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The Norwegian "Bubble" film

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  • Michael Hudson
    Dear Arno, Upon reflection, I don¹t like the basic sense of proportion of ³Blowing Bubbles² film. The problem is Carlotta¹s vulgar materialism. Based on
    Message 1 of 2 , Mar 2, 2012
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      The Norwegian "Bubble" film Dear Arno,
                  Upon reflection, I don’t like the basic sense of proportion of “Blowing Bubbles” film. The problem is Carlotta’s vulgar materialism.            
                  Based on her and Prof. Freeman’s studies of the S-curve life cycle of markets becoming saturated for new technology (refrigerators, computers, etc.) and then tapering off, she claims that bubbles are inevitable,  presumably as part of Schumpeterian Creative Destruction. It is all technology and markets.
                  If this is the case, where is the room for policy to make things better and avert bubbles. In my analysis, bubbles are financial. Minsky described the financial cycle as moving through three stages of increasing debt pyramiding, ending in the Ponzi phase. Given the exponential growth of debt/savings – in excess of the “real” economy’s surplus and ability to pay – this IS inevitable.
                  Like you, I wish that the policy focus of the Norwegian film had been on the single most relevant Norwegian decision to be made: what to do with the Oil Fund’s immense financial surplus. Should it be spent on the “real” economy, as China is doing with its long-term planning? Or should it be “financialized,” put in the U.S. stock, bond and derivatives market, like the unfortunate city of Vic that lost its immense payment from pre-selling electricity for a decade.
                  There IS a solution: The government could impose a Resource Rent tax, and capture the payments that Wall Street expected to get.
                  And for the Oil Fund, it could be spent in the ways we’ve discussed: investing in higher education, high technology, and what India and China are doing. And in better infrastructure. This is rejected. THAT could have been the focus of the film. Why make it in Norway at all, if the question is not posed, “If there will be bubbles, how should Norway preserve its immense oil fund?”
                  If Geoff were managing it, what would HE do?
                  Michael
    • Arno Mong Daastoel
      Dear Michael, Yes, the docu could really have made hell turn loose if they had scrutinised the policy of the worlds largest SWF (sovereign wealth fund), but I
      Message 2 of 2 , Mar 5, 2012
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        Dear Michael,

        Yes, the docu could really have made hell turn loose if they had scrutinised the policy of the world’s largest SWF (sovereign wealth fund), but I guess this was not their mission....

        While talking about this, this immense fund must really be tempting "honey" to the major political and financial “bears”. I would be very surprised if they have not spent considerable efforts trying to control and direct its policy. No wonder it is so difficult to get contrary info printed…. ;-)

        And yes, the problem with the docu is that Carlota’s techno-determinism becomes its reference frame - instead of having as power-politics as a frame: locally, nationally and internationally.

        So instead of being a political call for action the docu tends to become a paralysing techno-financial systems analysis – only pointing at “greed”, and even worse, ”the system”, as the sinners.

        Similarly: On Friday the docu was discussed here on a TV2 weekly economics program, and the editor of the weekly ‘Kapital’, was disappointed that it not point its fingers at the political decisions that led up to the crisis – both on municipal, national and international levels.

        I also missed a discussion of the economic philosophy that was behind the madness (and this is not more complex than the many financial intricacies the docu dealt with):

        After all politicians do listen to economic advisors… As far as I can remember, the only criticism of economics as a subject was Erik’s reference to real versus financial investments (?).

        But the matter goes far deeper of course, and I apologise for being repetitive, but IMHO I must again draw attention to e.g. F. List’s criticism of A. Smith’s materialistic “monetarism” (theory of exchange values - as opposed to his own theory of productive powers) – and this is a discussion with deep philosophical, religious and historical aspects, e.g. regarding the image of Man and Society.

        So, I must unfortunately conclude that the docu directed its guns in the wrong direction and shot with blanks.

        Still, it is very well worth seeing!
        Arno


        On 02.03.2012 13:10, Michael Hudson wrote:
        The Norwegian "Bubble" film Dear Arno,
                    Upon reflection, I don’t like the basic sense of proportion of “Blowing Bubbles” film. The problem is Carlotta’s vulgar materialism.            
                    Based on her and Prof. Freeman’s studies of the S-curve life cycle of markets becoming saturated for new technology (refrigerators, computers, etc.) and then tapering off, she claims that bubbles are inevitable,  presumably as part of Schumpeterian Creative Destruction. It is all technology and markets.
                    If this is the case, where is the room for policy to make things better and avert bubbles. In my analysis, bubbles are financial. Minsky described the financial cycle as moving through three stages of increasing debt pyramiding, ending in the Ponzi phase. Given the exponential growth of debt/savings – in excess of the “real” economy’s surplus and ability to pay – this IS inevitable.
                    Like you, I wish that the policy focus of the Norwegian film had been on the single most relevant Norwegian decision to be made: what to do with the Oil Fund’s immense financial surplus. Should it be spent on the “real” economy, as China is doing with its long-term planning? Or should it be “financialized,” put in the U.S. stock, bond and derivatives market, like the unfortunate city of Vic that lost its immense payment from pre-selling electricity for a decade.
                    There IS a solution: The government could impose a Resource Rent tax, and capture the payments that Wall Street expected to get.
                    And for the Oil Fund, it could be spent in the ways we’ve discussed: investing in higher education, high technology, and what India and China are doing. And in better infrastructure. This is rejected. THAT could have been the focus of the film. Why make it in Norway at all, if the question is not posed, “If there will be bubbles, how should Norway preserve its immense oil fund?”
                    If Geoff were managing it, what would HE do?
                    Michael
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