Joe Stiglitz: Why the world economy's malaise continues

[Becky Lindroos]

This sounds very similar to what happened in the US in the 1930s.  After the crash of the stock market some inherent issues in the general economy became glaring -  1. unemployment,  2. inventory stockpiles,  and 3. deflation of debt (owe more value than borrowed, business not worth what it was, etc.).   These things didn’t cause the Great Depression but they prolonged it (in the US)  because there was so much stockpiling of inventory that many of the surviving businesses weren't even going to think about hiring additional employees for 2 or 3 years.   This created a really bad cycle of no buyers for too many products.  

I think China’s problems might be worse because apparently they can’t lay employees off  (like we did)  as they go in search of cheaper labor elsewhere.  They don’t have a clue about downsizing the output - more is still better over there (I think).  Meanwhile the inventory piles up and up and there’s a huge glut on the world market with less demand and they have to sell at reduced and further reduced prices which might not cover their debts.  

Becky 


> On Jan 14, 2016, at 3:19 PM, ish mailian <ishmailian at gmail.com> wrote:
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> Maybe this will help? 
> 
> http://www.japantimes.co.jp/news/2012/11/05/business/excess-supply-not-lack-of-demand-weighing-on-the-global-economy/#.VpganfkrIb1
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> On Thu, Jan 14, 2016 at 5:41 PM, Mike Weaver <mike.weaver at zen.co.uk> wrote:
> It's not really about production, it's about distribution. 
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> On 14/01/2016 22:12, David Morris wrote:
>> Does the article say deceased demand isn't the cause of over supply?  Since I can't read it...
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>> David Morris
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>> On Thu, Jan 14, 2016 at 4:08 PM, ish mailian <ishmailian at gmail.com> wrote:
>> OK, but if demand is not declining, the price level is not increasing, the story is supply. That's the story, Gerry. 
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>> On Thu, Jan 14, 2016 at 4:59 PM, David Morris <fqmorris at gmail.com> wrote:
>> Lack of demand is one of the basic causes of over-supply (glut), and that lack of demand might be caused by any number of things, like lack of money (liquidity). Overproduction (exceeding demand) might be another cause.  Cheap money would not be one of its causes.
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>> David Morris
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>> On Thu, Jan 14, 2016 at 3:42 PM, Robert Mahnke <rpmahnke at gmail.com> wrote:
>> When demand exceed supply, how do you distinguish between "a supply story" and a demand story?
>> 
>> On Thu, Jan 14, 2016 at 1:31 PM, ish mailian <ishmailian at gmail.com> wrote:
>> Sorry about that; I thought it was a free article. It's an excellent article. And yes, it is focused on China, but the overproduction is not just a China story. 
>> 
>> The super capacity that was built to meet the expected super demand of the developing and emerging growth economies, in China and elsewhere, is the story, a supply story. 
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>> On Thu, Jan 14, 2016 at 4:07 PM, David Morris <fqmorris at gmail.com> wrote:
>> This article is behind a paywall, but if the first two sentences portend its content, then it seems to be saying that a glut of Chinese goods is slowing growth.  More demand would be the solution to this problem.  Lack of demand is its cause.
>> 
>> David Morris
>> 
>> On Thu, Jan 14, 2016 at 2:56 PM, ish mailian <ishmailian at gmail.com> wrote:
>> Because it's true. 
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>> http://www.wsj.com/articles/glut-of-chinese-goods-pinches-global-economy-1433212681
>> 
>> On Thu, Jan 14, 2016 at 3:49 PM, Robert Mahnke <rpmahnke at gmail.com> wrote:
>> Why do you say that?
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>> On Thu, Jan 14, 2016 at 12:37 PM, ish mailian <ishmailian at gmail.com> wrote:
>> The world is not not suffering from too little demand but with too much supply and with too much capacity. 
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>> On Thu, Jan 14, 2016 at 3:00 PM, David Morris <fqmorris at gmail.com> wrote:
>> The economics of this inertia is easy to understand, and there are readily available remedies. The world faces a deficiency of aggregate demand, brought on by a combination of growing inequality and a mindless wave of fiscal austerity. Those at the top spend far less than those at the bottom, so that as money moves up, demand goes down. And countries like Germany that consistently maintain external surpluses are contributing significantly to the key problem of insufficient global demand.
>> 
>> At the same time, the U.S. suffers from a milder form of the fiscal austerity prevailing in Europe. Indeed, some 500,000 fewer people are employed by the public sector in the U.S. than before the crisis. With normal expansion in government employment since 2008, there would have been two million more.
>> 
>> On Thu, Jan 14, 2016 at 1:39 PM, Robert Mahnke <rpmahnke at gmail.com> wrote:
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>> http://www.huffingtonpost.com/joseph-e-stiglitz/world-economy-2016_b_8908560.html?utm_hp_ref=world
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