Author Archives: Yves Smith

Minimum Wage Households That Get Pay Increases Typically Increase Their Borrowing Even More

The debate around Obama’s proposed minimum wage increase (when he had promised to deliver an even bigger wage rise in his first term) focuses mainly around how much economic stimulus it will provide and whether it will simply lead employers to cut worker hours (given how obscene corporate profits are, most companies have plenty of room to pay their employees more, even if their kvetching would lead you to believe otherwise. Remember, companies used to share the benefits of productivity gains with workers; it was in the later 1990s they started keeping the upside all for themselves). But a look at that question reveals what low wage workers do when they get pay increases.

Philip Pilkington: Hyperinflation! The Libertarian Fantasy That Never Occurs

By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil

While it is probably true that no one has ever gone broke underestimating the intelligence of the public, it is also true that many who try to turn a profit from stupidity often become the victims of their own nonsense. As we have discussed previously, the fear industry that has grown up since 2008 – mainly centred on the gold market – is a manifestation of this dynamic.

Links 3/5/13

Is the Eurozone Nearing a Make or Break Point?

One of the dangers of trying to understand what is going on in the Eurozone if you are a hapless but interested American isn’t simply that you’d have to be fluent in a lot of languages to keep on top of the media, but the media themselves are, as NC readers know well, not exactly reliable. Look at how much dictation from business and political leaders masquerades as news in the US. And we have a less controlled press than, say, Italy does.

So I will give readers some fresh data points and let you duke it out.

Beppe Grillo’s Parliamentarians Threaten Nuremberg Trials for Corrupt Italian Politicians

Former Italian senator Sergio De Gregorio confirmed: “The Cavaliere paid me,” he said about the €3 million he’d received in 2006 from Silvio Berlusconi. “Of course I took the money.” Frustrated with this daily display of corruption, 8.7 million angry Italians voted for Beppe Grillo’s 5-Star movement. While it wasn’t enough to govern, it was enough to give the political establishment conniptions—and show that anger and frustration finallycount.

Links 3/4/13

Student Loan Bubble So Big It’s Trumping Credit Cards as a Spending Driver

It turns out Lambert’s mother-in-law research is pretty good.

Congressmen Criticizing OCC Mortgage Settlement, While More Misrepresentations and Coverups Emerge

The Wall Street Journal today stresses that a lot of Democratic congressmen are unhappy about the botched settlement process but are unlikely to do more than beef because the new Comptroller of the Currency, Tom Curry, was selected by Obama.

But the more people poke at the settlement, the more creepy crawlies emerge.

Mirabile Dictu! More Executive Pay Revolt as Swiss Impose Curbs

It isn’t clear how effective the pushback against stratospheric top-level compensation will be, but the howls in the European media suggests that the corporate overlords really are concerned.

Links 3/3/13

US Climate Policy: Take Five

By James K. Boyce, who teaches economics at the University of Massachusetts, Amherst and whose latest book is Economics, the Environment and Our Common Wealth. Cross posted from Triple Crisis

“For the sake of our children and our future, we must do more to combat climate change.” These words in President Obama’s State of the Union address came as music to the ears of environmentalists. Do they herald a real effort to break the climate policy impasse in Washington?

Links 3/2/13