tag:blogger.com,1999:blog-22482875089002670402024-03-05T19:04:59.731-08:00LOVE . PASSION . BANJIBanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.comBlogger65125tag:blogger.com,1999:blog-2248287508900267040.post-18908375125238141682012-11-30T08:13:00.001-08:002012-11-30T08:13:20.248-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-87511839645244158302012-11-30T08:08:00.001-08:002012-11-30T08:08:01.290-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-58930669347431020162012-11-30T07:57:00.003-08:002012-11-30T07:57:45.507-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-68144501436673340692012-11-30T07:57:00.001-08:002012-11-30T07:57:38.350-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-17956560444310558562012-11-30T07:54:00.001-08:002012-11-30T07:54:12.784-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-10998320385780225732012-11-30T07:51:00.001-08:002012-11-30T07:51:09.174-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-61768166694308192442012-11-30T07:49:00.001-08:002012-11-30T07:49:26.908-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-64761370288515479382012-11-30T07:48:00.001-08:002012-11-30T07:48:15.310-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-91817887289218844642012-11-30T07:40:00.001-08:002012-11-30T07:40:57.840-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-24782031163593376872012-11-30T07:37:00.003-08:002012-11-30T07:37:48.890-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-51102360789659994332012-11-30T07:37:00.001-08:002012-11-30T07:37:46.709-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-85559053417933080812012-11-30T07:33:00.001-08:002012-11-30T07:33:37.210-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-79696215398701393462012-11-30T07:32:00.001-08:002012-11-30T07:32:01.143-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
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BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-1223539759253017052012-11-30T07:27:00.001-08:002012-11-30T07:27:58.018-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-23039927569521263772012-11-30T07:24:00.001-08:002012-11-30T07:24:03.291-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-63251991356811336572012-11-30T07:19:00.001-08:002012-11-30T07:19:12.986-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-10971600428713232652012-11-30T07:17:00.001-08:002012-11-30T07:17:48.015-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-55452342520159260822012-11-30T07:14:00.001-08:002012-11-30T07:14:32.781-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-38318830437459078042012-11-30T07:13:00.001-08:002012-11-30T07:13:01.986-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-79899151222441469192012-11-30T07:05:00.001-08:002012-11-30T07:05:51.330-08:00Change in the ‘real’ economy<div dir="ltr" style="text-align: left;" trbidi="on">
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<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<u><span style="font-size: 18.0pt; line-height: 115%;"><br /></span></u></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Forget
monetary policy, re-examine the cause of the great depression. The revolution
in agriculture that threw out millions of work. We must face and manage a shift
in the ‘real’ economy from agriculture to industry and service or risk a
tragedy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">It has now
been about five years since the bursting of the housing bubble, and four years
since the onset of the recession. Unemployment has been the order of the day
even before the recession, with so many workers losing their jobs. Almost half
of those who are unemployed have been unemployed long-term. Wages are falling –
The real income of a typical house-hold is now below the level it was in 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">We knew the
crisis was serious back in 2008, and we thought we knew who the ‘bad guys’ were
– the nation’s big banks, which through cynical lending and reckless spending
has brought the stock market to the brink of ruin.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The past two
presidential administrations justified a bailout on the grounds that only if
the banks merges while having a fixed capital base and were handed money
without conditions/limits – could give an economy recovery. Of late even the
monetary policy such as the production of large values of money in a single
note so as to by-pass spending much of the national fund in the production of
new notes.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Many,
especially in the financial sector, argued that strong, resolute, and generous
action to save not just the banks but the bankers, their shareholders, and
their creditors would return the economy to where it had been before the
crisis. In the meantime, a short-time stimulus, moderate in size, would suffice
to tide the economy over until the banks could be restored to health.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally,
banks got their bail-outs, some of the money went to bonuses. Little of it went
to lending. And the economy didn’t really recover – output is barely greater
than it was before the crisis, and the job situation is bleak. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Diagnosis of
our condition and prescription for solution is incorrect.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">First, it
was wrong to think that the bankers would mend their ways – that they would
start lending, if only they were treated nicely enough.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Even when we
fully repair the banking sector, we’ll still be in deep trouble – because we
were already in deep trouble. That seeming golden age of 2007 was far from a
paradise. Companies in the info-tech field were at the leading edge of a
revolution. Our living standard of under a dollar was sustained only by risings
debt – debt so large that our savings rate had dropped to near zero. And zero
doesn’t really tell the story - Because the rich have been able to save a
significant percentage of their income, putting them in the positive column. An
average rate of close to zero means that everyone else must be in the negative
column.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The problem
today is the so-called ‘real’ economy. It’s a problem rooted in the kind of
jobs we have, the kind we need, and the kind we’re losing, and rooted as well
in the kind of workers we want and the kind we don’t know what to do with. The
real economy has been in transition for decade and these transition
dislocations have never been squarely faced.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Joseph E.
