Category Archives: Economic fundamentals

Yanis Varoufakis: Presenting an Agenda for Europe at Ambrosetti

If you followed Yanis Varoufakis before he became a household word (at least in Europe and in finance circles), you’ll recognize that he is making a layperson-friendly case for the Eurozone reforms that he, Stuart Holland, and Jamie Galbraith call A Modest Proposal. A new wrinkle is that he argues that the scarcity of bonds eligible for QE argues for one of its ideas, infrastructure spending funded by the EIB (those bonds would presumably be eligible for QE purchases).

Wolf Richter: The US Oil Bust Just Got Worse

Wolf was early to point out the disconnect between declining rig counts, which the mainstream media has touted as proof that the oil bust was about to end, and rising production. That pattern has not abated.

Michael Hudson on the IMF’s Tender Ministrations in Ukraine and Greece

This RT interview with Michael Hudson focuses on the appalling state of the Ukraine economy and the role of the IMF, both in its policy-violating rescue package there and on a more general basis.

“File Under Improving Economy, Not”

Some economic sightings from house skeptics.

Gaius Publius: Astroturf “Progressive” Support for the TPP – Meet “270 Solutions”

It’s become routine to expose some of the supposedly organic proposals that come out of the Tea Party as actually sponsored by the Koch Brothers and other big corporate interests. We didn’t want to leave Democrats out in the cold in the astroturfing game. Gaius Publius discusses one ecosystem: a consulting firm, “270 Strategies” and one of its phony creations, the Progressive Coalition for American Jobs.

Bloomberg: “Consumers Aren’t Spending Even In a Booming Job Market”

The job market has allegedly disconnected in the last few months from retail spending. But is there really a divergence?

Did Ireland’s 12.5 Percent Corporate Tax Rate Create the Celtic Tiger?

Offshore banking and tax haven expert Nicholas Shaxson has launched a new blog, Fools’ Gold, to look at issues of ‘competitiveness’ and so-called ‘competition’ between nations. We’ve often taken issue with that policy goal, since it gives precedence to crushing labor as a way of lowering product prices to stoke exports. This approach is dubious for anything other than small economies, since all countries cannot be net exporters. Undue focus on exports as a driver of growth results in increasing international friction, such as the currency wars that are underway now. Moreover, as we have discussed separately, trade liberalization has gone hand in hand with liberalization of capital flows, in no small measure due to US efforts to make the world safe for what were then US investment banks. Yet Carmen Reinhardt and Ken Rogoff pointed out in their study of financial crises, higher levels of international capital flows are associated with more frequent and severe financial crises.

In addition, lowering wage rates reduces domestic demand. In countries like the US, where the domestic economy is much larger than the export sector, lowering internal demand to stoke exports is misguided.

Here we look at a first case study, the real reasons behind the growth and meltdown of the famed Celtic tiger, Ireland.

Gail Tverberg: The Oil Glut and Low Prices Reflect an Affordability Problem

Tverberg argues that low oil prices likely to be with us for a long time, due to the fact that demand will remain relatively weak. Given the reluctance of governments to engage in aggressive enough spending measures, the idea of that more economies will become mired in a Japan-like slump or weak demand is entirely plausible. And that’s before you get to the wild card of a Eurozone unraveling.

Bernie Sanders Blasts “Robin Hood in Reverse” Subsidies to the Rich, Calls for Full Employment

Bernie Sanders gave a forceful, if sobering, assessment of the state of the economy from the perspective of working men and women, as well as retirees, and focused on the hypocrisy of corporations and the wealthy that poor-mouth as a way to extract even more subsidies and tax breaks.

Michael Hudson: Quantitative Easing for Whom?

Michael Hudson recaps the theory, or perhaps more accurately, political justifications for quantitative easing, as opposed to how it works in practice.

Dear Federal Reserve: Now is the Time to Raise Interest Rates? Really? Seriously?!?

I am at a complete loss as to why the Federal Reserve might think that now is the moment to begin raising interest rates. I cannot see a scintilla of hard evidence in support, and potent evidence against.

Troika Tightening the Noose on Greece as Government Cash Crunch Worsens

“I begin to discern the profile of my death.” That arresting sentence, culled from early drafts, served as the anchor for one of the finest novels ever written, Margarite Yourcenar’s Memoirs of Hadrian.

The Troika and Eurogroup look to be working towards the Greek government to start having similar thoughts. However, given the high level of popular support for Syriza, and press reports that Greek citizens fully expect that the new government to at best only be able to deliver on a small portion of its campaign promises, the end game for Greece is looking more and more likely to be a failed state rather than a more neoliberal-friendly government.

Corporate Greed is Killing Investment

How the dubious “maximize shareholder value” thesis, an economic theory, and not a legal requirement, hurts investment and undermines growth.

Robert Parenteau: The Large Fly in Krugman’s New Keynesian Soup

Why New Keynesians look a lot like Friedmaniacs.