Re:Wall Street Banks Warn Downturn Is Coming
by pm90 on Wednesday August 23, 2017 @02:44PM
(#15084008)
How does the Venezuelan crisis affect the World Economy, though? AFAIK they are neither well integrated into global trade and finance (Japan and US), nor do they have so many people as to cause a serious change in the labor market (USSR).
Re:Wall Street Banks Warn Downturn Is Coming
by ChuckMcM on Wednesday August 23, 2017 @03:51PM
(#15084497)
In both the USSR and Venezuela cases we've seen a complete separation of meaningful feedback and controls in the regulation arm and the market itself. In both cases multiple markets emerged that where nominally independent (black, grey, sanctioned, and unsanctioned) which created ways for capital to flow that had previously been impossible. In both cases there appears to be tremendous looting of GDP into the market accounts of a smaller wealthy elite. To the extent that the wealth of a nation empowers its governance, the rise of oligarchs creates a nominally stable power structure that is disassociated with GDP development. To me, this appears to structurally favor wealth creation for the oligarchs over GDP creation for the economy.
What I observe is that the rapid shift of materially significant (from a GDP perspective) wealth from the general market to a much smaller number of market 'maskers' on a sovereign state basis, has an attenuating effect on systemic controls and other market damping systems.
So looking at how business cycles happen in a system where more and more interacting economies are less market driven and more exploitation driven is, again in my non-professional opinion, might shed some light on how the cycles will evolve.
Re:Wall Street Banks Warn Downturn Is Coming
by dnautics on Wednesday August 23, 2017 @04:11PM
(#15084630)
You could probably throw Zimbabwe, Yugoslavia, and Greece into that mix too. To a lesser extent Iceland, but in that case the "bad actors" were thrown into jail afterwards (which of course doesn't have effects reaching back into time)
Re:Wall Street Banks Warn Downturn Is Coming
by jacquesm on Wednesday August 23, 2017 @05:09PM
(#15085181)
Yugoslavia? You mean before the war and the break-up?
Economics is a challenging area to have theories because it is really really hard to run experiments. As a result you have to use existing choices and try to identify what the theory predicts, then walk forward in time to see if that prediction was accurate or inaccurate. It is really hard to do because humans tend to want things to succeed and can unconsciously add or subtract data points that move them closer to 'prove' or 'disprove' depending on what they want. Eliminating that bias is very difficult.
On a related note, we're also due for an ice age based on historical cycles. However as systems change and the balances within them shift, it can be difficult to see which variables force the cycle and which merely enhance it. Easy to see an enhancer as a major force when it isn't.
So back to business cycles; there are four outlier economic events which I think can provide some insights into what may or may not happen in the next decade. These are (in chronological order) The dissolution of the USSR in the 80's, Japan's meltdown in the 90's, the misnamed "Mortgage crisis" of 2009, and the collapse of the Venezuelan economy in 2015. Each of these events share a common thread of state controls and markets being ripped apart by events. I don't think we have yet learned all we need to learn from them.