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2010-06-25

Pirate's logic

Comments on Wendy Dobson “The G8/G20 in Canada—what can we expect?” 24/06/2010, http://www.eastasiaforum.org/2010/06/24/the-g8g20-in-canada%e2%80%94what-can-we-expect/
We have heard over and over again about the imbalances and the need for rebalance.

I think the argument and stresses of international imbalances appears to be a disguised form of merchantism.

Jus consider what caused the GFC and its effects on the world economies of both the GFC causing economies and their victims. Was that the imbalances, or the so called excessive savings of those surplus countries, or the mal-practice and excessive leverage and gearing and misallocation of low cost capitals in some of the borrowing countries the sources of problems that caused the GFC?

Isn't it a pirate's logic for borrowers to say that it was the fault of those savers that lent their savings to them for them to use at their own wills? Why should people using mortgage complain and blame depositors for making the funds available for them to use?

Isn't any different to a drunk to say it was the retailer that sold the alcohol that was the problem of his being drunk?

Were they forced to borrow?

Why didn't they use the low cost capital to more productive purposes?

Didn't they need better infrastructure, like upgrading hospitals, roads and power stations?

Didn't they need to build low emission energies?

Now while it has been all too easy to argue one way or another and blame others for own problems in the wake of the GFC just a drunker could do, the originators of the GFC are not in a strong position to argue that others should save less and consume more and import more from them while their own economies reduced their imports by phenomenal percentages and caused havoc to economies over the whole world.

Isn’t it the case that the most important thing is to restore, stabilise and encourage growth in trade, while maximise world welfare by taking optimal paths of adjustment for the international economies?

Why should that necessarily be an immediate rebalance in international trade?

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