Stighitz and Bruce Greenwald have been engaged in research on an alternative
theory of the depression – and an alternative analysis of what is ailing the
economy today.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">They concluded
that the under-lying cause was a structural change in the real economy. The
widespread decline in agricultural prices and incomes, caused by what is
ordinarily a ‘good thing’ – Over Productivity.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Agriculture
had been a victim of its own success. Jobs and livelihood on the farms were
being destroyed, because of accelerating productivity, output was increasing
faster than demand and prices fell sharply, and then came the black crude oil
business, which led to the total decay of the agricultural sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The cities
weren’t spared – far from it. As rural incomes fell, farmers had less and less
money to buy goods produced in factories. Manufacturers would have to lay-off
workers which further diminish demand for agricultural produce, driving down
prices even more.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Before long,
this vicious cycle affected the entire national economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Not until
government spending soared in preparation for global war that America started
emerging from the current depression. It is important to grasp this simple
truth. It was government spending, not any correction of monetary policy or any
revival of the banking system – that brought the recovery.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The long-run
prospects for the economy would of course have been even better if more of the
money had been spent on investments in education, technology, and
infrastructure rather than munitions, but even so, the strong public spending
more than offset the weaknesses in private spending.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
spending unintentionally solved the economy’s underlying problem; it completed
a necessary structural transformation moving America and especially the south,
decisively from Agriculture to Manufacturing.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Moving
forward now they are moving from manufacturing to a service economy in America,
but here in Nigeria, we are moving from Agriculture to Manufacturing and partly
a service economy.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Anyone who
believes that monetary policy is going to resuscitate the economy will be sorely
disappointed. The idea is a distraction and a dangerous one.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What we need
to do instead is embark on a massive investment program that will increase our
productivity for years to come and will also increase employment now.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">This public
investment and the resultant restoration in G.D.P increase the returns to
private investment. Public investment could be directed at improving the
quality of life and real productivity – unlike the private sector investment in
financial innovations, which turned out to be more akin to financial weapons of
mass destruction.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Can we
actually bring ourselves to do this, in the absence of mobilization for global
war? Maybe not, the good news is that we have under-invested in infrastructure,
technology, and education for decades, so the return on additional investment
is high, while cost is unprecedented low.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Government
stimulus designed is only going to work if we don’t preserve the old economy
but to squash it, focus and create a new one. We have to transition out of
manufacturing and into services that people want – into productive activities
that increase living standards, not those that create risks and inequality.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">To that end,
there are many high return investments we can make. Education is a crucial one
– a highly educated population is a fundamental driver of economic growth.
Support is needed for basic research for without it, nothing will fuel a new
spurt of innovation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">Finally, our
decaying infrastructure, from roads and railroads to levees and power plants,
is a prime target for profitable investment.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The second
conclusion is this; if we expect to maintain any semblance of ‘normality’ we
must fix the financial sector.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">As noted,
the implosion of the financial sector may not have been the underlying cause of
our current crisis – but it has made it worse, and it’s an obstacle to
long-term recovery. Small and Medium size companies especially new ones, are
disproportionately the source of job creation in any economy and they had been
especially hard-hit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">What’s
needed is to get banks out of the dangerous business of speculation and back
into the boring business of lending, but we have not fixed the financial
system. Rather we poured money into the banks without restrictions, without
conditions and without a vision of the kind of banking system we want and need.
