Category Archives: Macroeconomic policy

Yanis Varoufakis: The Game of the Two Marios

Yves here. Yanis called this post “Europe’s Modern Titanomachy: How Europe’s future is being shaped by large battles on seemingly small matters (Part C)” but that title obscures the point. His piece works though how the choices of ECB chief Mario Draghi and Italy’s prime minister Mario Monti interact with each other, and what that means for the future of the Eurozone: “Today’s Great Expectations (regarding the ECB’s intervention, banking union, Brussel’s federal moves etc.) are more likely to prive Dickensian than literal.”

Yanis Varoufakis on the Crisis in Greece

In this interview with Max Keiser, Yanis Varoufakis gives a vivid account of conditions on the ground in Greece and why he is still pessimistic for the prospects for the eurozone.

The Euro as Idealist Project or: How I Learned to Stop Worrying and Love Pragmatic Elites

By Nathan Tankus,s a member of Occupy Wall Street Alternative Banking working group. He is also deeply involved in the heterodox economics community and plans to have a PhD in economics before the decade is done. Cross posted with View From the Metropole.

In accounts of American economic history, the early days of banking are typically described as chaotic, contradictory and many decisions are depicted as awful, stupid mistakes. That period certainly included all these things, but looking at Europe now, one can’t help but feel that many back then (especially the elites) understood money better and were much better pragmatists.

Markets Applaud Draghi’s New, Improved Kick the Can Down the Road Strategy

On Thursday, ECB chief Mario Draghi announced a bond-buying program that had been largely leaked the day prior, namely that of a new bond buying program, the Outright Monetary Transactions, or OMT. Bond yields in Italy and Spain had already come down on the rumor, and stock markets around the world rallied on the news.

The enthusiasm appears overdone when you look at the sketchy details.

Spain Worse

By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness

As I wrote early last week Antonis Samaras was to spend much of the weekend in talks with Angela Merkel and Francois Hollande about the future of his nation. As the Telegraph pointed out yesterday the results were, as expected, unconvincing:

“Nonsense Economics” and the Deepening Greek Crisis

Real News Network has a sobering interview with Costas Lapavitsas,a professor at the University of London School of Oriental and African Studies, who gives an update on the political and economic situation in Greece.

Is an Anti-Austerity Alliance of Left Neo-Classicals and Post-Keynesians Possible? Is it Desirable? (Part 1)

Yves here. The discussion of tribal allegiances in economics in this post helps illustrate why it is so difficult to push back against failed ideas when they are dear to the mainstream. It is also a useful ethnographic guide.

By Michael Hoexter. Cross posted from New Economic Perspectives

I drafted the “Mixed Economy Manifesto” as one attempt to create a common basis for anti-austerity economists and non-economists to argue against, in the clearest terms possible, the waves of government spending cutbacks that are advocated by misguided elites, by the right-wing and by right-leaning neoclassical economists.

Yanis Varoufakis: How the ECB is Complicit in a Macro-Financial Debacle

Ponzi growth happens when unsustainable capital flows, wilfully predicated upon funding schemes that Reason knows to be fraudulent, give rise to large spurts of economic activity.

Ponzi austerity, in contrast, is what happens when unsustainable spending cuts, wilfully predicated upon funding schemes that Reason knows to be fraudulent, cause significant drops in economic activity.

It is an incontestable fact that Europe’s Periphery shifted from Ponzi growth to Ponzi austerity some time after the Crash of 2008.

Paul Ryan – Insider Trading and War on Medicare

Paul Ryan has become a lightening rod for controversy, both for his aggressive plans to cut Medicare and Social Security and for questions surrounding suspicious-looking trades in financial stocks that were September 18, 2008, the same day Congressional leadership was briefed about the crisis by Treasury Secretary Hank Paulson.

The Real News Network interviewed Tom Ferguson to parse out history from hype on both issues.

Draghi Continues Handwaving as EuroCrisis Worsens

Despite the high expectations, nay, demands of the Bond Gods, ECB chief Mario Draghi, who had promised to part the seas and deliver investors to a promised land of Eurotranquility, which these days means at least a few weeks of relief, instead resorted to more brave-sounding talk. Today his message was he and his fellow Eurocrats were still working on a plan to do something really big, not to worry. Markets “recoiled,” in the words of the Financial Times.

Philip Pilkington: Market Monetarism Or An Attempt to Speed Up the Decline in Real Wages

By Philip Pilkington, a writer and journalist based in Dublin, Ireland. You can follow him on Twitter at @pilkingtonphil

The so-called ‘market monetarists’ – that is, a growing pack of neoclassical economists who are advocating that central banks should try to generate inflation – are not as strange a breed as many think. Recently we compared classic deflationary monetarism with contemporary QE policies and found that they were based on the same underlying theoretical framework. We also found that the high priest of classical monetarism himself, Milton Friedman, strongly advocated inflationary monetary policies for both Japan after 1991 and the US after the stock market crash of 1929. So, it is by no means surprising that when one monetarist policy fails (I refer to QE), another will quickly be cooked up by Friedman devotees.

That is precisely the role of the market monetarists in the current policy and economic debates. They have introduced the banal notion that central banks should no longer target inflation or unemployment but instead they should focus on Nominal Gross Domestic Product (NGDP) – that is, a measure of GDP that has not been adjusted for inflation.