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  Nov 20 05:21 PM
  Italian Economics Minister Giulio Tremonti was the first member of an acting government to ever open the academic year at the Catholic University in Milan. Tremonti developed the theme of his speech, "social market economy," by calling for a new economic system that allows the long-term survival of society, and described the current crisis as due to globalization. He repeated his call for dealing with the derivative bubble in the only way possible: cancel it.
  
  "If I can use an image, it is like living in a video-game, with a key difference: In a video-game you can turn it off and the game is over. This is a video-game that will not be over. And just like in a video-game, you face a monster, you beat him and you start to relax, but another one comes, bigger than the first one; thus, the first monster was the sub-prime and somehow it was managed; the second monster was the collapse of credit and it was somehow managed; the third monster is the bankruptcy of the main financial institutions and it was somehow managed; the fourth one is the collapse of the stock markets, but behind the corner there are more monsters: the credit cards, the expected corporate bankruptcies due to troubled classification of corporate bonds, and then the monster of monsters, the derivative one, where the folly of incalculable risk appears, of non-intentional but collateral effects, definable not ex ante and not manageable without procedures that could evoke in the economic realm, the old wisdom of sabbatical year."
  
  Tremonti quoted Cardinal Ratzinger in a 1985 paper, in which Ratzinger forecasted the collapse of a system based on market rules in the absence of "a discipline based on a strong ethical and religious order.. "We are in a terra incognita", Tremonti said. "In the current moment we are inside a situation characterized by big critical complexities. I said in a conference that this is not a recession cycle but a discontinuity... of a crisis that nevertheless leads to a solution, but you must go through it. I think that we must have scientific ignorance, knowing of not knowing. I think we should be diffident towards those who do not know that they do not know, those who, not having forecast the breakout of the crisis, want to explain to you how it will develop."
  
  Tremonti listed a series of key changes introduced by globalization, that caused the crisis. Among these, he mentioned the rejection of Luca Pacioli's system of "double-entry bookkeeping". Calling it a "tribute we owe to an ancient Franciscan," Tremonti said that this shift was not a simple accounting change, but "a fundamental political and moral shift." "The real account is the world of values and the economic account is the world of prices. The real account is the world of values where you see the structure, the history, the origin, the present and the future of a society, as well as its industrial and moral mission." "The crisis we are living in is the crisis of a paradigm, which in the last 10-15 years has been dominated by the ideology of demand for consumer goods, often superfluous ones, better if purchased through debt... and eventually, the crisis of positivism that, at the same time, like in an insane oblivion of natural law, has deceived us into thinking that everything could be dominated by other than what is in our tradition, in the idea of a fair order, in the view of a fair social order which inspires the magistracy of the Church. The separation of moral law and economy, the effect of positivism has produced a view of man and of society in which morality is nothing but a subjective choice, and irreducibly so. Law [has become] nothing but the exercise of command by those who detain power, justum quia jussum, and the economy is nothing but an anonymous mechanism of satisfaction of individual and irrational whims, de gustibus non disputandum est... Moral law and economy have been separated, and globalization has accelerated this process, sublimated it, and favored the illusion that the individual person can always and increasingly distinguish between good and evil without the help of moral, of tradition, [but] on the basis of pseudo-scientific abstractions rather than on the basis of historic reason, as if one could crush man, values, time, space and history".
  
  The solution to the crisis goes through a new system, that "will replace the paradigm of demand for superfluous and debt-driven consumer goods, it will be a moral, civilian and political paradigm that organizes demand on collective investments done for the common good: not for the present but for the future, and not debt-driven but made on a solid, ground-laying perspective. It will no longer be the market but individual and collective consciousness to judge power, not the other way around. One thought can inspire us on this road, an old and wise thought by Plato: `The only good currency to be changed with all others is phronesis: a practical intelligence.' Above all if it is guided by God."
  

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  • Jakester
  • 37 Comments

  Nov 20 06:08 PM
  Although I agree with much in "Invest-in-a-Farm... The new system, that "will replace the paradigm of demand for superfluous and debt-driven consumer goods, it will be a moral, civilian and political paradigm that organizes demand on collective investments done for the common good: not for the present but for the future, and not debt-driven but made on a solid, ground-laying perspective. It will no longer be the market but individual and collective consciousness to judge power, not the other way around" has been tried in the USSR and Cuba most notably and failed miserably.
  