We have; in a phrase confused ends with means. </span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">A banking
system is supposed to serve society, not the other way around.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">That we
should tolerate such a confusion of ends and means says something deeply
disturbing about where our economy and our society have been heading.</span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">The society
are getting to understand what has happen. Protesters around country,
galvanized by Occupy Nigeria movement already are in the know</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
You</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Nigeria</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">God bless
Africa.</span></div>
<br /><div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
</div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-3886046343278055312012-08-07T11:34:00.000-07:002012-08-07T11:34:34.180-07:00Featured: Anna Piaggi 1931-2012<div dir="ltr" style="text-align: left;" trbidi="on">
Lagos, AFRICA - This afternoon, news got to me that Fashion Icon Anna Piaggi has died at 81. I went on twitter but couldn't say anything but i saw a tweet from Arieta Mujay mourning her and how much the fashion world is going to miss her. YES I concur. We are going to miss her.<br />
<br />
I read about Anna Piaggi and her works last year, She is an inspiration, My study on Karl Lagerfeld who happen to be a mentor of mine led me to read about her story. She provided inspiration for Karl and is celebrated for her own eccentric style.<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdKOG5bOJxV1S2QguDIgJnEiiiomEd_OPUOsHQyipMq6kT0C5nJBjeXjzVkA6U9Fr6SWwL6vr8LKzcTMsOolYRXYdDVQJDbsiOxy6_AJ2lcwCa1r7zDxV96rOMdOM70lGw-aU31tiNGchC/s1600/Anna-Piaggi-attends-the-G-034.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdKOG5bOJxV1S2QguDIgJnEiiiomEd_OPUOsHQyipMq6kT0C5nJBjeXjzVkA6U9Fr6SWwL6vr8LKzcTMsOolYRXYdDVQJDbsiOxy6_AJ2lcwCa1r7zDxV96rOMdOM70lGw-aU31tiNGchC/s320/Anna-Piaggi-attends-the-G-034.jpg" width="213" /></a></div>
<br />
<br />
I remember, Piaggi's vibrant dress sense (theatrical makeup and funky hats) stands her out on the front rows of Milan and Paris runway shows. Piaggi is not only an inspiration to me but also a Talisman for all those around the world who believe that fashion is a
way of life and that freedom of expression should manifest itself in
what we wear.<br />
<br />
Karl published a sketchbook of her creations and once wrote "Anna Invents Fashion". <br />
<br />
Anna, The Fashion world will miss you, We will miss your inspiration.<br />
Rest In Peace.<br />
<br />
<br />
Photo courtesy: http://www.guardian.co.uk<br />
<br />
<br /></div>BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-63110289647267454312012-08-06T07:15:00.000-07:002012-08-06T07:15:31.248-07:00Featured: KUTI performs 38000ft Airborne<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="separator" style="clear: both; text-align: center;">
Lagos, AFRICA - I have little or nothing to say as i am still in the
'aww' state. It takes someone from the KUTI family to pull this off. God
bless KLM for allowing this. Also God bless FEMI KUTI and the Positive
Force. </div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<iframe allowfullscreen='allowfullscreen' webkitallowfullscreen='webkitallowfullscreen' mozallowfullscreen='mozallowfullscreen' width='320' height='266' src='https://www.youtube.com/embed/XfQIZRnXjaQ?feature=player_embedded' frameborder='0'></iframe></div>
This is greatness. Now lets start seeing other acts perform.</div>BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-9057422860074244442012-07-30T12:37:00.003-07:002012-07-30T12:37:31.567-07:00Featured: Wedding Inspiration<div dir="ltr" style="text-align: left;" trbidi="on">
Lagos, NIGERIA - This morning after a long weekend, I was trying to get some rest and as my friends would say add a little flesh when i realized i forgot to turn off the radio of my handheld device and the red light was blinking.. I knew it would be one of my client. And behold it is my very own friend from ibadan, Heard i was coming to ibadan and got a wedding job waiting for me. So i decided to try and get some inspiration.<br />
