Author Archives: Yves Smith
Dan Kervick: Why MMT is Not a Free Lunch
By Dan Kervick, who does research in decision theory and analytic metaphysics. Cross posted from New Economic Perspectives
A common criticism of Modern Monetary Theory is that it is a naïve doctrine of free lunches.
But this criticism misses the mark. MMT does focus a good deal of attention on the monetary system and the banking system, and on the operational mechanisms of public and private finance. But the whole point of analyzing and clarifying the monetary system is to help people see through the glare of the economy’s glittering monetary surface to the social and economic fundamentals that operate below that surface.
Read more...New Econoparody: “Oil to the World”
Readers have enjoyed past productions by Versus. Here’s their latest holiday release:
Read more...Links 12/7/12
Fiscal Cliff Propaganda Watch: Business Owner Says the Fiscal Cliff Made Him Fire His Son
The lies told to sell the chump public on the necessity of enduring cuts to the social safety net are already at a breathtaking level. Where would you like to begin? The idea that big reductions in spending (going over the edge of the world off the fiscal cliff would be horrific, while only somewhat big cuts would be salutary? That Social Security “reforms” are necessary to fix the budget? Even former budget chief Peter Orszag ‘fessed up that one was not true. Or the favorite refuge of the Republicans, that raising taxes on the wealthy will hurt job creation. Ahem, we’ve pushed the low taxes model further than any other advanced economy, and the result is crumbling infrastructure, an overpriced and mediocre health care system, and record corporate profits combined with extreme measures to pay less to workers and a lack of new investment (the corporate sector has been a net saver since the early 2000s).
The propagandizing nevertheless has gotten so shameless it appeared to be time to point out particularly egregious examples.
Read more...Bill Black: Note to Italy – Please Send Us More Saracenos
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives
Austerity has driven unemployment among young Italian adults to over 35%. The result is that Italian university graduates are emigrating. This loss of Italy’s greatest source of future productivity gains is particularly crippling because Italy has far fewer university graduates than most developed nations.
Read more...Links 12/6/12
Khuzami Deathwatch: SEC Ignores Tips About $12 Billion of Hidden Losses at Deutsche Bank
Two days ago, we said it was time to fire the SEC’s chief of enforcement Robert Khuzami, who has not provided the tough policing warranted by the biggest financial crisis in the agency’s history. We didn’t anticipate that the story of Khuzami’s negligence would blow so big so quickly. Today, the Financial Times reported that three separate whistleblowers charged that Deutsche Bank had mismarked up to $12 billion in exposures to make it look healthier in 2008 and 2009 than it was, yet the agency had not acted on these allegations. And had Deutsche carried its positions at the levels these former employees suggest was more accurate, Germany’s biggest bank may well have needed a bailout.
Read more...Econ4 Video on the Housing and Foreclosure Crisis (With Your Humble Blogger in a Supporting Role)
Econ4, which is a group of reform minded economists (that may sound like an oxymoron but it isn’t) is presenting a series of videos on major topics where it believes our policies are seriously out of whack. Their latest release is on housing and foreclosures. Your humble blogger is a participant.
Read more...Wonder Why States Are Broke? One Reason is Companies Play Them Off Against Each Other
Our states and localities are cannibalizing one another as they concoct targeted tax breaks which they use to lure corporations from their neighbors.
Read more...Satyajit Das: L’Age d’Or, Part 2 – Golden Memories
The depth of the financial crisis, concern about the security of other assets including once risk-free governments bonds and a fragile banking system prompted a flight to gold as a safe haven. The monetary policies of governments and central banks, emphasising low interest rates and printing money to restart the global economy, also underpinned the gold price.
For investors, investing in gold is not without problems.
Read more...Citi Cuts 11,000 Jobs Rather Than Lower Pay, Illustrating Rentier Capitalism in Operation
Citi is a particularly blatant example of a way of operating that has become endemic in American business: when things get tough, throw as many employees as possible under the bus, and use that to maintain or even increase the pay of the top echelon.
Read more...Links 12/5/12
Philip Pilkington: Monetary Policy and Metaphysics – How Economists Try to Naturalise Terrible Policies and Disappear Into Their Own Theories
Yves here. Philip Pilkington makes an interesting argument in this post, namely, that the method preferred among mainstream economists for managing the economy encourages investors to speculate in financial instruments rather than invest in real economy assets and projects.
Read more...The Obscenely Rich Men Bent on Shredding the Safety Net
CEOs talk about shared sacrifice, but the only thing they want to share is your retirement money with their wealthy friends.
Read more...