[The rollercoaster events of the past few weeks in the global markets have shown to all that the “ghost of crisis past,” that has been haunting the advanced capitalist economies since 2007, will not likely disappear soon. Over the next months, “positive” economic data might spring up here and there, cheering markets for short periods of time – and creating traps for the small investor who hasn’t learned a lesson. But as we have understood, these bursts of optimism are quite fragile, and are followed with new, deep slumps.

Something is “broken” in the global economy, and not many are willing to discuss exactly what that is. One would have hoped that after the great destruction of value in 2007-2009, at least a few informed bodies would start a meaningful discussion regarding the root causes of the problem that has returned to haunt us.

But as a “new phase” in a global drama starts to unfold in front of our eyes, encouraging signs in this respect have appeared: economists are emphasizing more fundamental issues today, as they dare to look beyond the gaze of the myopic markets.

“With the West now in economic permafrost, paper wealth is vulnerable to loss,” say Stephen King and Karen Ward, HSBC economists, in their Aug. 23 analysis. “How the burden will be shared – between creditors and debtors, taxes and public services, shareholders and workers – remains unclear … This is no longer an issue about monetary policy and the role of central banks: in a world of winners and losers, hard political choices have to be made, yet, so far, are being avoided.”

The two economists add that the world has reached a point where central bankers are beginning to run out of power. The likely solution to the developed world’s economic difficulties requires an answer to the question of who will shoulder the cost of the crisis: that, as they emphasize, is a matter of political choice, not monetary policy.

Charles Dumas of Lombard Street Research utters the word “debt-deflation” in his Aug. 10 note – an apparent reference to a non-mainstream economist, Hyman Minsky.

We also have Stephen Lewis of Monument Securities who dares to challenge the norm. In his Aug. 19 note, Lewis says the talk over a “double-dip recession” misses the point, as the term “recession” implies cyclicality. He warns that we should be talking about a “depression,” which implies structurality. “US policy makers’ first important task now is to analyze the structural weaknesses that underlie the current malaise,” he says. “Will they do this? It seems very unlikely.”

Then, of course, we have Prof. Nouriel Roubini, who told the Wall Street Journal in an Aug. 15 interview that “Karl Marx had it right.” According to a transcript of the interview, he said more important things than that: “You cannot keep on shifting income from labor to capital without having an excess capacity and a lack of aggregate demand. That’s what has happened. We thought that markets worked. They’re not working.”

As the question of who will shoulder the burden takes the center stage, politics and rival political forces inevitably will be the focus from today on. We are sure to hear more of this type of discussion above as long as the “ghost of crisis past” urges experts to find a solution.]

I think the “ghost of crisis past” would have made a much better title, but Taylan probably wanted something that would summarize what he was trying to say in the column. As for the column itself, it is not the first one I have seen that argues that what we are seeing is much more than a cyclical downturn, and I bet it won’t be the last, either. But it is one of the neatest summaries of the main arguments of that camp I have read.

And I am sure, being a self-declared leftist, Taylan was delighted at Roubini’s words about Karl Marx. In fact, as soon as I figured what the article was about, I thought: “He should have mentioned the Roubini quote…” And he did, at the very end:)…

Speaking of Karl Marx, I have seen quite a few of his haunts during my London days, which are now coming to an end, including the pub he used to drink after long hours working at the British Museum…

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