Category Archives: Currencies

Deprogramming Progressives Indoctrinated into Supporting Austerity

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. Jointly posted with New Economic Perspectives

A little bit of economics can be a truly terrible thing, for the introductory classes in micro and macro-economics are the most dogmatic and myth-filled part of the neo-liberal curriculum. Dogmas that have been falsified for 75 years (such as austerity) are taught as revealed truth. The poor indoctrinated student is then launched into the world “knowing” that austerity is the answer and that mass unemployment and prolonged recessions are small prices to be paid (by others) to achieve the holy grail of a balanced budget. Students are taught that national budgets are really just like household budgets. These dogmas are not simply false, they are self-destructive and cruel. Neo-liberal economics is so bad and has gone downhill at such a rapid rate that it now worships the economic analog to bleeding patients – austerity – as a response to a Great Recession. Millions of people are indoctrinated annually into believing this long-falsified nonsense, and that includes people who consider themselves progressives.

The Probability of Greek Exit, Revisited

Fears of an imminent Greek exit from the Eurozone have subsided, for now. This column attempts to measure the probability of a Greek exit, finding that the changing fortunes of Greek political parties, and the possibility of an early election, mean that the risk of a Greek exit may actually be quite high. It suggests that, despite investors’ efforts to measure political risk, a persistent sense of unease about the Eurozone’s future is set to continue into 2013 and that Eurozone financial assets will thus continue to embed significant risk premiums in the coming years.

Wolf Richter: Sweden’s Euro Hostility Hits A Record

As the Eurozone flails about to keep its chin above the debt crisis that is drowning periphery countries, and as the European Union struggles to duct-tape itself together with more “integration,” that is governance by unelected transnational eurocrats, Sweden is having second thoughts: never before has there been such hostility toward the euro.

Is There a Case for Optimism About the Eurozone?

I know, we don’t generally do optimism here at Naked Capitalism. And truth be told, I’m having trouble accepting the Financial Times’ John Dizard’s argument that things are going to get better in the Eurozone. Admittedly, John has a taste for investing on the wild side: he’s typically recommending exotic trades in his weekly column. But his argument isn’t based on catching a near-term trading bounce; it’s based on…..fundamentals.

Modern Money & Public Purpose: Yanis Varoufakis and Marshall Auerback on the Eurozone Crisis

One of the reasons the public knows little about economics is that most economists are lousy speakers. Part of that is their reliance on jargon, which is often shamanistic, designed to obscure rather than communicate. But the other reason is that a lot of economists don’t bother to try to be engaging.

The remarks by Yanis Varoufakis and Marshall Auerback are informative and lively, if ultimately pretty grim. The comments at YouTube are extremely positive.

Greeks Get Time but Not Money

Yves here. This post by Delusional Economics continues with his cataloguing of the slide of the Eurozone into an economic and political abyss. What is striking is the contrast between his matter of fact tone (which at this point is fully warranted, these self destructive actions have become depressingly routine) and the horror of what is happening, that millions of people are faced with desperation and are prepared to take desperate measures in retaliation.

Has Chinese Currency Manipulation Succeeded in Breaking Japanese Manufacturers?

Tonight’s Financial Times has a eye-popping story, that the survival of Sharp, one of Japan’s top consumer products manufacturers, is in doubt:

Yanis Varoufakis: The Euro Crisis as a Spectacular Political Failure

Yves here. This post is the text of a speech Yanis delivered in Melbourne at the CPA annual conference, as part of a debate with Norman Lamont, the UK’s former Chancellor of the Exchequer under John Major.

An Overlooked Currency War in Europe

Yves here. One of the not-suffiently-discussed topics in the financial media is the tug of war over currency values, with the need to do post crisis damage control as the cover. For instance, after the initial round of QE, Brazil and India complained vociferously about the dual impact of a weaker dollar and higher commodity prices (yes, Virginia, some economists do think financial speculation can influence commodity prices) on their economies. If Europe contracts while growth in the US and China are also decelerating, it isn’t hard to imagine that the currency front will heat up even more.

This piece by Daniel Gros illustrates, surprisingly, that one currency manipulator has managed to operate under the radar so far.

IMF Suddenly Decides It Might be OK to Loosen Austerity Tourniquets Now that Gangrene is Setting In

While deathbed conversions might earn you a spot in heaven in some religions, they don’t carry you very far here on Planet Earth.

Christine Lagrade has taken too small a step in the right direction far too late to do much good.

Wolf Richter: Punishment of the Spanish Political Class by the People

Spanish Prime Minister Mariano Rajoy has a singular problem: 84% of all voters have “little” or “no” confidence in him. The fate of Alfredo Perez Rubalcaba, leader of the opposition Socialist party, is even worse: 90% of all voters distrust him! Those are the two top political figures of the two major political parties, and the utterly frustrated and disillusioned Spaniards are defenestrating them both.

Spain is in Trouble

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

As I talked about yesterday the outcomes of the failing policies enacted by European leaders in the face of the economic crisis boil down to a lose-lose struggle between international creditors and national citizens.

European Optimism Fades

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

I genuinely thought the Europeans were getting somewhere in the last few weeks as I detected (or maybe that should be optimistically hoped) a change of rhetoric from some of the more hardened camps and a growing realisation that the current approach to “solving” the crisis is failing. My optimism was helped by the fact that the OMT, like the LTRO before it, has driven down sovereign yields which has given the European leaders yet another opportunity to sit down away from the fire fighting and discuss outcomes beyond a short term market window.

But alas, this is Europe and I appear to have been wrong.

Mirabile Dictu! Bloomberg Finally Notices Deposit Flight, a Major Threat to the Eurozone

On the one hand, given that the Eurozone remains a major economic and financial flashpoint, it is good to see a major news service like Bloomberg provide a lengthy report on a continuing existential threat, that of deposit flight, or as we have described it, a slow motion bank run. But it’s a bit surprising it has taken them this long to take notice.

Central Banks Versus the People

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

As you are surely aware by now, the US Federal Reserve has announced a new round of quantitative easing which like the ECB’s outright monetary transactions (OMT) is a new program of large scale asset purchases by a central bank. I thought I’d spend a bit of time today talking about these programs because once again I have noticed some large misconceptions in the media about what these operations are, and more importantly, what the likely outcome of them is.