Category Archives: The dismal science

Amar Bhidé on How Following Hayek Leads to Regulating Banks Like Utilities, Looking Askance at Liquidity and Securitization

I highly recommend this short interview by John Authers of the Financial Times with Amar Bhidé, a professor at Tufts, in which he argues that a proper reading of Friedrich Hayek would lead to considerable skepticism about whether most of the changes in finance over the last three decades actually represent progress.

Tapering Talk: The Impact of Expectations of Reduced Federal Reserve Security Purchases on Emerging Markets

Yves here. This post is important because even though the Fed is focused on the impact of QE (and hence the taper) on the domestic economy, it’s been getting enough of a hard time from central bankers of leading emerging markets economies that it least has to feign concern credibly.

The Eichengreen/Gupta paper summarized in this post concludes that, quelle surprise, the countries most vulnerable to changes in Fed policy (which really means hot money in and outflows) are those with the biggest financial markets relative to GDP. Curiously, Eichengreen and Gupta fail to note that this means the orthodox advice to developing economies, that financial “deepening” is a Good Thing and therefore should be supported by government policy, in fact reduces financial stability and makes them even more vulnerable to the moods of fickle foreign investors.

Michael Hudson: Trade Advantage Replaced by Rent Extraction

An interview with 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, on the Renegade Economists radio/podcast

Steve Keen: Oh My, Paul Krugman Edition

Yves here. In some ways, I hate to be having such a run of Paul Krugman posts, but his stand on the TransPacific Partnership and his continued defense of dubious economic ideas that were long ago disproven, like loanable funds, in combination with his prominence, means the attention is well warranted.

The Eurozone: If Only It Were the 1930s

Yves here. This post looks at the strictures of the Eurozone (debt to GDP and deficit limits) and not surprisingly concludes that the supposedly independent ECB is making matters worse that a more “political,” as in growth oriented one, would. But depicting central bank independence as detrimental is a novel and important argument.

Philip Pilkington: Hjalmar Schacht, Mefo Bills and the Restoration of the German Economy 1933-1939

Yves here. I’m a big fan of economic history (and mystified that contemporary economists so rarely take interest in it). Pilkington describes an illuminating and oft-neglected chapter.

Rob Parenteau: How to Exit Austerity, Without Exiting the Euro

Yves here. This is an important post by Rob Parenteau which outlines a viable plan for subject nations austerity-afflicted Eurozone countries with reasonably-well-functioning tax bureaucracies to escape their downspiral.

Capital Inflows and Booms in Asset Prices

Yves here. This is a tidy and useful addition to the literature on how high levels of international capital flows generate financial instability.

Yanis Varoufakis Discuses Bitcoin and Litecoin on RT

Yves here. Yanis makes a couple of observations which won’t sit well with digital currency enthusiasts.

Yanis Varoufakis: What Europeans Should Know About the Current Situation in Greece

Yves here. In an interview with Edward Geelhoed, Varoufakis gives an urgent, sobering picture of the conditions in Greece, which contrasts dramatically with the claims made by Eurozone politicians.