Getting the better of international financial markets

The bitter lesson should be clear to the entire world by now -- keep the American banks and financial institution at arms length!

The James Carville 'quote' is incorrect. Carville was intimidated by the bond market, not the stock exchange. The bond market is able to intimidate political figures such as Carville because it dictates the cost of financing government programs, by setting interest rates. Stock markets have no comparable power over what the government can do.

It's very odd to think that one would need to explain this economic distinction to an officeholder at the World Bank.

What I would really like Simon Gray to explain is why the economic advice from the World Bank always looks the same, "RAH RAH CUT THE DEFICIT", regardless of changing economic conditions. Meanwhile, the U.S., Europe, China, are all "restarting their economies" by going on massive public spending binges. Of course, that doesn't necessarily mean that everybody ought to follow suit, but let's cast off the zealotry and dogmatism, and discuss the specific reasons why one should or should not succumb to this global trend. When, if ever, does the World Bank believe that increased public spending by countries like Serbia would be appropriate?

The truth is that the US, Europa and China are all getting it wrong and Serbia should not try to emulate this mistakes.
By trying to spend their way out of this downturn they can only prolong the recovery process, thus making things worse from almost everyone's point of view. Since the depression process is the recovery process, any halting or slowing down of the process impedes the advent of recovery. The more these adjustments are delayed, the longer the depression will have to last, and the longer complete recovery is postponed. The lost decade in Japan during the 90s is a case in point.
The idea that this crisis is caused by "underconsumption" and that the way to cure the depression is to stimulate consumption expenditures is absurd.
What brought about this crisis is precisely the fact that entrepreneurial investment erroneously anticipated greater savings, and that this error is revealed by consumer's re-establishing their desired proportion of consumption. "Overconsumption" or "undersaving" has brought about the crisis, although it is hardly fair to pin the guilt on the consumer, who is simply trying to restore his preferences after the market has been distorted by bank credit.
The only way to hasten the curative process of the depression is for people to save and invest more and consume less, thereby finally justifying some of the malinvestments and mitigating the adjustments that have to be made.

The bitter lesson should be clear to the entire world by now -- keep the American banks and financial institution at arms length!

The James Carville 'quote' is incorrect. Carville was intimidated by the bond market, not the stock exchange. The bond market is able to intimidate political figures such as Carville because it dictates the cost of financing government programs, by setting interest rates. Stock markets have no comparable power over what the government can do.

It's very odd to think that one would need to explain this economic distinction to an officeholder at the World Bank.

What I would really like Simon Gray to explain is why the economic advice from the World Bank always looks the same, "RAH RAH CUT THE DEFICIT", regardless of changing economic conditions. Meanwhile, the U.S., Europe, China, are all "restarting their economies" by going on massive public spending binges. Of course, that doesn't necessarily mean that everybody ought to follow suit, but let's cast off the zealotry and dogmatism, and discuss the specific reasons why one should or should not succumb to this global trend. When, if ever, does the World Bank believe that increased public spending by countries like Serbia would be appropriate?

The truth is that the US, Europa and China are all getting it wrong and Serbia should not try to emulate this mistakes.
By trying to spend their way out of this downturn they can only prolong the recovery process, thus making things worse from almost everyone's point of view. Since the depression process is the recovery process, any halting or slowing down of the process impedes the advent of recovery. The more these adjustments are delayed, the longer the depression will have to last, and the longer complete recovery is postponed. The lost decade in Japan during the 90s is a case in point.
The idea that this crisis is caused by "underconsumption" and that the way to cure the depression is to stimulate consumption expenditures is absurd.
What brought about this crisis is precisely the fact that entrepreneurial investment erroneously anticipated greater savings, and that this error is revealed by consumer's re-establishing their desired proportion of consumption. "Overconsumption" or "undersaving" has brought about the crisis, although it is hardly fair to pin the guilt on the consumer, who is simply trying to restore his preferences after the market has been distorted by bank credit.
The only way to hasten the curative process of the depression is for people to save and invest more and consume less, thereby finally justifying some of the malinvestments and mitigating the adjustments that have to be made.