We have magneto trouble. This was how Keynes described the international economy in the early 1930s: an engine with a key part (the alternator) unable to function. (Disclosure: I only figured this out by googling “magneto trouble”) The whole engine wasn’t in tatters, but since one key part couldn’t turn, nothing worked. Reading Keynes would certainly be more fun for all of us if there weren’t so many horrific failings in the current “Grand Depression” we seem to find ourselves currently in. The only difference is that no one will make a heartwarming Christmastime movie about Lehman Brothers, a la It’s a Wonderful Life. Will the financial sector be our broken magneto? Or is our economy so much more robust and secure than in 1930 that we will be able to weather this storm without too much damage?
On a limb here: doesn’t today’s problem seem to be proving the opposite of what our current CMC dogma has told us, that the markets are capable of policing themselves? Within a week of a Karl Rove protest? Liberalism scores a bank shot off the greed of men!
That doesn’t mean Keynes isn’t my still homie. Nothing ventured, nothing gained- even if that means snapping up sub-prime securities like they are cookies at Scripps. I am especially for that expansion of government spending- you nailed that one Keynes. The problem is that I am having a hard time figuring how to use Keynes mad knowledge to our current advantage. Though I do know now that Keynes was totally not for excessive saving, but that’s ok because Americans currently have a negative savings rate on average.
A quote that was about the 1930s that feels painfully relevant today: “The worst of it is that we have one excellent excuse for doing nothing. To a large extent the cure lies outside our own power. The problem is an international one, and for a country which depends on foreign trade as much as we do there are narrow limits to what we can achieve by ourselves.”
Boo-ya! Good luck getting an I-bank job. Let’s hope Bain is looking to hire 12 kids from CMC.
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