A Country Boy Can Survive

"stock markets down", sings Hank Williams and he manages to capture the sentiment of our current economy.  As times get tougher and tougher, and the bad news keeps coming in bushels, many folks out there are asking themselves the question, "how to prepare for what's to come"...

Economic word of the day:

AUSTERITY

WIKI:  In economics, austerity is when a government reduces its spending and/or increases user fees to pay back creditors. Austerity is usually required when a government's fiscal deficit spending is felt to be unsustainable.

Main Entry: aus·ter·i·ty 

Pronunciation: \ȯ-ˈster-ə-tē, -ˈste-rə- also -ˈstir-ə-\

Function: noun

Inflected Form(s): plural aus·ter·i·ties

Date: 14th century

1 : the quality or state of being austere
2 a : an austere act, manner, or attitude b : an ascetic practice
3 : enforced or extreme economy

a.  reduced availability of luxuries and consumer goods, esp when brought about by government policy

b.  (as modifier) an austerity budget

 

Thousands of civil servants have marched through Athens, the Greek capital, as they went on a 24-hour strike in protest against the government's plans to freeze wages, gather more taxes and reform pensions.

The action left flights grounded and many schools and government offices closed, while public hospitals were expected to only take emergency cases.

Barnaby Phillips reports from Athens.

The Deathbed of Keynesian Economics

 The Deathbed of Keynesian Economics

 WIKI:  Keynesian economics has developed from the work of John Maynard Keynes and focused on macroeconomics in the short-run, particularly the rigidities caused when prices are fixed. It has two successors. Post-Keynesian economics is an alternative school - one of the successors to the Keynesian tradition with a focus on macroeconomics. They concentrate on macroeconomic rigidities and adjustment processes, and research micro foundations for their models based on real-life practices rather than simple optimizing models. Generally associated with Cambridge, England and the work of Joan Robinson (see Post-Keynesian economics). New-Keynesian economics is the other school associated with developments in the Keynesian fashion. These researchers tend to share with other Neoclassical economists the emphasis on models based on micro foundations and optimizing behavior, but focus more narrowly on standard Keynesian themes such as price and wage rigidity. These are usually made to be endogenous features of these models, rather than simply assumed as in older style Keynesian ones (see New-Keynesian economics).

• John Maynard Keynes
• Joan Robinson
• N. Gregory Mankiw
• Paul Krugman
• Peter Bofinger
• Joseph Stiglitz

and more on the PIIGS... and pork

From Stacy on Max Keiser's site:  ...it is American banking analysts and Bloomberg that first called them Piigs; but I might also add that the usage of the term Pork in the US is very well established and still used to this day to describe the act of feeding from the government trough . . . So, if you find the term so offensive, why don’t you focus on your own backyard and try to get the use of the phrase ‘pork’ banned in the US? Wiki on Pork Barrel

“Typically, “pork” involves funding for government programs whose economic or service benefits are concentrated in a particular area but whose costs are spread among all taxpayers.”

Sounds like it is a definition that could apply to a ECB bailout of Greece, which is perhaps why American banking analysts favor using the term, PIIGS?

The usage originated in American English.

And here is the cover art of the annual report from the Citizens Against Government Waste, they call their report, “The Pig Book”: http://www.cagw.org/reports/pig-book/2009/

Currency Devaluation:

Devaluation ..., it specifically implies an official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. In contrast, depreciation is used for the unofficial decrease in the exchange rate in a floating exchange rate system. The opposite of devaluation is called revaluation.

Crony Capitalism

 Economics is about Human Action.

Crony capitalism is a pejorative term describing an allegedly capitalist economy in which success in business depends on close relationships between businesspeople and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.
Crony capitalism is believed to arise when political cronyism spills over into the business world; self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals.
 
What is the answer to crony capitalism?  You will find that Providence points to limited state powers or you will end up with this:

 

Eurozone in February 2010 - Part 1: Who is Martin Wolf

The financial crisis of 2009 is morphing into the fiscal anxieties of 2010. This is particularly true inside the eurozone. Spreads between rates of interest on Greek bonds and German bunds touched 3.86 percentage points in late January (see chart). The risk has emerged of a self-fulfilling confidence crisis that would have dire consequences for other vulnerable members. Much attention has focused on what might happen if the crisis were not resolved, with talk of bail-outs, defaults or even exits from the euro. But what would need to be done to resolve the crisis, without such a calamity? It is the demand, stupid.

http://www.ft.com/cms/s/0/3...

Who are the PIIGS?

Senior Editor Paddy Hirsch explains why problems with certain European countries sovereign debt could blow the house down. 

Faith and liberty: the economic thought of the late scholastics By Alejandro Antonio Chafuen

Online book link is HERE.

Retirement?

Never say retire...

Read Roepke:

Economics of a Free Society