Category Archives: The dismal science

Robert Wade: Elite Denial of Corruption and Inequality – World Bank Case Study

Yves here. While readers may think development policy has limited relevance to US and advanced economy readers, the IMF and World Bank have been and continue to be vehicles to make the world, particularly smaller or otherwise more influenceable regimes, more friendly to the interests of US multinationals. And at the same time US companies are taking down a record share of GDP in profits, the country’s ranking in inequality is worse than that of many developing economies. New York City is more unequal than China, and as the chart below shows, is also more unequal than Russia, famed for its oligarchs, and India, which still has hundreds of millions living in abject poverty.

So the World Bank’s efforts over time to exclude issues like corruption and inequality from its analysis have direct and obvious parallels to policy discussions here. Wade’s anecdotes of the way the World Bank refused to even allow the “c” word to be acknowledged are striking.

Why You Should Stop Worrying About Central Bank Losses

Yves here. I guarantee this post will make some readers’ heads explode. It also explains why Germany would benefit from OMT.

Nikkei Falls 6.4%, Overseas Markets Escalate Hissy Fit Over Cut in World Bank Forecasts, Fed Taper Talk

The big shortcoming being exposed by the Fed’s talk of tapering QE isn’t just that it’s premature. The central bank could have had its cake and eaten it too by using the “T” word and then in case of overreaction, sending minions out to reassure investors that it didn’t mean it, really, they just had to say it to appease the hawks (not in that formula, mind you, the mere fact of running around and looking concerned about markets having a bit of a swoon is more important than content). It’s that any QE exit subjects the Fed to conflicting objectives and Mr. Market may have finally awoken to that fact.

Sasha Breger: More Ways That Financiers Suck Wealth From Agricultural Providers (and Ultimately, You)

By Sasha Breger, a lecturer at the Josef Korbel School of International Studies at the University of Denver and author of the recent book Derivatives and Development. Her research includes global finance, derivatives, social policy, food, and farming. Cross posted from Triple Crisis

In my last two posts (http://triplecrisis.com/a-great-sucking-sound-part-2/, http://triplecrisis.com/a-great-sucking-sound-part-1/), I addressed the roles of debt, farmland acquisition, and physical commodity hoarding in helping finance siphon wealth from global agriculture. In this final post, I discuss the role of derivatives and insurance markets in this redistributive process.

Wolf Richter: Germany Grapples (Again) With The Choice Between Its Constitution And The Euro

Yves here. The consensus view among experts, despite considerable public opposition in Germany, is that the German Constitutional Court will not upend the Eurozone bailout mechanisms by ruling in favor of challenges to their legality. This confirms the policy issue that Dani Rodrik flagged in 2007: you can’t have national sovereignity, democracy, and deep integration of markets at the same time. You can have at most two of the three. Sadly, Europe looks ready to settle on only one on that list.

Richard Alford: Trust in Economists?

By Richard Alford, a former New York Fed economist. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side

The greatest deception men suffer is from their own opinions.

The supreme misfortune is when theory outstrips performance.

Leonardo da Vinci
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Nathan Tankus: Memo to Paul Krugman on the Eurozone – Read Your Own Research!

Normally, I’m a harsh critic of neoclassical economics and neoclassical economists. However, sometimes the most frustrating things about neoclassical economists is their lack of familiarity with neoclassical models (especially older ones) and current neoclassical research. Monday provided a rather extraordinary example of this trend: Paul Krugman is apparently not familiar with Paul Krugman’s research!

Dan Kervick: Do Banks Create Money from Thin Air?

Yves here. This post by Kervick is LONG, but that’s because he unpacks the “creation” of money in a step-by-step manner. Your patience will be rewarded.

Bill Black: How Elite Economic Hucksters Drive America’s Biggest Fraud Epidemics

Bill Black describes the spurious efforts to justify America’s recent fraudfests.

Bill Black: Great Moments in Nobel Prize History – 2007 Winner Pumps for Plutocracy, Billionaire CEOs

The first article in a series by Black on the remarkable, in the bad sense of the work, work by Nobel prize winners on regulation.

Nikkei Disses Third Dose of Abenomics, Falls Nearly 4%

The financial media and investors were waiting tonight for Prime Minister Abe’s latest announcement on the extreme economic sport known as Abenomics. But his new installment dashed hopes, and after a short-lived rally, the Nikkei is down over 3%. But after the wild ride since May 22, when the Japanese index plunged 7.3%, a 3% decline is coming to look almost like normal daily volatility. (Well, now that it’s down nearly 4%, it might be a beast of a different color).

Yanis Varoufakis: Mixed Messages from the IMF

Yves here. Note how the need to pretend Deutsche Bank is not undercapitalized, mentioned in passing in this post, is playing into policy.

An interview by Yanis Varoufakis, Professor of Economics at the University of Athens, with Tomas Hirst of Pieria. Cross posted from Yanis Varoufakis’ blog.

Philip Pilkington: Paul Krugman and the Fatherless Keynesians

By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil

Some decades ago the British economist Joan Robinson – one of John Maynard Keynes’ most brilliant students who helped him with the original draft of his General Theory – half-jokingly referred to some of her colleagues as “Bastard Keynesians”. These colleagues were mostly American Keynesians, but there were a few British Bastard Keynesians too – such as John Hicks, who invented the now famous ISLM diagram. What Robinson was trying to say was that these so-called Keynesians were fatherless in the sense that they should not be recognised as legitimately belonging to the Keynesian family. The Bastard Keynesians, in turn, generally assumed that this criticism implied some sort of Keynesian fundamentalism on the part of the British school.

Such a misinterpretation exists to this day. The second and third generation Bastard Keynesians – which include many of those who generally collect under the title “New Keynesian” – have reinforced this criticism.