Welling intervjuer Koo

via Zero Hedge (pdf direkte), langt og veldig bra intervju med den garva (sentral)bankieren Richard Koo.

Koo har, som det går fram i intervjuet, førstehåndskjennskap både til Feds håndtering av den latinamerikanske bankkrisen på åttitallet og til japanernes håndtering av sin krise. Som han sier, han prøvde å forklare hva som faktisk skjedde i Japan med de konvensjonelle verktøyene, uten større hell...

...Koos syn på saken føles som en syntese av teoriene til Steve Keen og Bill Mitchell, men Keen og Mitchell er teoretikere, Koo er empiriker. Koos budskap er heller ikke ulikt James Galbraiths, men med (minst) en viktig forskjell: Koo er bankmann, og tro mot sin stand bagatelliserer han bankenes rolle i å legge til rette for krisene, og sukker oppgitt over dem som vil legge skyld på dem... Galbraith er en "politisk økonom" og en sterk kritiker av bankene spesielt og finanssystemet generelt.

Utdrag fra intervjuet (Welling i fet, Koo i normal skrift):

Maybe. But with its massive store of savings, Japan didn’t have to worry about depending on the kindness of creditors in China and the Mideast as its bond rates scraped along at zero. The U.S. does.

The truth is that Japan was actually in that same precarious position, a decade ago. With Japanese government debt skyrocketing because of massive fiscal deficits, all of the ratings agencies, the IMF, the OECD — they all issued horrendous warnings against Japan. Japanese bond investors remember very well that JGBs were downgraded repeatedly, to the point where Japan’s debt was rated lower than that of Botswana, because the ratings agencies were so sure that at some point the whole thing would come crashing down and that interest rates would soar. But it never happened. And the reason is easy to understand, once you grasp the concept of a balance sheet recession. The amount of money that the government has to
borrow and spend to sustain GDP is exactly equal to the amount of excess savings generated within the private sector of the economy. So that money is actually available within the private sector, even in the U.S., even in the U.K.
And the U.S. is no longer a low savings rate country; the last statistic was over 6%, higher than Japan. What’s more, with companies also increasing their savings, there’s no “crowding out” and banks are only too happy to lend to the government, as the last borrower standing — and also because they don’t have to keep as much capital against loans to the government as they would against private sector loans, allowing the banks to rebuild their profits and balance sheets.

It sounds almost too good to be true —

It’s not. I believe that as more and more people in the U.S. realize that this is the mechanism at work, the fear of interest rates rising will be increasingly reduced, and I won’t be surprised to see long bond rates in the U.S. falling from
where they are now. In any event, whether you start with a high savings rate or a low savings rate, once a country enters a balance sheet recession because the private sector is paying down debts, you end up having excess savings in the private sector and it is those excess savings that the government has to borrow and spend. It doesn’t have to borrow externally. So the U.S. doesn’t have to borrow from China or anywhere else. But because that’s contrary to the mind set
for the last 10 or 20 years, it’s very hard for people to come around to that realization.

You spend quite a few pages of your book discussing why so many economists
haven’t seen what you see —

Well, I think it is because so-called neo-classical economics starts from the very premise that the private sector is maximizing profits and everything
is built off that premise. Besides, it was also a question of what data they have been looking at. For most of the post-war period, people were maximizing profits in the West, so no one had to look for other possibilities. But
during the Depression, and in the 1990s in Japan, the private sector was actually minimizing debt, not maximizing profits. As I wrote, people minimizing debt are never anxious to advertise that they’re effectively bankrupt. As a result, the true nature of a balance sheet recession was invisible, inaudible. Companies working
to minimize debt are the least likely to share that fact with the outside world.

Det er en ganske stor kontrast mellom dette og den hyperventileringen som får så mye spalteplass... Her er Niall Ferguson, f.eks.:

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. [Koo derimot sier: So we have a situation where fiscal policy is actually controlling the effectiveness of monetary policy. It’s a complete reversal of what almost everyone alive today learned in school — that monetary policy is the way to go.]Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

(A Greek crisis is coming to America, Niall Ferguson/Financial Times, min utheving)

...stort mer 180° fra Koos synspkt er det vel ikke mulig å komme...

To ting her: En, jeg er overbevist om at Koos versjon av hvordan systemet virker er riktig... vel, riktigST i det minste... To, Ferguson er en god talsmann for den "konvensjonelle visdom"... og på kort sikt er det den saueflokken, eh, "investorene" styrer etter... og det er den vestlige politikere må gi inntrykk av å styre etter, dersom de ønsker å bli gjenvalgt...

Men kanskje den viktigste tingen å ta med seg fra Koo er at å fikse det underliggende problemet -- for mye gjeld i privat sektor-- vil og må ta tid.

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