This Real News Network interview nominally is about whether Greece should leave the Euro. But it is really about the struggle between the bondholders, who are crushing Greek democracy and society, versus the population. The interviewee Costas Lapavitsas makes an forceful case why defying the banks is the best route for Greek society, even thought the transition will also be difficult.
Read more...Rob Johnson brings a wide ranging perspective (from politics, as a former Senate staffer; from markets, as a former hedge fund manager; and an economist, by training and via his current role as head of the Institute for New Economic Thinking) to this interview on the immediate and deeper implications of the central bank intervention on behalf of the Eurozone earlier this week. Johnson is deeply skeptical both of the near and longer-term approaches taken to rescue the Euro. This talk has a particularly clear and layperson friendly discussion of the rationale for and failings of austerity.
Read more...By Philip Pilkington, a journalist and writer living in Dublin, Ireland
JK Galbraith, remarkably, regards the Federal Reserve as a largely powerless institution; he dismisses the idea that the Fed can end a recession by cutting interest rates as a “quasi-religious conviction” that “triumphs over conflicting experience.”… Because Galbraith believes monetary policy cannot increase demand, however, he has a sort of Depression-era vision of an economy in which anything that increases spending is good… And so Galbraith is oblivious to the most serious problem facing modern liberalism: reconciling social justice with full employment.
As the above, rather embarrassing quote from Paul Krugman’s review of JK Galbraith’s classic book The Affluent Society shows, neoclassical economists and neoclassically-trained central bankers have long been enamoured with monetary policy – and are generally angered when it subject to questioning. Why? Well, there are a variety of reasons, some of these are ideological (monetary policy doesn’t stink too badly of nasty government interference with the Holy Market), some of these are purely functional (the central bank has independent control over rates) and some simply have to do with making economists’ silly toy-models work (monetary policy gives neoclassicals a feeling of power over the economy they would otherwise lack).
Anyway, in the present crisis – just as in the great depression – monetary policy has proved completely ineffective. This has caused some – myself included – to question the real efficacy of monetary policy altogether, but it has others continuing the search for that silver bullet.
Read more...By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.
Simulposted at The Distributist Review
This is the second installment of a six-part interview. For the previous part, see here. Red indicates exact quotes from Hans-Hermann Hoppe’s 2001 book “Democracy: The God That Failed.”
ANDREW: Do other libertarians agree with your idea of a libertarian society?
CODE NAME CAIN: Well, we do have our differences. For example, the Cato Institute is severely compromised by numerous left-leaning libertarians such as David Boaz. The Cato tag-alongs and certain other prominent libertarians imagine that an extremely small government would be better than no government at all. They are, of course, wrong.
Read more...I’ve deliberately waited a bit before examining the remark of one Jason Barker, an employee of the New York Fed, on a New York Post article the day after the November 17 Occupy Wall Street protests. My initial negative reaction to his comment still holds.
The Post piece itself presented itself as a celebration of police bloodlust…
Read more...I suspect many Naked Capitalism readers would regard “democratic governance” as something of an oxymoron in the US. Our favorite curmudgeon, political scientist Tom Ferguson, discussed the failure of the supercommittee negotiations and what it means for politics and the economy. He sees the danger of government by technocrats, meaning experts who are really fronts for banking interests, as rising.
Read more...By Philip Pilkington, a journalist and writer living in Dublin, Ireland
We stand for the withering away of the state. At the same time we stand for the strongest state power that has ever existed. Is this “contradictory”? Yes, it is contradictory. But this contradiction fully reflects Marx’s dialectics.
– Josef Stalin in remarks to the Soviet Party congress in 1930
Such is the contorted nonsense that flows from doctrine and dogma when these become institutionalised. When dogma is confined to the armchair of the intellectual or the blackboard of the social scientist it is innocuous – simply an attempt by one individual to make sense of a world that they will never, in truth, ever make sense of. But when it comes to occupy a seat of power it becomes like a steamroller that can crush common sense and practicality in a misled attempt to change the world for the better.
Read more...Yves here. Andrew Haldane is the most important thinker, bar none, on the financial services industry today. This piece by Haldane and Vasileios Madouros, a fellow member of the Financial Stability team at the Bank of England. contains a key statement that needs to be drummed into policy makers and commentators: “Bearing risk is not, by itself, a productive activity.”
By Andrew Haldane, Executive Director, Financial Stability, Bank of England and Vasileios Madouros, Economist in the Financial Stability directorate of the Bank of England. Cross posted from VoxEU
Whilst few would argue that the financial crisis has not brought the real economy down with it, there is considerably less clarity about what the positive contribution of the financial sector is during normal times. This lead commentary in the current Vox debate on the issue focuses on the value-added of risk and government subsidies in national accounting, and makes an important distinction between risk-taking and risk management.
There is no doubting the financial sector has a significant impact on the real economy. Financial crisis experience makes this only too clear. Financial recessions are both deeper and longer-lasting than normal recessions. At this stage of a normal recession, output would be about 5% above its pre-crisis level. Today, in the UK, it remains about 3.5% below. So this much is clear: Starved of the services of the financial sector, the real economy cannot recuperate quickly.
But that does not answer the question of what positive contribution finance makes in normal, non-recessionary states. This is an altogether murkier picture. Even in concept, there is little clarity about the services that banks provide to customers, much less whether statisticians are correctly measuring those services. As currently measured, however, it seems likely that the value of financial intermediation services is significantly overstated in the national accounts.
