Yves here. While the impetus for Steve Keen’s post is the ECB’s latest pretense that it can and is doing something to combat deflation, he provides an excellent and short debunking of two widespread misconceptions about money and banking. The first myth is the money multiplier and the second is that reserves are the basis for bank lending.
Read more...Economists occasionally point out that societies generally move to the right during periods of sustained low growth and economic stress. Yet left-leaning advocates of low or even no growth policies rarely acknowledge the conflict between their antipathy towards growth and the sort of social values they like to see prevail. While some “the end of growth is nigh” types are simply expressing doubt that 20th century rates of increase can be attained in an era of resource scarcity, others see a low-growth future as attractive, even virtuous, with smaller, more autonomous, more cohesive communities.
Read more...Home sales have been declining since last fall and in some cases steeply, with memories of bidding wars early last year triggering wistful sighs. The sales decline continued into the summer, and indications are that they’re dragging into September as well. But the median sale price continued to rise, if at a slower rate, and in many areas has moved out of reach for the median-income household.
Read more...The IEA dropped a little bombshell yesterday by ‘fessing up that the economic prospects for Europe and China are so crappy that the outlook for oil prices is less than robust, even with the US bristling to go after its new favorite Middle Eastern nemesis, ISIS.
Read more...High unemployment and low wage growth are solvable problems. But powerful and well placed people believe it is in their interest to keep them unsolved
Read more...Yves here. The way that England’s leaders, as well as pundits and investors generally, failed to recognize that Scotland really could vote for secession, is even more significant than it seems, and as Ilargi tells us below, it’s plenty significant. As NC readers have noted, the fact that Scots have swung in favor of secession is certain to embolden other separatists. But at least as important is why events have reached this juncture.
Read more...The IMF’s two loans to Ukraine this year were clearly in violation of IMF rules. They demonstrate the degree to which the IMF is an arm of U.S. Cold War politics.
Read more...The ECB took a few surprise measures on Thursday mainly as a signal that central banks are willing to Do Something, even when sort of somethings they can do are at best unproductive. But the weak tea of lowering the benchmark rate by 10 basis points to 0.05% and announced it would be implementing a watered-down version of QE, in which it will start buying asset backed securities and covered bonds nevertheless pleased investors initially. bu the enthusiasm proved to be short lived; in the US, the modest stock market lift in the morning had gone into reverse by the close of trading. The announcement did produce one tangible positive outcome for the flagging European economy, which was to lower the value of the euro.
Read more...The somewhat peculiar results of the Challenger Labor Shortage Survey showed that 77% of the approximately 100 human resources executives polled said their companies were having difficulty filling open positions due to a shortage of available talent… But today, I ran into something that put that report in a different light, via Rebekah Campbell’s article in the New York Times, which describes her experiences in trying to rope in potential investors for her company, Posse.
Read more...Yves here. It should come as no surprise that Obama’s rhetoric on climate change is sorely out of whack with his policies. Indeed, as Michael Klare reports, there’s been enough of a economic rebound in the US to lead to more driving, and hence more oil usage. And rather than regard that as a problem, the Administration has shifted from talking up clean energy to pushing more domestic oil production.
Read more...Yves here. Mathew’s post describes the political and ideological dynamics that continue to drive failed austerity policies in Europe. But even more important, it also explains why Europe, and German leaders in particular, have fallen in line with the US and are escalating the conflict with Russia over Ukraine. As we’ve discussed, they’ve convinced themselves that Russia will suffer from the economic sanctions imposed by the US and EU before Russia can play its energy card. And some analysts further believe that Russia would not dare restrict gas supplies to Europe, that it cannot afford to lose the income.
Read more...Yves here. This post, while informative, omits a critical piece of the calculus made by the West (or at least the US, in pushing Europe to fall into line) in its escalation of the conflict in Ukraine.
Read more...Is the “Consumer Confidence” index really a good proxy for the health of “the economy”?
Read more...I would have liked to see some table pounding and shouting about pseudo-scientific constructs like the “Natural Rate of Unemployment” — what’s “natural” about it? — or a heartfelt plea for a well-funded study to find out how the permanently disemployed actually eat, and find shelter, and stay alive — System D? — or even a dim recognition that regulating the economy by throwing people out of work is just as barbaric and inhumane as the medieval remedy of bloodletting.
Read more...ECB President Mario Draghi is recognizing that the recovery in the Euro area remains uniformly weak.
Read more...