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How capital went into (and out of) the GIPSI’s
from the German Georg T’s blog. Sapere aude!
A reader of my blog pointed me to an recent article from Paul Krugman, where he writes:
” ………..I’d like to post a good chart, but I haven’t found a clean presentation of the data. If anyone knows how to do this, let me know! But the basic story seems clear. And by the way, this makes it quite clear that to the extent that you want to talk about irresponsible behavior, it was really a collaborative, trans-European project. German bankers knew what the Spanish banks were doing, and in fact took on quite a bit of the risk directly by accepting real estate as collateral.”
Financial assets of German banks owed by the GIPSI nations (billions of Euro)
So I feel honored, when you, as a nobel laureate, join me in finger pointing towards the irresponsible behavior of german bankers ( 2 ). However, I would appreciate it, if you could clean up the mess at your door step first. For example by acknowledging that Steve Keens explanations are far reaching and worth to be considered seriously.
Sapere Aude!
Georg Trappe
P.S.: Steve Keens dynamic view and the exceptional Blog Querschuesse with its well prepared data deliver a far reaching explanation. More well prepared and current data regarding the engagement of german MFIs in the GIPSIs can be found here.
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—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
————— Michael Hudson ————–
Maria Alejandra Madi / Jack Reardon
————- Edward Fullbrook ————-
—————— Steve Keen —————–
————— Richard Smith —————
————– Gustavo Marques————
– Victor Beker and Beniamino Moro –
————– Lars Pålsson Syll ————-
—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
————— Mauro Gallegati ————–
————— Herman Daly —————-
————— Asad Zaman —————
—————– C. T. Kurien —————
————— Robert Locke —————-
Real-World Economics Review Blog 
Long time ago Mansory (in the Street light) pointed to this cause although indirectly.
There is a big difference between science, by which we can best be guided to knowledge of ourselves and the world we inhabit, and the ideology that underpins the preternatural disciplines of politics, economics and demography.
Ideologies need to be named and debunked. As things stand now, there is much confusion about what is and what is not science. Ideologues in politics, economics and demography are consciously and deliberately misrepresenting themselves as scientists. If demography is not a science; if Demographic Transition Theory is not scientfic, how can demographers gather themselves in an International Union of the Scientific Study of Population (IUSSP). If economics is not a science; if neoclassical economic theory is not scientific, how can the Nobel Prize (presumably an award for outstanding achievement in science) be given annually in Economics. At least the Nobel Peace Prize, often awarded to politicians for exceptional achievements, is not confused with the awards to scientists. Such willful misrepresentations of science need to be exposed for the ideologies they are.
Are economists and demographers political hacks? They are not scientists.
While many too many deniers of what is real shout out attractive falsehoods and are heard, those who tell the truth about the human population are ridiculed and marginalized. In large part the colossal global predicament facing the human community in our time is a result of widely shared preternatural demographic theories and consensually validated specious economic theories. Unscientific models have been dishonestly and deceitfully presented and defended as science on our watch. Demographic and economic theorists consciously and deliberately failed to acknowledge and incorporate into their theories well-established scientific knowledge regarding biological evolution, human population dynamics and well known physical ‘rules of the house’ of the planetary home we inhabit. They uniformly fail to recognize a difference between the way the natural world works and the way they think. For example, economists assume the resources of a finite and frangible Earth can supply infinite products. At the behest of corporate benefactors and political powerbrokers, demographers and economists bear primary responsibility for directing the human community down a ‘primrose path’ that is marked by skyrocketing overpopulation, rampant overproduction, outrageous overconsumption, unconscionable hoarding as well as extraordinary resource depletion and widespread environmental degradation. Most experts of demography and economics self-righteously hold onto outdated theories that serve to confuse the public and deny what could be real. A paradigm shift and drastic action to redo demographic and economic thought will be required so that experts in these fields of research embrace relevant science rather than conveniently overlook it.
It isn’t “thought” that needs to be redone but politics, as your blog maintains that the economists and demographers serve political interests not the development of thinking. It has been apparent for some time on this blog that Marx was right: we are not here to understanding the world but to change it.
So Robert, why doesn’t policy-making involve honest and competent thinking? I don’t know the context of the Marx remark. I do know we have changed the world, but because so many of those who aspired to didn’t know what they were doing and refused to believe they needed to, it is worse now than before we changed it. It isn’t change we need, Robert, it is improvement. Not creative destruction but intelligent harmonisation of our needs with nature’s, e.g. replacing ill-health, nature’s population control, by understanding how control works and providing the local information necessary for intelligent population self-control.
Dave, approximative knowledge is all we have, so those who do the thinking can never be sure if their thoughts are good prescriptions for change, nobody knows. But this does not mean we are powerless to act; people in management often say it is better to do something (anything) rather than to do nothing. As Napoleon said: On s’engage et puis on voit. Uncertainty has to be built into thinking and that means action is necessary in uncertainty in order to clarify.
Yes, Robert, approximate knowledge is all we have. That is one of the reasons we go wrong, and why it is necessary to have ways of being able to see and correct our errors. That is why it is necessary to generate targets and error information locally, not just to localise errors but because otherwise we can’t see whether problems are due to us or (conveniently) someone else.
In my comment on “What History Really Says” I wished Victorian (Victory?) minded economists the same fate as Soddy’s Victorian chemists. Being me I missed the punch line: Soddy’s analogy of the average weight of bottles, some half full, others empty, applies equally to the lies, damn lies, of statistics like GDP.
