Category Archives: Economic fundamentals

Yanis Varoufakis: Greek Success Story: The latest Orwellian Turn of the Greek Crisis

Greece’s Prime Minister recently flew to China, to woo Chinese investors. In his bid to be persuasive, he adopted a radical narrative: Greece is a Success Story. A country that almost perished in 2012 is now on the mend; on the road to stabilisation and growth; a wonderful opportunity, currently, for investors to pick up ultra cheap investments and to benefit from the forthcoming growth. How much of this is true, however?

David Dayen: FSOC Annual Report Shows Continued Interest in Austerity Bargain Over Reducing Financial System

With Jack Lew now installed at Treasury, I decided to take a look at the annual report of the Financial Stability Oversight Council (FSOC), the Dodd-Frank creation that’s supposed to monitor systemic risk. We already know the leanings of the not-so-new regime at Treasury: they think Dodd-Frank worked to secure a more stable financial system, an opinion reiterated Tuesday at a Senate Banking Committee hearing.

David Dayen: The Uprising of the Second Tier in a Time of Late Capitalism

The past several years have demonstrated the obvious point that inequality and depression will combine to produce flares of mass social unrest. You see this in Europe and the Middle East, where rising food prices had as much to do with the Arab Spring as decades of political repression. Things are no different here in America. Even though elites are fortunate enough to have a militarized local law enforcement apparatus in place to make sure the rabble doesn’t get too out of control, these flares, indications of broader awareness that in an economy rigged against them, the only recourse is to step outside the system and shout to the heavens. We’ve seen this before in US history; it was called the Gilded Age, and it led to the set of progressive reforms as well as a legacy of labor organizing that might, just might, be awakening from what seems like a decades-long slumber.

Private Equity Residential Landlords Rushing to Cash Out via IPOs

We’ve been skeptical of the private equity land rush to snap up single family homes for rentals. They’ve been a big enough force in the housing market nationwide to lead some commentators to question how solid the housing “recovery” is. Yet the combination of rising enthusiasm for housing and a richly-valued stock market is leading a raft of PE firms to ready IPOs as a way to take profits and establish valuations for their profit participations.

Russia’s Plan For The BRICS To Dismantle The Dollar System

The status of the US dollar as the world reserve currency gives the US tremendous advantages. Among them: it allows the Fed to export inflation, while the Federal Government can run a huge deficit with impunity. But now an angry Russia has had enough!

The Limits of Governing Budgetary Policies by Rules

By Daniela Schwarzer, who heads the research unit European Integration at the German Institute for International and Security Affairs, Stiftung Wissenschaft und Politik (SWP) in Berlin. Cross posted from Triple Crisis

The European squabble over budgetary austerity reached a new peak a good week ago when a document drafted by leading representatives of the French Socialist Party, which reportedly had been seen by Elysée officials close to President Hollande, personally attacked German Chancellor Angela Merkel. Less mediatized, but more telling about the nature of the governance problems facing the euro area, are the statements made by Finance Minister Pierre Moscovici this weekend.

Are Flagging Productivity Gains a Sign of a Played-Out Economy?

Bloomberg flagged that productivity gains in the US are tepid, and that’s a sign of economic weakness:

Jack Lew’s Nose is Getting So Long He Needs a Hacksaw

Jack Lew really needs to get better at lying in public. So far, he’s making a hash of it.

Yanis Varoufakis: Macroeconomic Experiments: Abenomics Versus Euro-Austerity

By Yanis Varoufakis, a professor of economics at the University of Athens. Originally posted at Australian Broadcast Corporation’s The Drum

In the long, unending wake of the global financial crisis, desperate governments and central banks are trying their hand at experimental economic policy mixes. Japan and the eurozone offer a glimpse of how radically different anti-crisis experiments can be.

Europe’s Depression Worsens

Yves here. Take note in particular the discussion of the state of play in Italy. Even though other countries under the German yoke are complaining, Italy is the one that can credibly defy Germany, and the Germans know it.

I welcome comments from people who are following European media. I’m not sure that Latta’s failure to round up supporters matters much. I’d imagine he wants to position himself as Berlusconi’s messenger rather than a staunch ally.

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 mentioned earlier in the week Italy may have a new parliament but there is very familiar person who appears to be pulling the strings, and how long such an arrangement can last is questionable.

Secret “Free Trade” Negotiations Will Gut Regulations, Further Enrich Multinationals and Big Financial Firms

It’s a sign of the times that a reputable economist, Dean Baker, can use the word “corruption” in the headline of an article describing two major trade deals under negotiation and no one bats an eye.

Did the Euro Kill Governance in the Periphery?

Yves here. We’re a little EU-centric tonight as a result of a wealth of particularly good material, which is often a sign that stresses are rising (there was tons of good material in the runup to the crisis as well).

By Jesús Fernández-Villaverde, Professor of Economics, University of Pennsylvania and Luis Garicano, Research Fellow with the Productivity and Innovation Programme, Centre for Economic Performance; Professor of Economics and Strategy, Departments of Management and of Economics. Cross posted from VoxEU

By the end of the 1990s, under the incentive of Eurozone entry, most peripheral European countries were busy undertaking structural reforms and putting their fiscal houses in order. This column argues that the arrival of the euro, and the subsequent interest-rate convergence, loosened a tide of cheap money that reversed the incentives for further reforms. As a result, by the end of the euro’s first decade, the institutions and governance in the Eurozone periphery were in worse shape than they were at the start of the decade.

France Versus Reality

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

Yesterday I noticed an interesting paragraph over at efxnews about France and its parallels with what many see in the market today:

It’s a big surprise for some that France is high on the crisis susceptibility index…

Reply to Reinhart and Rogoff’s NYT Response to Critics

One of the striking aspects of the furor over Thomas Herndon, Robert Pollin and Michael Ash’s dissection of the considerable flaws in the Carmen Reinhardt and Kenneth Rogoff austerity-justifying paper are the “the earth is still flat” efforts to salvage the theory.