I visited so many sites to get some, but i wasnt getting any. So i decided to just switch off my laptop and sleep when a write-up popped on. Behold it was a shoot that was done for a lovely couple by <a href="http://jessicajanaephotography.blogspot.com/" target="_blank">Jessica Janae Photography</a> (Click to check her work out).<br />
<br />
Something about this shoot is<br />
The way the groom look sharp in his grey suit,checked tie and gold cufflinks to match his gold wedding band (You know how we at #RAFA love sharp looks)<br />
<br />
The sweet 'First Look' between the couple <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDf_R-NUOa6t87XRWeOPntGDNhJPt7Antti4iUieQi_hHZfngE9UNNzzlXoQAa3PSlDNzGBYjNw04ZcyQpRRzOkG3xPziGBmU1-qg7325OQlxbxPzbWumIvw-PyeKwKW5JTe7TCVhtq6bM/s1600/3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDf_R-NUOa6t87XRWeOPntGDNhJPt7Antti4iUieQi_hHZfngE9UNNzzlXoQAa3PSlDNzGBYjNw04ZcyQpRRzOkG3xPziGBmU1-qg7325OQlxbxPzbWumIvw-PyeKwKW5JTe7TCVhtq6bM/s320/3.jpg" width="213" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtoZWomn42ihy4iOWbno7A9eVLF9uJE-l0mvudtkeEy43vFgf5lQc0fc-d9WeksmMqzMEWdJ3lokidMf2WhVvbcnNnGPGVlVkcDZ8NsoeU50XkxZ34tonJtV62keAv5Dz173TckzYKhD51/s1600/10.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtoZWomn42ihy4iOWbno7A9eVLF9uJE-l0mvudtkeEy43vFgf5lQc0fc-d9WeksmMqzMEWdJ3lokidMf2WhVvbcnNnGPGVlVkcDZ8NsoeU50XkxZ34tonJtV62keAv5Dz173TckzYKhD51/s320/10.jpg" width="226" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjilpRqOARscHTwhbv9AkIRXHEY_NdcWEHVY1MuZG75NTuLSqzVLiGsPq_Bvf4E-OsOyTtdfBE_ivPAne2TcAx-ztdgJuSCexWXFKuc5H-pJ8YhRyatsO6Mrl6V4McAAAQrh1T9c1umuEjI/s1600/11.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjilpRqOARscHTwhbv9AkIRXHEY_NdcWEHVY1MuZG75NTuLSqzVLiGsPq_Bvf4E-OsOyTtdfBE_ivPAne2TcAx-ztdgJuSCexWXFKuc5H-pJ8YhRyatsO6Mrl6V4McAAAQrh1T9c1umuEjI/s320/11.jpg" width="233" /></a></div>
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Well, Just not to say too much.. You can see for yourselves<br />
The Blush Skirted wedding dress with sleeves, pink tuck detailing, intricate, sparkly belt and OMG... Pockets!<br />
And who knows a simply white room and comfy chairs would make the perfect backdrop?!<br />
Thanks to the fantastic Jessica of Jessica Janae Photography for sharing this.. Such an inspiration.<br />
So…thoughts please, I’m sure I’m not the only one blown away by this stylish shoot!<br />
<br /></div>
BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-38505715452321436062012-07-27T11:12:00.000-07:002012-07-27T11:12:33.969-07:00Featured: Fashion Critics<div dir="ltr" style="text-align: left;" trbidi="on">
<b>LAGOS, Nigeria</b> - All creative endeavours require critical feedback if they are to
develop and mature. Ancient storytellers honed their craft by observing
the reaction of their audiences. Medieval strolling players were pelted
with manure if they failed to perform well. Vaudeville artists in the
American South were physically threatened and run out of town if they
weren’t up to standard. Indeed, art, dance and literature all have, and
require, the opinion of a chorus.
<br />
It’s a tall order to expect critics to always be right in their
judgements. And there are many examples where critics have got it
completely wrong. They laughed with derision at the Impressionists and
we all know how Stravinsky was excoriated for “The Rite of Spring,”
which turned out to be the 20th century’s single most influential piece
of music. As the saying goes, critics come and go, but true creativity
is eternal.<br />
Fashion is different. We do not want eternity in a garment. We prefer
novelty. We are excited by new things that capture the moment. There
are no eternal verities in a couple of yards of fabric. And for that
reason, criticism of the kind dedicated to other arts seems preposterous
in fashion, as indeed does the title of critic. It reeks of pomposity.<br />
What is the clothes commentator to say that is not already apparent
to others? What depth is to be found in the average ready-to-wear
collection? What do the punters want to know before they go shopping, if
indeed they want any opinion at all, other than our own?<br />
<span id="ecxmore-35193"></span>Well, it seems the fashion critic has
three choices. He can buy into the bullshit and accept the whole
carnival of press handouts, photo shoots, styling gimmicks, the show and
what they say about the actual clothes. He can puncture the bullshit
and tell the truth about the lamentable standards of commercial fashion.
