{"id":17646,"date":"2014-06-30T17:07:19","date_gmt":"2014-06-30T21:07:19","guid":{"rendered":"http:\/\/ssgreenberg.name\/PoliticsBlog\/?p=17646"},"modified":"2014-06-30T17:12:29","modified_gmt":"2014-06-30T21:12:29","slug":"central-bankers-issue-strong-warning-on-asset-bubbles","status":"publish","type":"post","link":"https:\/\/ssgreenberg.name\/PoliticsBlog\/2014\/06\/30\/central-bankers-issue-strong-warning-on-asset-bubbles\/","title":{"rendered":"Central bankers issue strong warning on asset bubbles"},"content":{"rendered":"

The Boston Globe<\/em> has the article Central bankers issue strong warning on asset bubbles<\/a>. I was looking for something sensible in this article.<\/p>\n

The organization, which reflects a widespread view among central bankers that they are bearing more than their share of the burden of fixing the global economy, often uses its annual reports to send a message to political leaders, commercial bankers, and investors.<\/p><\/blockquote>\n

Well that certainly looked promising.\u00a0 Monetary policy cannot fix what ails the world economy.\u00a0 It needs some fiscal stimulus.\u00a0 Let’s see what the central bankers recommend.<\/p>\n

The organization said governments should do more to improve the performance of their economies, such as reducing restrictions on hiring and firing.<\/p><\/blockquote>\n

Well they missed that easy target by a mile.\u00a0 Maybe they have some advice for corporations.<\/p>\n

The organization also had harsh words for corporations, which it said were not taking advantage of booming stock markets to step up investment.<\/p><\/blockquote>\n

I wonder what part of the following scenario these bozos don’t understand.<\/p>\n

Ms. CEO is pondering what to do next.\u00a0 She responded to the economic crash by cutting back her corporation’s production, closed, plants, and laid off\u00a0 workers because she wasn’t able to sell all the goods her\u00a0 corporation was producing.<\/p>\n

Now that she has reduced the production level to match the lowered demand, her corporation is making profits again.\u00a0 In fact they are piling up.\u00a0 She has already got research and development rolling to come up with new products that will make old products obsolete.\u00a0 This is about the only way to get people to buy some more stuff because the people who have old stuff don’t need more, and the people who need more stuff don’t have the money to buy it.<\/p>\n

Still the profits are piling up.\u00a0 So Ms. CEO gives herself and her staff whopping income increases.\u00a0 She ups the dividends to the stock holders, and investors flock to buy more shares so that they can get some level of earnings.<\/p>\n

Still the profits are piling up.\u00a0 Ms. CEO discovers that the corporation can play games with financial investments, derivatives, and financializing the company as an easy way to make even more profits.<\/p>\n

She and her fellow CEO’s have trillions of dollars in liquid assets\u00a0 that they don’t know what to do with.\u00a0 Suddenly she makes a discovery.\u00a0 The stock market is booming, her corporation is raking in money hand over fist, yet there is still no demand for more production output from her idle factories.\u00a0 “I know” she says, “I’ll invest in cranking up my\u00a0 factories so I can give stuff away for free.\u00a0 That will fix my problem of too much profit piling up.”\u00a0 Yeah, right!!!<\/p>\n

So what is it that the central bankers expect corporations to invest in?\u00a0 Does it take deep study of the latest theories in economics to understand the situation.\u00a0 It’s as simple as “What part of no freakin’ customers do you not understand?”<\/p>\n

Some experts are selling the idea that if we focus more wealth at the top of society, that will surely encourage more demand.\u00a0 How many more\u00a0 mansions, yachts, and private jets can one billionaire buy.\u00a0 Eventually they run out of places to spend their money.\u00a0 They certainly aren’t going to use their money to open up idle factories and hire workers when they already have factory output in balance with the now lowered consumer demand.<\/p>\n

So central bankers and congressional experts of a right wing persuasion, I again ask,<\/p>\n

“What part of no freakin’ customers do you not understand?”<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The Boston Globe has the article Central bankers issue strong warning on asset bubbles. I was looking for something sensible in this article. The organization, which reflects a widespread view among central bankers that they are bearing more than their share of the burden of fixing the global economy, often uses its annual reports to […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-17646","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/17646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=17646"}],"version-history":[{"count":6,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/17646\/revisions"}],"predecessor-version":[{"id":17652,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/17646\/revisions\/17652"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=17646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=17646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=17646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}