tag:blogger.com,1999:blog-7557651362769702661.post4469842663084660126..comments2024-02-20T12:42:49.383+05:30Comments on Ugly, but Bearable: Financial Inclusiveness, Now Exclusively for You!Anonymoushttp://www.blogger.com/profile/13798639260026686429noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-7557651362769702661.post-60129796186297866852008-10-03T10:32:00.000+05:302008-10-03T10:32:00.000+05:30Well, kracker, I live in the fond hope that there ...Well, kracker, I live in the fond hope that there will be more than one person in an econ dept somewhere who would be willing to comment on my blog posts. If you're so damn lazy about signing into google, have you tried the 3rd option that blogger offers, 'Name/URL', just above 'Anonymous'? You can just type in your name there. Unless you're scared that the University of Maryland will take you down for commenting on macroeconomic matters without completing your PhD.<BR/><BR/>As for the Chinese, if they have been maintaining an artificial peg for the renminbi against the dollar, they could just stop buying up so much American debt and allow the currency to appreciate, just in case they ever end up facing issues with inflation due to rising prices of imports. <BR/><BR/>Though that does bring up a question: is inflation a major problem only for democracies?Anonymoushttps://www.blogger.com/profile/13798639260026686429noreply@blogger.comtag:blogger.com,1999:blog-7557651362769702661.post-13218343462684112452008-10-03T09:51:00.000+05:302008-10-03T09:51:00.000+05:30Ah yes but a devaluation of the dollar will also i...Ah yes but a devaluation of the dollar will also imply a devaluation of the Chinese currency whatever it is called since this is tied to a basket of currencies which is basically the dollar. Whatever happens to world trade in the next 30-50 years is going to be very interesting. <BR/><BR/>More interesting facts - the US cap on public debt is now 11.5 trillion dollars. Putting this into perspective, world GNP ~9 trillion dollars. <BR/><BR/>Somethings got to give, it would seem...<BR/><BR/>really? you cannot tell my identity what will all this talk about eco and profs in the econ dept and all?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7557651362769702661.post-65976779165634303402008-10-02T22:15:00.000+05:302008-10-02T22:15:00.000+05:30Thanks for the show of support, anon. it would hel...Thanks for the show of support, anon. it would help if I knew for sure who you were - that would narrow down which econ dept it was you were referring to.<BR/>The Chinese government owns an equity stake in Merrill through it's sovereign wealth fund. I think the equity stake is ok - at least they can throw their weight around in case those investment bankers try selling them some dodgy debt again ;-)<BR/><BR/>As for a devaluation in the dollar, it's a little ironic to think that the US was only a while ago accusing the Chinese of keeping the value of their currency artificially low which allowed them to export so much. If the dollar does get devalued and oil stays expensive, we might see a change in the pattern of world trade all over again - manufacturing might boom again in (or closer to) the US, and outsourcing jobs might get too expensive. Wonder what happens then. Maybe now is a good time to invest in Mexico...<BR/><BR/>As for Obama vs McCain, I think the world would be a much more cynical place if McCain wins. As for the economists, the subject's been getting a lot of bad press lately, so hopefully they will be able to contribute something.Anonymoushttps://www.blogger.com/profile/13798639260026686429noreply@blogger.comtag:blogger.com,1999:blog-7557651362769702661.post-62671424365042561052008-10-02T16:45:00.000+05:302008-10-02T16:45:00.000+05:30And, this particular statistic is a little alarmin...And, this particular statistic is a little alarming - China apparently owns 49% of Merrill-Lynch. I don't know what that means i.e. what exactly do they own and in what form.<BR/><BR/>But, it does make you think. If the US continues to run its trade deficit and China continues to buy up US securities, then a devaluation of the dollar is going to happen sooner or later. <BR/><BR/>One reason why Obama would be a good choice for president, is that virtually every economist is on his side, and you need some good economists to figure out how best to handle this sort of devaluation. I'm pretty sure this crisis is going to affect the trade account of the US, and it would be interesting to see how and if the crisis is dampened so as not to affect the price of the dollar.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7557651362769702661.post-24747453379588727542008-10-02T16:39:00.000+05:302008-10-02T16:39:00.000+05:30pretty much agree with everything here. The proble...pretty much agree with everything here. <BR/><BR/>The problem really lies, I think, with the general lack of regulation in the US. Companies don't like being told what to do by government in any country, but the US has always been rabidly anti-regulation.<BR/><BR/>This crisis is one of the more serious outcomes of that. In most instances where public regulation needs to be stronger - insurance, telecommunications to name two other person irritants of mine - there is a complete lack of foresight/planning. <BR/><BR/>The coolest thing is how Mccain is going to handle this, considering how he went around tearing up every regulation he saw. <BR/><BR/>And, what of 970 billion dollars? Who is going to pay for that? And that is an estimate the actual bail out may be more. <BR/><BR/>You may be interested to know that 2 profs in the econ dept have designed an auction mechanism to sell off whatever fancy financial security that people don't know the value of at the moment. And one of them has been talking to Obama. Cool, what?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7557651362769702661.post-8798831382318412132008-10-02T11:20:00.000+05:302008-10-02T11:20:00.000+05:30You don't necessarily have to be poor to be credit...You don't necessarily have to be poor to be credit- 'unworthy'. Given that most people have credit histories and a credit score, credit worthiness is not so much a question of 'do you lend or not', it's a question of 'how much should you lend, and at what rate'. Most loans would have gone to people whose credit scores and income did not warrant the amount of money they were lent - but they may have been able to pay off a smaller loan. The problem was that they were willing to borrow, and banks were willing to lend, more than they could reasonably repay given their income. <BR/>A NINJA loan doesn't mean that the borrower doesn't have a job or an income stream - it means that the lender opted not to ask for sufficient documentation of the same, instead just looking at the borrower's credit score and minimal documentation like repayment records on other debt such as credit cards. While that shows that you have a willingness to repay, that doesn't guarantee your ability to repay if the loan amount is higher. Again - those kinds of loans go to people who have already got some kind of credit history and/or debt, ie people who already are part of the financial system, not people who need to be 'included' in any way.<BR/><BR/>My point was that aiming for financial inclusiveness was not the cause of the problem. Not unless you define inclusiveness as 'making people who already have some sort of debt believe that they can keep taking on even more debt even if they can't reasonably pay it off, because that's the American Way'.Anonymoushttps://www.blogger.com/profile/13798639260026686429noreply@blogger.comtag:blogger.com,1999:blog-7557651362769702661.post-2263227467351689632008-10-01T22:53:00.000+05:302008-10-01T22:53:00.000+05:30You may be right, but it is also true that many po...You may be right, but it is also true that many poor, credit-unworthy people were given loans with cavalier ease. This NPR radio documentary talks about specific examples:<BR/><BR/>http://www.thislife.org/Radio_Episode.aspx?sched=1242<BR/><BR/>In one case, a guy was given half a million dollars without even having to prove his income.Yohanhttps://www.blogger.com/profile/14326253996680580793noreply@blogger.com