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05-10-2009, 11:14 AM | #1 |
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What a feeling: how emotions may yet save the economy~
What a feeling: how emotions may yet save the economy
By Chrystia Freeland Published: May 7 2009 20:35 | Last updated: May 7 2009 20:35 An influential Democrat who was also one of the world’s top-ten, highest-paid hedge fund managers last year thinks he knows which book is at the top of the White House reading list this spring: Animal Spirits, the powerful new blast of behavioural economics from Nobel prize-winner George Akerlof and Yale economist Robert Shiller. Judging by the upbeat economic message we have been hearing from the White House, the Treasury and even the Federal Reserve over the past six weeks, that is a shrewd guess. The authors argue that “we will never really understand important economic events unless we confront the fact that their causes are largely mental in nature”. Our “ideas and feelings” about the economy are not purely a rational reaction to data and experience; they themselves are an important driver of economic growth – and decline. Since mid-March President Barack Obama and his team have mounted a sophisticated effort to brighten those “ideas and feelings”, reassuring the nation with “glimmers of hope across the economy” and the assertion that “we’re starting to see progress”. The much bally-hooed stress tests – whose comprehensively leaked results were fully unveiled after the markets closed on Thursday – are both an important example of this confidence-building campaign and its toughest challenge. The sunnier rhetoric of recent weeks marked a sharp shift both from the bleak mood of the fin de regime administration of George W. Bush and from the first weeks of the Obama White House. The outgoing president’s political capital was so low in his final months in office that the mere fact of his public appearances seemed to have a depressing effect on the markets. His secretary of the Treasury, Hank Paulson, enjoyed greater confidence, but he needed to convince lawmakers the situation was dire enough to merit his $700bn Tarp programme. Likewise, Mr Obama needed the nation to be worried enough about the economy to pass his nearly $800bn stimulus plan. And too much good cheer in the first days of his administration could have wasted one of his most powerful trump cards – the country’s belief that this recession is owned by president number 43, not number 44. But once the stimulus bill was passed, the White House calculated that, as Mr Obama told the Financial Times, lawmakers and US voters had reached their limits. No new money to rev up the economy or revive the banks would be forthcoming until the president and his team could demonstrate concrete results from the first instalment. Since then Americans have been hearing a decidedly more optimistic vibe from Washington. It has seemed to work. A Google search for the term “economic recovery” turned up 6,991 references to the term in January and 7,831 in February. In the first week of May the phrase occurred 24,443 times. More traditional yardsticks show the same result. According to a recent ABC/Washington Post poll, Americans’ belief that their country is heading in the right direction has soared from 19 per cent, just before Mr Obama’s inauguration, to 50 per cent, the highest in six years. In what could be a textbook example of behavioural economics, the stock market has followed the same curve, recovering from what rightwing commentators were calling “the Obama bear market” at the beginning of the year to a healthy rally. Thursday night’s verdict on banks’ balance sheets will also be a stress test of the administration’s experiment in behavioural economics. Washington has clearly learned the lesson of one of its rare, early failures. In contrast with the disastrous media management of Treasury secretary Tim Geithner’s maiden economic speech, the results of the stress tests have been so thoroughly previewed that by Thursday financial pundits and punters seemed almost bored with the exercise. Ennui is not the same thing as conviction – one of America’s biggest money managers on Thursday described the exercise to me as “the feather tests” and it is hard to find anyone who doesn’t work for the government, or one of the banks, who believes the tests have been rigorous. But, like Washington, Wall Street really does want the scheme to work and the markets to recover. Over the next few weeks the administration will be hoping those feelings are powerful enough to drive the economic data. original article here; http://www.ft.com/cms/s/0/69bc7894-3...44feabdc0.html Copyright The Financial Times Limited 2009 |
05-10-2009, 06:41 PM | #2 |
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Re: What a feeling: how emotions may yet save the economy~
So economists are becoming spirit walkers? Getting in touch with electro-magnetic thought fields of emotional realities? Firms' quarter profits are becoming secondary to beauty and care for earth?
Yes, let's go... |
05-10-2009, 07:07 PM | #3 |
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Re: What a feeling: how emotions may yet save the economy~
Y'know ? I think We're finally starting to make a difference...
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05-10-2009, 08:08 PM | #4 |
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Re: What a feeling: how emotions may yet save the economy~
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05-10-2009, 08:55 PM | #5 | |
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Re: What a feeling: how emotions may yet save the economy~
Quote:
She was interviewed on Coast to Coast yesterday, May 9, 2009. |
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05-15-2009, 10:45 PM | #6 |
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Re: What a feeling: how emotions may yet save the economy~
Save the economy, why would anyone want to do that? Its corrupt and only serves to hinder us.
Once upon a time humans were just humans rather than capitalist pigs. Some of us worry about all the poverty going on in the world while the rest of us are worried about having enough money for a new plasma screen or investment property. The hypocrisy of some of the richest people in the world, "lets fight poverty!" How many houses do some of these people own ???? Had to feel sorry for nick cage recently having to move out of his castle cos he couldnt really afford it anymore.....poor bugger how will he survive now!?! How messed up are we as a race when some people who are in the position of saving lives are still struggling with the **** money they get while someone who plays 'make believe' in a movie for 6 months or so can effectively retire on the millions they make? monetary system....pffft, kill it. Last edited by Neo; 05-16-2009 at 02:25 AM. |
05-16-2009, 12:53 AM | #7 |
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Re: What a feeling: how emotions may yet save the economy~
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