12/26/09 - the prospects of asset-backed keynsianism

treasury increases commitment to back freddie and fannie, removing any limit to the funds that would be used to support these agencies and reinforcing the administration's stake in trying to jump-start an asset-backed, comsumer-led keynsian econ revival. by stabilizing asset prices, most essentially home prices, it is hoped, will stabilize consumer spending which is the targeted engine of econ growth through the maintenance and increase of demand. demand thus leading the way to production, rather than vice versa.

the prospects of asset-backed keynsianism
a.) structurally impaired by shrinking credit available to consumers
b. the consumer is saving, repariing over-extended debt purchasings
c.) those on fixed incomes are constrained by near-0 interest rates
d.) a loss of 17 million jobs
e.) a second wave of foreclousres await with any future fise in interest rates or the ending of tax subsidies

deflation-inflateion prospects

a.) it looks like a draw
b. asset price inflation will reflect the effect of a weakening dollar, rather than a strengthening economy
c.) commodity price inflation will actually pressure corprate profits and to lead to alessening of demand for commodities. there will be little wiggle room for pass-through pricing of rising commodity costs.


capitalism's reappraisal

a.) an economic system is not a theoretical creation, it is successful insofar as it meets the needs of a society and that society's power relations between classes.

b.) capitalism exists under many different political systems or states: china, germany, japan, the us

c.) the 70s proved the vulnerabiliites of even the strongest domestic economy to extra-territorial forces, - oil shock, increasingly competitive japanese and euro imports.

d.) the domestic space was unable to remain self-regulating - the symptom was inflation

e.) neo-liberalism's reign will challenge the political space of the nation-state.

f.) capitalist success often involved the political choice to ignore social and environmental costs in the calculation of profits.