Yves here. While it’s not hard to imagine that war is bad for economies as well as living things, this post gives an overview of some of the costs that the proxy war in Ukraine is inflicting on the economy and hence on the population. Note that this tally does not include the impact of the efforts to render cities in the east uninhabitable by destroying water supplies and other critical infrastructure.
Read more...People have no money. So there’s no aggregate demand. So there’s no recovery.
Read more...The spectacle of insanely authoritarian policing in Ferguson, as well as media jitters over ISIS and ongoing reports of action in Gaza and Ukraine, has shifted attention a bit away from simply lousy economic results from Europe. That fragility could play in a nasty way into blowback from sanctions against Russia.
Read more...J.D Alt examines how far a community could get without private banks….and it’s less far than you probably think.
Read more...I have long complained that the likes of Paul Krugman have grossly misinterpreted the meaning of the term ‘liquidity trap’. These economists seem to think that we are currently in a liquidity trap despite the fact that yields on bonds are extremely low across the board.
Read more...Yves here. In contrast with the way that political repression is gradually becoming the new normal in America, Don Quijones chronicles how rapidly it is being put in place in Spain to curb protests against austerity and bank-favoring policies. The extreme form of shredding democracy to protect commercial interests was Chile, where as a writer put it, “People died so markets could be free.”
Read more...Even though there has been a big uptick in news stories on rising economic inequality, and more chatter among economists about the idea that high levels of inequality are associated with lower growth, much of the messaging has come from the Democrats desperate to use the one dog whistle that might rally their badly abused base. Even though inequality has risen under Obama, thanks to policies that favored rescuing banks and enriching the medical-industrial complex over helping ordinary citizens, the Democrats are all too willing to rely on their perceived lesser-evilism relative to the Republicans. After all, it was only Romney’s billionaire warts that kept Obama from what would otherwise have been a well-deserved 2012 defeat.
But while the Administration has been pushing inequality as a useful campaign theme (the signal was inviting Thomas Piketty to meet with Treasury Secretary Jack Lew), in parallel, it also appears that some of the expressions of concern about inequality among the policy classes are genuine.
Read more...Yves here. We’ve featured Eric Garland’s past posts on Guitar Center, a case study of how a private equity firms (originally Bain Capital, now Ares Capital as a result of a restructuring when the company was on the verge of failure) run businesses into the ground for fun and profit. Garland stresses that the assumptions that Guitar Center and its owners are touting for growth, given the state of big box retails, amount to an advanced case of magical thinking. Garland also focuses on the broader impact of the Bain/Ares misrule, namely the damage done to employees and vendors.
Read more...Yves here. I might step down the headline claim to “Ebola could be an economic black swan” but otherwise the depressing point is well taken.
Read more...n the movie “Groundhog Day,” a television weatherman, played by Bill Murray, awakes every morning at 6:00 to relive the same day. A similar sense of déjà vu has pervaded economic forecasting since the global economic crisis began a half-decade ago. Yet policymakers remain convinced that the economic-growth model that prevailed during the pre-crisis years is still their best guide, at least in the near future.
There are good reasons, beyond the repeated forecast failures, to doubt that assumption.
Read more...Yves here. Ilargi is more amped up that usual on the topic of Europe’s self-inflicted wounds resulting from joining the US in imposing so-called Tier Three sanctions against Russia. This own goal results from Europe offering itself as as economic shield, since by virtue of having its nations far more engaged in commerce with Russia than the US, it stood first in line in the event Russia decided to respond in kind. And that’s before you throw in that Europe’e economy and its banking system are in far more fragile shape than America’s.
Read more...Yves here. Robert Heilbroner described economics as the study of how society resources itself. It’s hard to think of a resourcing issue more basic than food. Not surprisingly, food and the means of producing it were the source of traditional wealth (the so-called landed aristocracy). Similarly, expropriation of rights that yeoman farmers had enjoyed, such as hunting rights and access to common pasture land, were the main devices that early industrialists used to end the farmers’ self-sufficiency and force them to sell their labor as a condition of survival. Even though similar land grabs are justified now under the idea that large-scale farming is more efficient than cultivation by smaller operators, Tim Wise contends that evidence is not conclusive, particularly in emerging economies.
Read more...Yves here. Only with the fullness of time will we know whether Ilargi’s “the end is nigh” headline will have coincided with the crack that signaled the sell-by date of the officialdom-induced post crisis rally. But Ilargi makes more interesting points than simply, as many done, point out that the bubble party has to end and the unwind is not likely to be pretty.
Read more...The Administration wants to reclassify US firms that send production offshore as “factoryless goods” producers, meaning manufacturers.
Read more...Yves here. This post looks at how little has been done in the wake of the global financial crisis is instructive because it takes an international view. The Australian writer, Catherine Cashmore, is particularly anxious about the failure to address the usually lucky country’s ginormous property bubble, and its not alone in having this problem (cue the UK, China, and Canada). It the US, although we’ve had a housing “recovery” and some markets are looking frothy, the bigger issues are the squeeze on renters as former homeowners are now leasing and the stock of rentals is tight in some markets (in part due to destruction of homes that would have been rentable in the foreclosure process due to servicer mismanagement and in some markets, due to properties being held off the market, both by servicers and by landlords who are either in the process of rehabbing them or have otherwise not leased them up). And it focuses on the elephant in the room: lousy worker wage growth.
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