The Economic Culprits

The Economic Culprits
Panic is not a good adviser
Alfredo Ascanio (askain)
Published 2008-10-01 09:29 (KST)

During the crisis in the 1930s John Maynard Keynes made a critical analysis of the "laissez faire" because classical economics did not help to find a solution. So what to do for small and medium business can be reactivated.

If the capitalism (entrepreneurs economy) continues to operate the strict regulation of the state is vital, to overcome the crisis in the short term.

Businesses and consumers depend on disposable income (own income and credit). Disposable income comes from the national income.But the national income depends on the production of business and government.

Thus, if the government raises revenue with a rescue plan that is not an expense is an investment.

These resources can be used in the US because there are no “bottlenecks” that prevent this, assuming that the matter not be politicized because of the presidential campaign.

The point is that there is a variable that at the time of Keynes did not exist: the high cost of energy due to high oil prices.

The Rescue Plan should play its own role. How is the behavior of money during the rescue process? Which are the winners and losers in the short term.

Although the world now is different in the years 2008 to 1930, the self-regulation will be tested to see if it works. The crisis shows that it is necessary to do something rational.

The crisis is based on three factors: money for the rescue, time and uncertainty.

One possible culprit of the problem is the use of money in irresponsible speculation and actions to strengthen the wealth itself by relying on Wall Street.

All of this has surprised us, but the mystery is that the macro economy, says Victor Chick of Berkeley, shows a certain behavior consistent, though sometimes not to our liking.

After the Rescue Plan is necessary to analyze their effects to be able to correct in time.

In today's economy, there are many expectations and so the same people whom protest was concerned for their future. But the panic is not a good adviser.



Alfredo Ascanio is a professor of economics at Simon Bolivar University in Caracas, Venezuela.