I agree with Napoleon. “He who never made any mistakes never made anything”. But it is crucial that we learn to distinguish systematic from random (ergodic?) mistakes, and to learn from them. Economists, who still don’t understand post-1948 control theory, clearly haven’t learned anything from their systematic mistakes.
Do we learn from our mistakes? When I first ran into Operational Research I was impressed like lots of people. I read Stafford Beer’s book on OR, then investigated the OR Society and started on page 1, year 1 of the Operational Research Quaterly to learn how system thnking would solve our problems in deision-making. I look through issue after issue chronogically. Eventhing was going swimminnly untill the 1960s when doubts began to emerge in article, intil we got to Ackoff, one of the grus 0f OR, who in 1979 wrote his article about the Future of OR is past. What I saw was a sort of nervous breakdown in OR. Has it recovered. I stopped reading about it.
“Operations research, or operational research in British usage, is a discipline that deals with the application of advanced analytical methods to help make better decisions”.
I wasn’t talking about OR or making better decisions, Robert, I was talking about cybernetics, and continuously correcting actions which (due to uncertain aims or stochastic noise within or without the system), inevitably keep going wrong, whether or not one makes the right decision. You won’t find that in Wikipedia’s list of things relevant to management that OR does. When I studied OR, the finding that impressed me was that the organiser of a successful mine rescue turned out to be the telephone operator, who knew what everyone was doing.
“Dave, approximative knowledge is all we have, so those who do the thinking can never be sure if their thoughts are good prescriptions for change, nobody knows. But this does not mean we are powerless to act…”;Locke
“Yes, Robert, approximate knowledge is all we have. That is one of the reasons we go wrong, and why it is necessary to have ways of being able to see and correct our errors.”davetaylor1
Isn’t this agreement.
Aren’t Economist in a room the same as Stock Gurus in the same room,
” trying to predict a future event”. They need only to realize , “that future success is not guaranteed by pass performance”. It is only a probability.
What did Churchill say, “Why do the American always get it wrong first?”
But we then change it to be correct for a while, at least until the power of human intelligence
changes the conditions for better, for worst, or for no change at all.
It is 2012,over 75 years ago, Frederick Soddy wrote about what could result from bank lending on margin and “The Role of Money”, he was branded “a fool”,”a crank.
In four books written from 1921 to 1934, Soddy carried on a “quixotic campaign for a radical restructuring of global monetary relationships”, offering a perspective on economics rooted in physics—the laws of thermodynamics, in particular—and was “roundly dismissed as a crank”. While most of his proposals – “to abandon the gold standard, let international exchange rates float, use federal surpluses and deficits as macroeconomic policy tools that could counter cyclical trends, and establish bureaus of economic statistics (including a consumer price index) in order to facilitate this effort” – are now conventional practice, his critique of fractional-reserve banking still “remains outside the bounds of conventional wisdom”.
Quote Soddy,
“It was recognized in Athens and Sparta ten
centuries before the birth of Christ that one
of the most vital prerogatives of the State was
the sole right to issue money. How curious that
the unique quality of this prerogative is only now
being re-discovered. The” money-power ” which
has been able to overshadow ostensibly responsible
government, is not the power of the merely ultra-
rich, but is nothing more nor less than a new
technique designed to create and destroy money
by adding and withdrawing figures in bank ledgers,
without the slightest concern for the interests of
the community or the real role that money ought
to perform therein.
The more profound students of money and,
more recently, a very few historians have realized
the enormous significance of this money power
or technique, and its key position in shaping the
course of world events through the ages. … It is con-
cerned less with the details of particular schemes
of monetary reform that have been advocated
than with the general principles to which, in the
author’s opinion, every monetary system must at
long last conform, if it is to fulfil its proper role
as the distributive mechanism of society. To allow
it to become a source of revenue to private issuers
is to create, first, a secret and illicit arm of the
government and, last, a rival power strong enough
ultimately to overthrow all other forms of
government.
Please, challenge, improve,use as your guide.
“Isn’t this agreement”? No.
There are two types of problem: those due to approximate knowledge and those due to mistaken understanding. Those due to mistaken understanding don’t show until you rule out those due to a multiplicity of events which happen unpredictably and not very often. Understanding guides what one tries to do (for better or worse), and error control tries to enable you to do it. A society is riding for a fall which doesn’t understand that fluctuations in stock market prices are not just due to approximate knowledge but can be and often are systematically controlled by deliberate mis-selling (i.e. creation rather than elimination of errors). Isn’t that what Soddy’s saying about the money market?
“Isn’t this agreement”? No.
There are two types of problem: those due to approximate knowledge and those due to mistaken understanding.
As a reply to davetlayor1, a question?
Wouldn’t “approximate knowledge” contain the probability of the “mistaken understanding”?
For example; we can with certainty predict the price movement of any stock or bond price.
That is at any future date the price will be either higher,lower, or the same .
If “approximate knowledge” did not take “mistaken understanding” as part of its knowledge
it would not have to disclose “Past results cannot guarantee future results.”
This disclosure such be made by Economist as well as Stock Gurus.
and of course any “Lucky Fool”.
As a non economist, may I say, politely, that the sarcastic elliptical tone of your post makes it very hard to understand.
If all you want to do is communicate to economists,I suppose it is ok to write like that.
but if you ahve any interest at all in communicating to noneconomist, the sarcsasm and opaque references are just self indulgent.