  
  On Nov 20 05:21 PM Invest-In-A-Farm ! wrote:
  
  > Italian Economics Minister Giulio Tremonti was the first member of
  > an acting government to ever open the academic year at the Catholic
  > University in Milan. Tremonti developed the theme of his speech,
  > "social market economy," by calling for a new economic system that
  > allows the long-term survival of society, and described the current
  > crisis as due to globalization. He repeated his call for dealing
  > with the derivative bubble in the only way possible: cancel it.
  >
  >
  > "If I can use an image, it is like living in a video-game, with a
  > key difference: In a video-game you can turn it off and the game
  > is over. This is a video-game that will not be over. And just like
  > in a video-game, you face a monster, you beat him and you start to
  > relax, but another one comes, bigger than the first one; thus, the
  > first monster was the sub-prime and somehow it was managed; the second
  > monster was the collapse of credit and it was somehow managed; the
  > third monster is the bankruptcy of the main financial institutions
  > and it was somehow managed; the fourth one is the collapse of the
  > stock markets, but behind the corner there are more monsters: the
  > credit cards, the expected corporate bankruptcies due to troubled
  > classification of corporate bonds, and then the monster of monsters,
  > the derivative one, where the folly of incalculable risk appears,
  > of non-intentional but collateral effects, definable not ex ante
  > and not manageable without procedures that could evoke in the economic
  > realm, the old wisdom of sabbatical year."
  >
  > Tremonti quoted Cardinal Ratzinger in a 1985 paper, in which Ratzinger
  > forecasted the collapse of a system based on market rules in the
  > absence of "a discipline based on a strong ethical and religious
  > order.. "We are in a terra incognita", Tremonti said. "In the current
  > moment we are inside a situation characterized by big critical complexities.
  > I said in a conference that this is not a recession cycle but a discontinuity...
  > of a crisis that nevertheless leads to a solution, but you must go
  > through it. I think that we must have scientific ignorance, knowing
  > of not knowing. I think we should be diffident towards those who
  > do not know that they do not know, those who, not having forecast
  > the breakout of the crisis, want to explain to you how it will develop."
  >
  >
  > Tremonti listed a series of key changes introduced by globalization,
  > that caused the crisis. Among these, he mentioned the rejection of
  > Luca Pacioli's system of "double-entry bookkeeping". Calling it a
  > "tribute we owe to an ancient Franciscan," Tremonti said that this
  > shift was not a simple accounting change, but "a fundamental political
  > and moral shift." "The real account is the world of values and the
  > economic account is the world of prices. The real account is the
  > world of values where you see the structure, the history, the origin,
  > the present and the future of a society, as well as its industrial
  > and moral mission." "The crisis we are living in is the crisis of
  > a paradigm, which in the last 10-15 years has been dominated by the
  > ideology of demand for consumer goods, often superfluous ones, better
  > if purchased through debt... and eventually, the crisis of positivism
  > that, at the same time, like in an insane oblivion of natural law,
  > has deceived us into thinking that everything could be dominated
  > by other than what is in our tradition, in the idea of a fair order,
  > in the view of a fair social order which inspires the magistracy
  > of the Church. The separation of moral law and economy, the effect
  > of positivism has produced a view of man and of society in which
  > morality is nothing but a subjective choice, and irreducibly so.
  > Law [has become] nothing but the exercise of command by those who
  > detain power, justum quia jussum, and the economy is nothing but
  > an anonymous mechanism of satisfaction of individual and irrational
  > whims, de gustibus non disputandum est... Moral law and economy have
  > been separated, and globalization has accelerated this process, sublimated
  > it, and favored the illusion that the individual person can always
  > and increasingly distinguish between good and evil without the help
  > of moral, of tradition, [but] on the basis of pseudo-scientific abstractions
  > rather than on the basis of historic reason, as if one could crush
  > man, values, time, space and history".
  >
  > The solution to the crisis goes through a new system, that "will
  > replace the paradigm of demand for superfluous and debt-driven consumer
  > goods, it will be a moral, civilian and political paradigm that organizes
  > demand on collective investments done for the common good: not for
  > the present but for the future, and not debt-driven but made on a
  > solid, ground-laying perspective. It will no longer be the market
  > but individual and collective consciousness to judge power, not the
  > other way around. One thought can inspire us on this road, an old
  > and wise thought by Plato: `The only good currency to be changed
  > with all others is phronesis: a practical intelligence.' Above all
  > if it is guided by God."

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  • Smarty_Pants
  • 1130 Comments
  • My Website

  Nov 20 08:40 PM
  Well, I guess based on today's Dow close at 7552 we have a definitive answer for all those who were asking whether we had seen "the bottom".
  
  In a word: No.
  

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  • GeminiAtlas
  • 19 Comments

  Nov 21 01:43 AM
  Invest in a Farm,
  You just recited some of the phrases all the socialists use to make the "useful idiots" fall into their hands with collectivist schemes. Everything must be done "for the common good." We must sacrifice the present for "the future." USSA?...no thanks...
  Although I do agree that there is something amiss with the consumerist society and debt, I believe that current government policies foster that type of environment. Basically, the tax structure (i.e. income taxes) doesn't help. A consumption based tax would in lieu of income tax and capital gain tax would encourage savings and investments and production. This would be much more "environmently-fr... as people would want to reuse, or repair their stuff instead of throwing it out and buying a new one (because of the tax). And the Fed wants to keep the interest rates low which encourages debt spending. And of course, the big business lobby wants to keep it that way to get people to buy their crap products that have no real value. I am not laying that at the feet of capitalism (which seems to get blamed for everything bad but gets no credit for anything good), but at the feet of good ol' fashioned cronyism. If business wasn't using their crutches in congress to help them out, they would really have to compete on the open market, which means they innovate to produce goods that have real value or they fail.

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