Linchpin Pro-Austerity Paper Rife with Errors; Recomputed Results Show No Growth Hit from High Government Debt
There appears to be no intellectually honest defense of austerity left standing.
Read more...Category Archives: Macroeconomic policy
Obama Honors Thatcher with TVA “Privatization” Plan, Kicks Ordinary People in the Stomach Again
Nathan Tankus is a student and research assistant at the University of Ottawa. You can follow him on Twitter at @NathanTankus
President Obama adopted a reflective tone to mark the passing of Maggie Thatcher. Commenting on her death, he stated “the world has lost one of the great champions of freedom and liberty.” In Obama’s proposed budget, we found out what the terms “freedom” and “liberty” mean: the freedom for the old to go hungry and the freedom of the poor to go cold.
Read more...Why Germany (Mistakenly) Thinks it Can Kill Its Export Markets Through Austerity and Still Prosper
I’ve mentioned repeatedly that Germany wants contradictory things: it wants to stop financing its trade partners (the periphery countries in Europe) and yet wants to continue to run large trade surpluses. I took this to be a sign of German wishful thinking, or just politicians figuring the incoherent strategy can still be maintained for the duration of their time in office.
A post by Yanis Varoufakis show that the Germans at least have better delusions that I realized.
Read more...Troika Demands Another €6 Billion from Cyprus, Making “Rescue” Bigger Than GDP
Nothing like dramatic proof that austerity is a failure
Read more...The GFC is Dead, Long Live the GFC!
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. Cross posted from MacroBusiness
PIMCO famously coined the phrase to “the new normal” to capture what it saw was a structural change to global markets in the wake of the GFC. It was to be period defined by lower returns on assets owing to a combination of delevering, deglobalization, and reregulation. Today that looks like fantasy.
Read more...Obama Moves Forward with Cutting Social Security and Medicare as We Lecture Europe Otherwise
It must be really hard to be an Obama defender these days, at least if you are not on a big corporate payroll.
Read more...Bill Black: The New York Times Thinks Bleeding Cyprus is “Strong Medicine”
Yves here. I’m overdue for a post on the propagandizing against Cyprus. Black describes one element of this barrage.
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 posed from Benzinga
I’m announcing the New York Times award for incompetence in macroeconomic reporting (IMR, pronounced like “screamer”).
Read more...Michael Hudson: Thatcher’s Legacy of Failed Privatizations
Yves here. Be warned this piece is long but very much worth your time, since it demolishes the myth of the attractiveness of privatizations by looking at its record in England, where it was first undertaken on a widespread basis.
By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is “The Bubble and Beyond.”
As in Chile, privatization in Britain was a victory for Chicago monetarism. This time it was implemented democratically. In fact, voters endorsed Margaret Thatcher’s selloff of public industries so strongly that by 1991, when she was replaced as prime minister by her own party’s John Major, only 35 percent of Britain’s voters supported the Labour Party – half the proportion registered in 1945. The Conservatives sold off public monopolies, used the proceeds to cut taxes, and put the privatized firms on a profit-making basis. Their stock prices rose sharply, making capital gains for investors whose ranks included millions of Britons who had been employees and/or customers of these enterprises.
Yet by 1997 the Conservatives were voted out of office by one of the largest margins in their history. What concerned voters were the results of privatization that Mrs. Thatcher had not warned them about
Read more...Now It’s Official: Obama Sells Catfood Futures, Um, Social Security and Medicare Cuts
There is no more pretense possible. We now have the absurd spectacle of Paul Ryan’s budget being to the left of Obama’s on the issue of Social Security and Medicare.
Read more...QE Forever?
Ambrose Evans-Pritchard, in a provocative column, argues that the monetary authorities are not going retreating from QE, and that might not be a bad thing. But in its current form, it probably is.
Read more...Euro-da-Fé
By Dan Kervick, who does research in decision theory and analytic metaphysics. Cross posted from New Economic Perspectives
(Brussels) Nonplussed by this week’s unemployment report showing the Eurozone jobless rate rising to an unprecedented 12%, members of the European Parliament and Europe’s national governments pressed ahead on Wednesday with passage of a stringent new package of austerity measures. Dubbed “hyperaustérité” or “Übersparpolitik” by its backers, the new program of ruthless cuts and social demolition promises to deliver even higher levels of joblessness, misery and hopelessness than has been achieved so far by earlier rounds of austerity.
Read more...Bill Greider on Why Paul Krugman Was So Wrong
A good piece in the Nation by Bill Greider, which focuses on Krugman’s long standing support of free trade, and how, contrary to his predictions, the results were not positive for ordinary American workers.
Read more...Richard Alford: Fed Policy – Old Wine in New Bottles
Yves here. This is an important post, in that it describes how the Fed, despite the unconventional look of some of its measures, is using more extreme variants of traditional policy approaches, and why that is not such a hot idea.
Read more...Michael Hudson Explains How Deficit Hysterics Target the Wrong Type of Debt
I was at the Atlantic Economy conference the week before last, and Michael Hudson got in one of the best quips: “Helicopter Ben has taken off and has been dropping money all over Wall Street. But he hasn’t dropped any on Main Street.” He has an informative talk with Paul Jay of Real News Network on why the fixation on public debt is wrongheaded, and we should worry about private debt instead.
Read more...Will Cyprus Be Contained? (Updated)
In March 2007, Fed chairman Ben Bernanke said that he thought the impact of losses on subprime mortgages was likely to be contained. It took five months for events to start proving him wrong. August 2007 marked the onset of the first acute phase of the global financial crisis, when the asset backed commercial paper market seized up.
Last week, in a press conference, Bernanke indicated that he thought the likelihood of the crisis in Cyprus having larger ramifications was limited, and avoided using the “c” word. But the message was similar to that of March 2007.
So are we likely to see the sort of delay between the assessment and the onset of trouble, as we did in 2007, or is Cyprus a nothingburger, as the Troika and many investors contend?
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