Comments on: FDL Book Salon Welcomes Menzie Chinn and Jeffry Frieden, Lost Decades: The Making of America’s Debt Crisis and the Long Recovery

By: darms

darms — Sun, 02 Oct 2011 05:43:45 +0000

Hi, here at the end of the world no one’s gonna see this but I will go out on a limb and say the cause of of the US debt crisis was the rating agencies rating crap securities AAA so they could be purchased by pension funds and other institutional investors. Had they not been able to abuse the AAA rating the securitization boom would not have occurred and the bubble would have been a great deal smaller. Those are the folks who need to go down…

By: Menzie D. Chinn

Menzie D. Chinn — Sat, 01 Oct 2011 23:56:20 +0000

OK, 10% implies 1.6 ppts of GDP.

By: bigbrother

bigbrother — Sat, 01 Oct 2011 23:16:16 +0000

When is the “Level Playing Field” coming?
G)

By: JW Mason

JW Mason — Sat, 01 Oct 2011 23:10:33 +0000

I don’t know how much real depreciation is feasible

I don’t mean to sound snarky, but I don’t see how it’s possible to believe that “exchange rate adjustment will be key” if you don’t have any idea how much exchange rates can actually adjust.

By: JW Mason

JW Mason — Sat, 01 Oct 2011 22:59:22 +0000

my most recent work indicates that the Marshall-Lerner conditions are more than satisfied.

Do you mean the final column of Table 1? With due respect, I think you are mistaken. The reported coefficients (0.95 for exports, 0.16 for imports) do (barely) satisfy the MLR condition *for a country with balanced trade.* But for a country that starts from the current US position of exports of 14% of GDP and imports of 18% of GDP, they do not satisfy the MLR condition, and imply that depreciation will worsen the current account. Just do the math…

By: Menzie D. Chinn

Menzie D. Chinn — Sat, 01 Oct 2011 22:59:11 +0000

Thank you Bev, for having Jeff and me on, and thanks to Mike for the great questions to start off the debate.

By: eCAHNomics

eCAHNomics — Sat, 01 Oct 2011 22:58:31 +0000

Capital intensity is a second order condition. Can’t be dispositive.

When I visited China a decade ago, we went to Chonquing, the first inland center of govt-graced econ development. In fact, I’m wearing my Stillman Museum Flying Tigers T-shirt right now. The WWWI capitol with U.S. supporting the incredibly corrupt & inept Chaing Kai Shek, what else is new! Don’t know how many more Congquing’s have been fiscally favored in the intervening decade, but must be quite a few. Days of cheap Chinese labor are far from over.

By: Scarecrow

Scarecrow — Sat, 01 Oct 2011 22:58:16 +0000

Thanks much to our authors and to Mike for responding to all our questions. Really appreciate it. Excellent discussion.

By: Menzie D. Chinn

Menzie D. Chinn — Sat, 01 Oct 2011 22:57:23 +0000

Because we promise health care, rising health care costs are an “entitlements” problem. I agree that we could certainly get more for the resources we are devoting to health care. Without the apparatus of the private health insurance firms, care could probably be delivered much more cheaply. But the capital and labor devoted to the health care system has arisen over decades, and squeezing out the rents will take lots of time.

For sure, however, implementing something like the Ryan plan (voucherizing) would take the direct costs off the government’s books, but not solve the health care cost problem at all (according to CBO), and the costs would probably shift back onto the government’s books somehow, via emergency room costs (unless we were able to credibly precommit to following the reaction at one of the Republican debates, and let those without health insurance follow nature’s course).

By: gigi3

gigi3 — Sat, 01 Oct 2011 22:56:12 +0000

“We do have elections”

That may be, BUT:

The likelihood of an honest election becomes more remote (pun intended) with each passing day. Here is Brad Friedman (Bradblog) discussing “the man in the middle” on KPFK:

http://www.bradblog.com/?p=8790