Links: 2009-04-19

I am in Germany through Monday, so I have been reading a lot of German-language press recently.

  • Citigroup mit 1,6 Mrd. Fake Gewinn – egghat (German) Citi is using accounting tricks to goose earnings by taking an accounting gain from a loss in the value of their debt (ostensibly because they could buy the debt back and book the gain). Many have caught on to this and have discounted Citi’s earnings report. Apparently, Morgan Stanley will take a hit in the other direction because their debt has appreciated in value.
  1. bluebutt0n says

    Thought this might be an interesting addition to the links.

    Interview in Denmark in the daily, Information with Martin Wolf as translated by google

    -Financial Times editor: ‘Kapitalismens era is over’

    ‘Nothing will be as before. State will play a much bigger role than ever before, ‘says Financial Times editor, Martin Wolf

    Two of the financial world’s most unpredictable say just shapes; George Soros and Martin Wolf from Financial Times. Wolf has aroused strong feelings in the financial world with its findings on top of financial crisis in the Financial Times.
    LONDON – “He hates when people come too late. Just such a you know it.”

    Martin Wolf’s Swedish secretary Kristina, looking almost scared out when we move down on the world editor’s office at Southwark Bridge # 1

    But we come not too late.

    I’m there twenty minutes early and have to wait half an hour in the great man’s office. He is breathless when he finally arrives.

    He wasted no time.

    “Let’s get started. I have a busy day,” he says, and immediately starts to talk:

    “Capitalism in its current form is dying. It took too long for people – including myself – to realize this,” says Martin Wolf.

    He should know what he is talking about. The former senior economist at the World Bank has been the editor of the Financial Times since the mid-1980’ene. And his columnist read – and quoted – by world leaders. Angela Merkel has recently cited him. This is Gordon Brown. But that does not mean that he is right.

    The great Canadian economist John Kenneth Galbraith once said that in “Hell is a special department for economists when they read their predictions up.” In other words, economists have previously been mistaken. So why should we believe Martin Wolf’s forecast?

    “It is nothing that is secure in this world. To predict global economic development is much more difficult than meteorology. There are a few variables in a weather forecast. In the economic market, there are millions of agents. But what I am saying is The existing system can not survive in its current form. The State will play a larger role than ever before. It has nothing to do with confidence and faith. In contrast to before the markets react positively to government intervention. It’s new – indeed, almost revolutionary “says Martin Wolf.

    On his bookshelf are long rows of scholarly books. But the book lying on his desk is not a report from the World Bank or any financial statements of Royal Bank of Scotland, but Karl Marx ‘famous capital.

    “Karl Marx had great insight. But it is too early to say whether he was right.”

    ‘We live in a new world’
    Wolf has shown clear read on the lesson, and correspond promptly to questions about the German champion thinking.

    Karl Marx predicted that there would be greater capital concentration. He predicted monopoly. He believed that the so-called profit rate would fall. Had he right?

    “It’s hard to say. There is no credible targets for profit rate. But there are monopolizing tendencies. But Marx was not the only thinker who foresaw the collapse of capitalism. Another was Austria offender Josef Schumpeter. And in many ways, he had more right” .

    Josef Schumpeter wrote in the early 1940s book Capitalism, Socialism and Democracy. Here he argued that the increased bureaucratisation of society would lead to more central planning and socialism. It looks Wolf as a realistic scenario. But in contrast to Schumpeter feared he was not the trend.

    “The move towards more regulation, as Schumpeter predicted in the 1940s is now occurring. Well, government intervention has had a renaissance, and pumped money into the economy as never before, but the most interesting is that capitalism is becoming more regulated. Who would have thought that there could be introduced rules on bonuses and that the famous and infamous hedge funds (a form of unit trusts ed.) would be state controlled? We live in a whole new world. And I see as positive. Governments have rescued economy. It is completely new. ”

    Too pessimistic
    – But is it good? Schumpeter believed that capitalism was characterized by the thriving Gründerkapitalist (entrepreneur Ed.). His fear was that increased regulation would stifle the enterprising men and women in the bureaucracy. Is it not a realistic option?

    It believes Martin Wolf does not: “I think Schumpeter was a little too pessimistic in the area. It is clear that there must be safeguards for entrepreneurs. And it will be. We have learned from past mistakes. But it has also shown that capitalism can not survive without the state. Laissez-faire capitalism, so the view is summarized in the slogan, ‘let fall what can not be’ yes, the view has suffered shipwreck. In this way, we have already moved us into the planned economy era, “says Financial Times editor.

    He looks at his watch:

    “I unfortunately have to run now. We have a busy day.”

    He turns to his desk and begins to check his emails. Audience is over, and his secretary explains apologetic – in Swedish – he is very stressful.

    “There are many in the City that are sure to Martin because he is so critical.”

    It is perhaps not surprising. To the editor of the Financial Times declares capitalism dead, giving him little friends among the needles striped gentleman on the stock exchange. The truth is amiss heard.

    1. Edward Harrison says

      bluebutt0n, that’s a good article for me to link out to tomorrow. Thanks for the tip.


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