[lit-ideas] Re: Paying the bills
- From: Teemu Pyyluoma <teme17@xxxxxxxxx>
- To: lit-ideas@xxxxxxxxxxxxx
- Date: Wed, 15 Aug 2007 09:14:19 -0700 (PDT)
David Ritchie:
> This one I hope will blow over simply because I have lived in many bad
economies and I want none of it. Come back Greenspan, stand behind the
curtain one more time.<
Economist Adrian Blundell-Wignall has come up with a rather catchy diagnosis
for the current economic woes, the rolling bubble. I like it metaphorically,
although I am not quite sure how bubbles roll (or blow over for that matter).
But I also think BW is right: "The key thing in globalised financial markets
you really have to
understand is there's no such thing as a domestic monetary policy that
doesn't matter for the rest of the world. Because if you're making
interest rates very low in Japan, or making liquidity strongly
available in places like China, then in globalised financial markets
the mechanisms are there, through derivatives and swaps and so on and
so forth, to basically take advantage of those low interest rates and
low costs of borrowing around the world."
http://www.abc.net.au/pm/content/2007/s1986049.htm
And the logical conclusion is that the bubble won't really burst until it is
global in scale.
Cheers,
Teemu
Helsinki, Finland
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