Re: Why economists do not care about high rates of unemployment w

[Doug Henwood <dhenwood@xxxxxxxxx>]

CAPM and Chicago orthodoxy, the Wall Street Journal editorial page aside,
may be looking pretty ragged, but it's interesting that the Clinton
administration contains two economists who have done a lot to shine a
light on its raggedness (Summers & Stiglitz) and they haven't done a damn
thing about it. Wall Street loves the silent depression, and one of the
reasons the markets have been so rocky over the last couple of months is
that it may be over, at least for now - unemployment is getting too low,
capacity utilization too high, and GDP growth too fast.

Doug

Doug Henwood [dhenwood@xxxxxxxxx]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)


On Tue, 12 Apr 1994 FAC_BROSSER@xxxxxxxxxxxxxxxx wrote:

> To Doug Henwood:
>      You're probably right for most.  A bango depression is what
> would probably shake many.  But I would note that there has been
> increasing awareness of the "Silent Depression" even among a lot
> of mainstream types which has raised a lot of questions, although
> the recent pickup of the US economy may reinforce complacency on
> many of their parts.  Something else that has gotten the attention
> of some of them has been all the misbehavior in the financial markets
> that you have noted on numerous nets.  CAPM and the great Finance
> Orthodoxy that depended on Rational Expectations is looking pretty
> ragged these days.  Losing a lot of money can open a few eyes,
> perhaps for some of these even more than unemployment among "them".
> Indeed this is where the nonlinear stuff has been getting a big
> opening because it offers ways of explaining these weird financial
> oscillations and also points in the direction of nonergodicity,
> uncertainty, etc., etc.  The stock market shines a light on the
> naked emperor, at least for some.
> Barkley Rosser
> James Madison University
>