Read more...By Mark Ames, the author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine. Cross posted from The eXiled
See the guy in the photo there, dangling an ax from his left hand? That’s Greece’s new “Minister of Infrastructure, Transport and Networks” Makis Voridis captured back in the 1980s, when he led a fascist student group called “Student Alternative” at the University of Athens law school. It’s 1985, and Minister Voridis, dressed like some Kajagoogoo Nazi, is caught on camera patrolling the campus with his fellow fascists, hunting for suspected leftist students to bash. Voridis was booted out of law school that year, and sued by Greece’s National Association of Students for taking part in violent attacks on non-fascist law students.
Read more...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
Someone has created a fabulous, richly detailed parody of Austrian economics. They call it The Daily Bell and claim that its perspective reflects Austrian economics. In reality, it satirizes faux Austrian economics’ sycophancy toward elite white-collar criminals.
I was delighted to learn that they used my recent column: The Virgin Crisis: Systematically Ignoring Fraud as a Systemic Risk as the vehicle for their send-up.
Read more...This is the last day of Naked Capitalism fundraising week. Don’t miss the chance to participate. So far, over 840 donors have already invested in our efforts to shed light on the dark and seamy corners of finance. Join us and participate via our Tip Jar, another credit card portal or by check (see here for details). Read about why we’re doing this fundraiser and our current target.
Welcome to our new guest blogger Susan of Texas, who writes at The Hunting of the Snark. Follow her on Twitter at SusanofTexas.
Mrs. John Dashwood had never been a favourite with any of her husband’s family; but she had had no opportunity, till the present, of shewing them with how little attention to the comfort of other people she could act when occasion required it.
It is a truth universally acknowledged that rising inequality and social unrest go hand in hand. Wealth and therefore power in the US are becoming concentrated in fewer and fewer hands, and the deliberate exercise of this power has created one of the highest levels of inequality in the world.
Read more...This is the last day of Naked Capitalism fundraising week. Don’t miss the chance to participate. So far, over 840 donors have already invested in our efforts to shed light on the dark and seamy corners of finance. Join us and participate via our Tip Jar, another credit card portal or by check (see here for details). Read about why we’re doing this fundraiser and our current target.
By Olafur Arnarson, an author and columnist at Pressan.is, Michael Hudson, a Professor of Economics at University of Missouri- Kansas City, and Gunnar Tomasson, a retired IMF advisor
The problem of bank loans gone bad, especially those with government-guarantees such as U.S. student loans and Fannie Mae mortgages, has thrown into question just what should be a “fair value” for these debt obligations. Should “fair value” reflect what debtors can pay – that is, pay without going bankrupt? Or is it fair for banks and even vulture funds to get whatever they can squeeze out of debtors?
The answer will depend largely on the degree to which governments back the claims of creditors. The legal definition of how much can be squeezed out is becoming a political issue pulling national governments, the IMF, ECB and other financial agencies into a conflict pitting banks, vulture funds and debt-strapped populations against each other.
This polarizing issue has now broken out especially in Iceland.
Read more...By Mark Ames, author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine who writes regularly at The Exiled.
If you’ve been reading Naked Capitalism for any period of time without giving back in donations—and most of us have been hooked from the time we discovered Yves Smith’s powerful, sharp voice and brilliant mind—then you you’ve been getting away with murder. Naked Capitalism is that rare blog that makes you smarter. Smarter about a lot of things, but primarily about Yves’ area of expertise, finance.
By a quirk of historical bad-luck, the American Left has gone two generations without understanding finance, or even caring to understand. It was the hippies who decided half a century ago that finance was beneath them, so they happily ceded the entire field—finance, business, economics, money—otherwise known as “political power”—to the other side. Walking away from the finance struggle was like that hitchhiker handing the gun back to the Manson Family.
Read more...This is Naked Capitalism fundraising week. Over 620 donors have already invested in our efforts to shed light on the dark and seamy corners of finance. Join us and participate via our Tip Jar or read about why we’re doing this fundraiser and other ways to donate, such as by check or another credit card portal, on our kickoff post and one discussing our current target.
Dean Baker is co-founder of the Center for Economic and Policy Research. He previously was a senior economist at the Economic Policy Institute and an assistant professor of economics at Bucknell University. He has a Ph.D. in economics from the University of Michigan. His latest book, The End of Loser Liberalism, has recently been released to download free of charge on the CEPR website.
Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.
Philip Pilkington: The overarching thesis of your book The End of Loser Liberalism is quite a provocative one. This isn’t just a book about economics as such. Instead, if I were to venture using a term that appears to be coming back in fashion, it’s a work of political economy. You write that the current political debate – wherein the left are seen as restricting and constraining the ‘free market’ while the right are seen as letting it free to work – is completely skewed. You write that liberals and progressives need to take a different line on this. Could you explain this basic premise in a little more detail, please?
Dean Baker: The conventional view is that conservatives place a huge value on market outcomes. It is common for progressives or liberals to deride them as “market fundamentalists”, as though they worship the market as an end in itself. By contrast, liberals/progressives are supposedly prepared to use the hand of government to override market outcomes in order to promote goals like poverty reduction or equality. I argue in the book that this view is completely wrong, and worse that it plays into the hands of the right.
I argue that the right has quite deliberately structured markets in a way that have the effect of redistributing income upward. The upward redistribution of the last three decades did not just happen, it was engineered.
Read more...This is Naked Capitalism fundraising week. Over 620 donors have already invested in our efforts to shed light on the dark and seamy corners of finance. Join us and participate via our Tip Jar or read about why we’re doing this fundraiser and other ways to donate, such as by check or another credit card portal, on our kickoff post and one discussing our current target.
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