Yearly Archives: 2013

Dan Kervick: Did the House of Representatives Just (Unintentionally) Eliminate the Debt Ceiling?

My fellow NEP blogger Joe Firestone wrote recently about House Resolution 807, the Full Faith and Credit Act, which was passed on May 9th by the US House of Representatives. The supposed purpose of the act is to prevent default on the public debt as a result of the debt ceiling… But if I am not mistaken, this act would provide the Secretary of the Treasury with the power to meet all US spending obligations, and effectively eliminate the debt ceiling as a serious political and operational consideration going forward.

Nathaniel Cline and Nathan Tankus: Fiscal Systems, Organizational Capacity, and Crisis: A Political Balance of Payments Approach

In the preface to the forthcoming Festschrift to Alain Parguez, Mosler argues that in the mid 1990s he thought, “the theory of the monetary circuit was correct to the point of being entirely beyond dispute”. However, he also argues that the theory “could be further enhanced by starting from the beginning”. This beginning for Mosler was of course why the workers accepted the units of a currency as payment for their labor services. His answer (which is quite well known among heterodox economists by now) was that imposed debts denominated in that unit of account, give it’s units value; in other words taxes.

This is an important part of the story, but we would argue it is in fact not the beginning. The true beginning to the circuit is the question of where people and organizations gain the ability to tax.

David Dayen: Hedgies Bet on Fannie/Freddie Status Quo

The new CBO budget projections showing debt stabilization over the next decade and a reduction of the expected FY 2013 deficit to $642 billion hasn’t been deemed by Washington as a “scandal,” although falling deficits amid high unemployment and below-trend growth is actually, you know, a bit scandalous. But even more unremarked upon is one of the primary reasons for this near-term deficit drop, mentioned in passing by CBO on page 1:

CBO’s estimate of the deficit for this year is about $200 billion below the estimate that it produced in February 2013, mostly as a result of higher-than-expected
revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac.

Links 5/16/13

Voices of the Harmed Borrowers on Rust Consulting

Checking the queues, I keep noticing Rust harmed borrowers returning to comment on the threads for the three posts Yves did on Rust and the OCC (here, here, and here). It’s almost like they have no other place to tell their stories! Incredible though that may seem.

So I thought I would collect all their comments into a single post, most importantly to show the harmed borrowers that there was a place where they were heard, and to serve as a resource for decision makers,* and possibly to serve as the basis for further analysis at NC. I would also like to ask any Rust employees who encounter this post to read the whole thing, and to reflect.

Europe’s depression deepens

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

Not that it should be a surprise to most MB readers, but the economic data coming out of nations within the Eurozone is once again “worse than expected”. Last night it started with Italy:

Nathan Tankus: The Transit Coup – How Robber Barons got New York City to Bail Out Their Subway Lines.

By Nathan Tankus, a student and research assistant at the University of Ottawa. You can follow him on Twitter at @NathanTankus

Since the Reagan/Thatcher era, it is common to view politics over infrastructure as simply a battle between right wing forces attempting to privatize infrastructure and others trying to defend it (I covered the latest attack by President Obama on the TVA). However, this is only the recent history of United States infrastructure policy.

Richard Alford: The Problem of Central Banks With Multiple Goals and Few Tools

By Richard Alford, a former New York Fed economist. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side.

Current monetary policymakers (largely economists) have designed and employed macroeconomic models and a policy framework that allow only one goal for central banks: price stability. They did not solve the problem of how to allocate scare resources (in this case limited policy tools) in pursuit of competing ends, e.g., stable prices, full employment, sustainable growth, financial stability, external balance.

Links 5/15/13

Josh Rosner on How Dodd Frank Institutionalizes Too Big to Fail

Josh Rosner of Graham Fisher testifies before a subcommittee of the House Financial Services committee today on why Dodd Frank has not ended too big to fail, but also has managed to entrench the megafirms’ advantaged position.

Attacking Iran’s Nuclear Sites Would be Sheer Madness

By Claude Salhani, journalist, author and political analyst based in Beirut, specializing in the Middle East, politicized Islam and terrorism. He is also the former editor of the Middle East Times and. C the former International Editor with United Press International and also ran UPI’s Terrorism & Security Desks. Cross posted from OilPrice

A timely article by Wade Stone for Global Research examines what would happen to the oil producing nations of the Gulf in the event that Israel would target Iran’s nuclear reactors and facilities; the reply and the scenario given is nothing short of a nightmare.

Links 5/14/13

Germany pushes France toward periphery

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

You know, post June-2012, I genuinely thought we’d moved past the back and forth, chicken and egg arguments within the Eurozone, but alas, we are here again:

German central bank head Jens Weidmann has strongly criticized French efforts to reduce its budget deficit, just days after the European Union granted Paris more time to meet EU requirements. He warns that French delays could damage the credibility of euro-zone rules.

France needs more time to get its budget deficit under control.