Category Archives: Macroeconomic policy

Michael Hudson: Banks Weren’t Meant to Be Like This

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

A shorter version of this article in German will run in the Frankfurter Algemeine Zeitung on January 28. 2012

The inherently symbiotic relationship between banks and governments recently has been reversed. In medieval times, wealthy bankers lent to kings and princes as their major customers. But now it is the banks that are needy, relying on governments for funding – capped by the post-2008 bailouts to save them from going bankrupt from their bad private-sector loans and gambles.

Yet the banks now browbeat governments – not by having ready cash but by threatening to go bust and drag the economy down with them if they are not given control of public tax policy, spending and planning. The process has gone furthest in the United States.

Philip Pilkington: Is QE/ZIRP Killing Demand?

em>By Philip Pilkington, a journalist and writer living in Dublin, Ireland

Warren Mosler recently ran a very succinct account of why the Fed/Bank of England’s easy monetary policies – that is, the combination of Quantitative Easing and their Zero Interest Rate Programs – might actually be killing demand in the economy.

Warren Mosler recently ran a very succinct account of why the Fed/Bank of England’s easy monetary policies – that is, the combination of Quantitative Easing and their Zero Interest Rate Programs – might actually be killing demand in the economy.

Tom Ferguson on SOTU: New Financial Fraud Commision Could Actually Slow Down Investigations

Political scientist Tom Ferguson agreed with our dim take of the news reports last night on the formation of a “new” financial fraud commission on mortgage abuses (which is actually just part of an existing fraud commission that has done squat). He also saw the apparent co-optoins of New York’s Eric Schneiderman as an effort to rein in the attorneys general that oppose the mortgage settlement.

If you are concerned and skeptical as I am, PLEASE write or call Schneiderman’s office. While it is unlikely to derail this particular train, it does not hurt Schneiderman know that you recognize this as a likely Faustian bargain.

Reader DS sent this note as an example:

Dear Atty General Schneiderman,

Having admired the integrity with which you have supported the rule of law
related to Wall St shenanigans and the mortgage crisis, I find it deeply distressing to read the following:

http://www.nakedcapitalism.com/2012/01/is-schneiderman-selling-out-signs-up-to-co-chair-committee-designed-to-undermine-defectors-to-mortgage-settlement-deal.html

I hope/trust that you will not ‘sell out’.

You can call Schneiderman’s office at 800-771-7755 or send a message via this page.

To the Ferguson interview:

Germany Loses Its Grip

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 http://www.macrobusiness.com.au/2012/01/greece-lines-up-portugal/“>MacroBusiness.

And so we roll on…

One of the things that amazes me about the European “crisis” is how symptoms of the underlying problems of the macro-economic system that is the Eurozone get confused with the actual problem. Let’s take the current situation in Greece for example:

Lessons for Europe’s Fiscal Union from US Federalism

Yves here. Even though both writers are affiliated with the Peterson Institute, this post talks about the need for countercyclical mechanisms in the eurozone, which makes it less austerian than the prevailing line of thinking in the officialdom. But some readers will not be so keen about the worship of Hamilton.

By C Randall Henning, Professor of International Economic Relations, American University and Martin Kessler, Research Analyst, Peterson Institute of International Economics. Cross posted from VoxEU

In the last few months, several Vox columns have drawn parallels between Europe today and an emerging – and even less stable – United States in the eighteenth century. This column stresses that Europe’s leaders in search of a fiscal union need not seek to replicate the US experience but they should at least learn from it.

Greece Lines Up Portugal

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.

Another weekend…. and we are still waiting for an outcome on Greece. The chief negotiators from Institute of International Finance (IIF) have left the country yet we still haven’t heard anything that sounds remotely like a deal. FT reports that the brinkmanship hasn’t ended but there doesn’t appear to be too much wiggle room left:

Greece Poised to Default

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.

Another melee won by the ECB overnight with the LTRO once again pushing sub 3 year sovereign auctions into a “happy place”.

Satyajit Das: Europe’s The Road to Nowhere, Part II – Roadblocks Ahead

By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010)

Over the next few months, the Euro-Zone faces a number of challenges including: the implementation of the new arrangements, possible further downgrading of a number of nations, refinancing maturing debt and meeting required economic targets. There will also be complex political and social pressures.

Implementation of the new fiscal compact may not be a fait accompli.

Wolf Richter: Greece – Disagreement Everywhere, Rift in the Troika

Austerity measures are taking their daily toll on Greece. Suicides and attempted suicides have jumped by 22.5%. Unemployment rose to 18.2%. Pharmacies are having difficulties obtaining medications. More cuts are coming. If there is no agreement with the bailout Troika, Greece will default in March. But now, even the Troika is in disarray.

Germany is already in a recession too

Edward Harrison here. Happy New Year to Naked Capitalism readers. You’ve probably seen this from early in the morning: Germany printed a negative GDP growth number for Q4. Here’s what I said earlier today at Credit Writedowns about this news. As I predicted in a message to Credit Writedowns Pro subscribers on Monday, statistics have […]

Public Money for Public Purpose: Toward the End of Plutocracy and the Triumph of Democracy – Part VI

By Dan Kervick, a PhD in Philosophy and an active independent scholar specializing in the philosophy of David Hume who also does research in decision theory and analytic metaphysics. Cross posted from New Economics Perspectives.

I will conclude by proposing six social tasks for the rising generation – six challenging tasks whose successful pursuit will help us achieve a more just, equal and democratic society. It is my view that the resulting society will not only be fairer and more decent. It will also be more economically productive, and will better promote human happiness and flourishing by more effectively distributing the goods and services we produce. Most of us will be happier in such a society as well, because the practices of democratic equality do a better job satisfying the human desires for cooperation, solidarity, trust, stability and fellowship that are the foundation of the social life for which human beings are naturally framed.

Extreme laissez faire capitalism of the kind extolled off and on over the past two centuries, and increasingly preached by economists, financiers and conservative thinkers over the past four decades, is a perverse distortion of human nature, foisted upon us by cold and demented thinkers captivated by inhuman notions of efficiency and domination. In the end, it is a system that reduces each human being to an object whose value is nothing beyond what it is worth in the market. We need to restore a social balance, in which private property, entrepreneurialism and commercial activity do not dominate our lives and set all the rules for our existence, but function within a democratic social order framed by a politically coherent and effective commitment to the public good. In a democratic social order there exists an activist public sector controlling a substantial store of social goods, and channeling democratic energies and intelligence into the ambitious perfection of such goods.

The six proposed tasks are not intended to be in any way exhaustive. They all pertain to the economic sphere of life alone. But the realization of a genuinely democratic society will require efforts that transcend the economic sphere. We need to rejuvenate the democratic spirit in America, educate ourselves and our fellow citizens on the unfulfilled potentialities of democratic existence, recapture the salvageable institutions of our threatened but still existing democracy, and further expand the institutions and habits of democratic practice. There is much to be done, but the prospect of doing it is exciting.

Wray: Krugman has shined the headlights on the crucial currency issuer-currency user difference

Edward Harrison here. The post by Randall Wray below is an interesting one because it points out how the world has changed since the end of the gold standard and why the sovereign debt crisis is centered in the euro zone. While I have an Austrian bias overall, for me, MMT is the best way […]

ECB Success and Folly

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.

Yet another interesting night in Europe. Spain managed to over sell as it latest auction with €6.03 billion sold versus €3.5 billion targeted which in the current environment is seen as a good result.