f you come to San Francisco or Silicon Valley and look around, you’d arrive at the conclusion that California is booming, that companies jump through hoops to hire people, that they douse them with money, stock options, and free lunches. But in the rest of the state, the picture isn’t that rosy.
Read more...Yves here. We described the funding mismatch with Chinese wealth management products during the first liquidity crunch earlier in the year, but given that most readers aren’t familiar with these structures, it’s good to have another summary as to how they work and more discussion of why they pose a risk to the Chinese economy. They are troublingly similar to structured investment vehicles, which were one of the detonators of the credit crisis in the US and UK.
Read more...Yves here. I thought this essay on money was useful in and of itself, and it also contains a useful primer on the views of major schools of thought in orthodox economics.
Read more...Yves here. As Wolf describes, in our brave new work of super-low interest rates, the 10 year Treasury breaching 3% was regarded with fear and loathing by the officialdom. Now with the Fed’s reassurances that the Fed funds rate will remain at just about zero for the foreseeable future, the stock market has popped the Champagne. But will the impact of the withdrawal of support for bond prices impact stocks sooner than the current rally would have you believe?
Read more...Yves here. One of the big problems with the growth v. “de-growth” debate is how terrible our measures of productive activity are.
Read more...Lambert here: This should be fun!
By Vincent Huang*, a graduate student in the Economics Department at UMKC. Originally published at New Economic Perspectives.
The discrepancy between the orthodox (primarily neoclassical) and the heterodox (Post Keynesian, Chartalism, MMT, etc.) schools of thought rests fundamentally in their different perception in the way the capitalist economy functions. Such discrepancy can be described in the contrast between C – M – C’ and M – C – M’.
Read more...The Fed’s announcing the taper was supposed to be an earth-shaking event. But that actually sorta happened last summer when Bernanke first used the “t” word and interest and mortgage rates made an impressive upward march in a short period of time.
From my considerable remove, what was noteworthy about the Fed’s announcement yesterday is how terrified it seems to be of creating an upset.
Read more...A look at some predictions for Europe in 2014.
Read more...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
Read more...Iceland is widely portrayed as a post-bubble success story, but the reality is more conplex.
Read more...Yves here. Even though Yanis Varoufakis has savaged the Trokia’s austerity policies that are driving Greece and other periphery countries into economic and social distress as well as fueling the rise of extreme right wing parties, some readers of this blog have criticized him for advocating reforms to pull the Eurozone out of its nosedive […]
Read more...What worries me most about the world today, in the last weeks before Christmas and New Year’s Day 2014, is that all the plans we make for our futures and more importantly our children’s futures are DOA.
Read more...By Lambert Strether of Corrente.
MMT’s Bill Mitchell narrates a slide presentation of a paper (draft) co-authored with Louisa Connors, Member, Centre for Literary and Linguistic Computing, University of Newcastle. I wish the paper had an abstract, so lazy people like me could just grab it, but here are what I see as the key paragraphs in the introduction:
It is reasonable to expect that professional failure on the scale of the GFC would lead to a re-evaluation of the paradigm with in which these economists work, and major changes in economic curricula and research. Mainstream economists, however, have re-energised their anti-government free-market biases and effectively reconstructed what was a private debt crisis into a sovereign debt crisis, obscuring their role in the crisis and deflecting attention from the flaws in their model. The dynamics that created the crisis (deregulation, reduced financial oversight, etc) continue to be advocated by the mainstream as solutions. The fact that mainstream macroeconomics has retained its hegemonic status in the face of its failure to resonate with reality is [and inability to master simple Excel macros as well they’ve mastered hegemonic status seeking, despite their field’s carefully cultivated reputation for scientific rigor], in no small way, due to the way economic debates are framed in the public discourse. Framing refers to the way an argument is conceptualised and communicated by speakers and listeners. Processes of conceptualisation proceed by way of adaptive reasoning on the basis of models and representations. Research in cognitive philosophy and cognitive linguistics suggests that the models that constrain our thinking operate at a largely unconscious level, and that the abstract concepts we draw on are “largely metaphorical”, “imaginative”, and “emotionally engaged” (Lakoff and Johnson, 1999:3-4).
So, light the fire in the woodstove with the Sunday Times, get a cup of coffee, and listen Mitchell’s laconic narration (and charming Australian accent):
Read more...Last week, I was reading parts of a report issued by Japanese investment bank Nomura, which started out saying that the “Global Financial Crisis” is over. If I lay out a statement like that side by side with a lot of other things I see, I can only conclude that Nomura doesn’t reside in the same universe I do.
Read more...Yves here. This post gives a good recap of where QE is and isn’t having an impact on the economy, and the “isn’t”s clearly prevail.
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