will be avoiding the pitchforks, but hey they have drones these days, so the people don't have much chance really.

 

[daenku32]

Then again, he may and you may not.

Hmmm......

Considering I've heard/read the opposite of what he is typing from many other real economists (and explained in good detail), I'll stick to my comment.

 

[mhaze]

Considering I've heard/read the opposite of what he is typing from many other real economists (and explained in good detail), I'll stick to my comment.

It's certainly true that many opposing things are being heard.

 

[kevsta]

Kyle Bass with a super prescient presentation the global macro situation, talking with Todd Groome (ex IMF) on Europe, the US, and the unavoidable defaults to come. the presentation covers the potential timing, order and magnitude of global sovereign default, and how to invest ahead of the curve.

"return of capital is way more important than return of capital" global debt to GDP is now 340%, "we've never been here before" ..so this time is already different.

 

[The Central Scrutinizer]

 

[kevsta]

I would suggest you stop trolling and watch the video, you might learn something.