Ragnarok Emblems Imagesize:24x24

Financial Crisis and optimism

Bella gente, nella ripresa dell'aggiornamento del blog di qualche giorno fa avevo accennato all'inenzione di scrivere un pezzo in merito all'attuale crisi finanziaria ed economica, ed ora intendo mantenere la promessa, anche se il mio non sarà un pezzo "tecnico" ma una pura riflessione personale.

Soltanto pochi mesi fa avrei dato una lettura molto diversa da quella che ho adesso della situazione today, particularly I would have given greater credence to interventions (see "state") and taken as a good example of resolving a crisis Keynesian policies of the 30s (otherwise known as New Deal ): consequently I would look favorably economic policy "expansionary" in recent weeks.
My point of view is radically changed after the meeting - thanks to Munrey Rothbard's book "The Great Depression - with the school of economics called" Austrian "(as its major exponents were Austrian immigrants in the U.S.) version and underestimated little known economic liberalism.

Now, I'm not here to give a lecture of "austroliberismo" (as as was the austromarxismo ...), I would have the necessary skills to do it, but I can tell you in brief what I understand of this school of thought.
To put it very simply, the Austrians say this:

• market economic / financial "wild", ie without external interference, there is an interest rate called the "natural" given by the time preferences of individuals (consume more today or tomorrow? And for tomorrow as I will have to consume in that time than today?)
• time preferences of individuals, consumers determine at any time of the decision of entrepreneurs how to allocate investments, a greater propensity for immediate consumption will discourage entrepreneurs from making massive investments to focus on providing current vice versa in the case of consumer preference for deferred
• the banking system, primarily central banks, with the ability to be able to provide more money than they hold as a guarantee (in any course of monetary economics teaches that the banks are governed by standing by the hope that not all depositors go to get back the money at the same time: otherwise, the failure would be inevitable), "dope" the market and in particular the level of the natural rate of interest. In fact offering much more money in loan which would be normal, contributing to artificially lower the interest rate from its equilibrium level as set by the time preferences;
• business, is "misleading" by the low rates, try to take the opportunity to invest in highly capital-intensive and returns far in the future, but the low bank rates do not really correspond to the changed conditions of consumer preferences;
• the consequence is that the industrial system, because of the "distortion" of interest rates, many more will make the necessary investments to or when the same investment policy (and costs) is unsustainable for businesses (as consumers' preferences really have not changed), or some external factor not "ingrippi" the banking system, lowering the credit of this to businesses ( credit crunch )
• the end result is - or should be - a chain of failures firms that were exposed to long-term investment more than necessary, and consequent recession is not a coincidence that even in the darkest times of crisis the industry closest to the consumer, however, go quite well, as are the longer- capital-intensive to suffer.

Here, if we compare today's realities with the postulates of the Austrians, we see many similarities, from a bank loan unbounded (with interest rates at historic lows, around 1 to 2% for many years in a row) through a policy of investment in capital goods is very high.
Therefore, if the Austrian theory is true, the proposed solutions now (as in the years after 1929) are entirely inadequate, as in some way perpetuating - this time under the umbrella of state and para-state (central banks) - l 'excess supply of credit and the removal of interest rate from its natural level: in a sense every € placed to save the system is actually a € which helped to kill and to perpetuate the crisis. According to the Austrian
the best thing to do would be to allow the crisis to develop in full, just like a disease, and to follow its course to recovery.

Now, I have not deep enough to matter - and probably will not do enough - to tell whether what I call a doctrine austroliberismo is convincing, for sure this crisis will be a good test to check the "strength" of economic laws are currently the most reliable.

Moreover, from the point of view more closely, "down to earth," I do not share the pessimism and doom hovering: a crisis like this, far from marking the end of capitalism, it shows the vitality and the ability to shake (although at cost of deep crisis) germs of policy mistakes, and then renewed. For young people like us such a situation, if properly exploited with a minimum of ingenuity, can be a great business opportunity, because many secure positions and income have failed, opening up vast grasslands for those who have good ideas and a bit of courage .

However, in the words of Gandalf the Grey in Lord of the Rings, in reference to those who complain of having been born in time "bleak"

[...] It is true for all those who live in times like these but not
up to them to decide, we can only decide what to do with the time it is granted
.

Lord Tojo