Or he can play the honest broker and go halfway or simply find other
things to write about such as the number of roses in a room and the
names of the front row personalities.<br />
But which do we actually want? Or is a runway video enough? And in
this era of social media, what kind of voice do we want to hear? The one
that echoes or challenges our own? Is expertise really necessary? And
what is expertise, anyway?<br />
I have been both amused and irritated over the years by fashion
academics who write unreadable piffle about a world they do not know.
Few are invited to the shows and none have gone through the
apprenticeship of watching hundreds of shows per season, some of which
are unbelievably bad. This is the equivalent of a cricket commentator
who goes only to the Oval and knows nothing of local cricket greens. Or,
worse, knows neither. The scale of comparison vital to all assessment
is missing. And no scale equals no meaning.<br />
Technology has given everybody a voice, no matter how much or how
little they know. But do we think that all voices can be equal? In the
past, there was no doubt. People wanted to know from the people who
knew. Now, anybody with a clever way with words is allowed and
encouraged to write.<br />
We all have our favourite writers and that is no bad thing. But who will be remembered and read ten years after their deaths?<br />
<br />
My answer is: nobody. Does it matter? You tell me.<br />
<br />
Colin McDowell for Business of Fashion. </div>BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com0tag:blogger.com,1999:blog-2248287508900267040.post-15043269317561506162012-05-18T12:57:00.000-07:002012-05-19T07:07:05.225-07:00Featured: Ray-Ban focus on the Eyes.<div dir="ltr" style="text-align: left;" trbidi="on">
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<br />
From the days of Bob Dylan recording in the studio, Tom cruise dancing sans pant in Risky Business, or the strokes wearing them on stage, to this present moment where every Nigerian Art wears it. It has become an identity for some aswell. But its good that we all know its undying appeal. We have to <br />
look back at the heyday of american design, in the 50s<br />
<br />
In 1952, Raymond Stegeman creative designer for Ray-Ban created Wayfarer. In an era where easthetics were paramount, the wayfarer stood out as a pair of sunglasses that instantly embodied that coolness that everyone was after. Yet it wasnt just the James Deans, Johin F. Kennedys, and Mohammed Alis of the world that flocked to Ray-Ban's designs. Everyone was picking up the shade to add a touch of accessible style to their summertime wardrobe.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisoKYYJUo3fz5Ji_SAYxdx-svLuZ0z5hHLmhokHFR6n5Uq0KiXWuArv3btITXq1VFwbLSdYxLIn3HZhitZT46F0DblHNXncidOg-gKW-_TtKDuVOUuqwDnGbKUbJN6rbkR61peoXs2pk6r/s1600/ben-ferrari-street-style-05.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisoKYYJUo3fz5Ji_SAYxdx-svLuZ0z5hHLmhokHFR6n5Uq0KiXWuArv3btITXq1VFwbLSdYxLIn3HZhitZT46F0DblHNXncidOg-gKW-_TtKDuVOUuqwDnGbKUbJN6rbkR61peoXs2pk6r/s320/ben-ferrari-street-style-05.jpg" width="252" /></a>As trends have faded in and out, the wayfarer has maintained a constant presence. Look around! Sure it'll disappear for a few months here and there, but always comes back as strong as ever. While the original design is inarguably timeless, Ray-Ban has recently begun to offer a few update models for the modern fashionable peeps, including slimmed down design, round and square versions, as well as a folding option. But dont worry, the original wayfarer is always available, so you can continually keep it classic...<br />
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Rafastylists,<br />
<br />
Stay Blessed.</div>BanjiRafahttp://www.blogger.com/profile/08397294580914454642noreply@blogger.com1