Another good week for Europe as the latest PMI data shows the tentative recovery is gaining pace.
Eurozone manufacturing recovery gathers pace in August
• Final Eurozone Manufacturing PMI at 26 – month high of 51.4 in August (July:50.3)
• Growth improves in Germany, the Netherlands, Italy, Austria and Ireland.
• Input prices broadly unchanged since July
The Obama administration, for reasons that pass all understanding, has been running a campaign of leaks disparaging one of Obama’s few senior female appointees, Janet Yellen. Her high crimes include not being a protégée Bob Rubin and doing exceptionally well in economic forecasting. Rubin wants the job of Fed Chair to go to his top protégée, Larry Summers. Yellen, as Vice Chair of the Fed stands in the way of Rubin’s ambitions. (Rubin is too toxic to take the Chair directly.) The administration has been leaking primarily to the New York Times’ Binyamin Applebaum. His latest article contains this remarkable statement, without analysis…
Read more...By Dan Kervick, who does research in decision theory and analytic metaphysics. Originally posted at New Economic Perspectives.
Some people believe in endogenous money. They believe we live in a monetary system is which money is generated and extinguished as part of the ordinary flow of everyday economic activity. The economy tends to generate the money it needs in order to satisfy the exchange desires and saving preferences of participants in the economy, and to extinguish the money it doesn’t need.
The endogenous money picture is in some considerable tension with the idea that the monetary system is controlled by the government. The alternative exogenous money picture holds that the issuance and destruction of money is a task reserved for government alone, and that the total amount of money present in the economy is therefore a government policy choice.
Read more...No debacle is allowed to interfere with Chancellor Angela Merkel’s efforts to hang on to her job, and any debacles get swept under the rug at least until after the elections on September 22. Every time uppity opposition voices stir up some controversy, it’s brushed off, denied, ridiculed, or minimized – and it has worked admirably well so far.
Even Edward Snowden’s revelations day after day in Der Spiegel – which had received copies of documents detailing German involvement in NSA spying activities, among other sins – were successfully shuffled off. Though the discussion continues to be heated, it is, like in the US, a bi-partisan debacle, compromising political figures from both sides. The scandal is spreading and festering, but apparently without political fallout.
Read more...So now India is the latest casualty among emerging economies. Over the past 10 days, the rupee has slid to its lowest-ever rate, and the Indian economy may well be on the verge of a full-blown currency crisis. In this febrile situation, it is open season for rumours and pessimistic predictions, which then become self-fulfilling.
This means that even if there is a slight market rally, investors quickly work themselves into even more gloom. Each hurriedly announced policy measure (raising duties on gold imports, some controls on capital outflows, liberalising rules for capital inflows and so on) has had the opposite of the desired effect. Everything the government does seems to be too little, too late – or even counterproductive.
Read more...The March on Washington’s 50th anniversary resulted in two commemorative events, including the one Saturday with comments by Eric Holder and Nancy Pelosi, and the one yesterday with a speech by President Obama. Needless to say this is a bit of an inversion of the original message of a March ON rather than WITH Washington. So I would say that the major tribute this week to the legacy of that march, a march for jobs and freedom, is actually today’s national retail worker strike for a higher wage, which takes what had been a one-off model and expanded it. Events are expected in 35 cities, maybe more. And where the initial events were just with fast-food workers at places like McDonald’s and Wendy’s, apparently workers at retailers like Macy’s are involved in some cities.
Read more...I’m nearly finished with a very long book that may well be the best illustration of the basic principles of Modern Money Theory available. The book is “A Call To Arms,” by Maury Klein. It is an historical account of the U.S. mobilization as it prepared for, and engaged in, war with Germany and Japan. The scale of the task was unprecedented in human history—and the accomplishment of it changed not just the structure of the American economy, but American society as well. What is striking about the story—and the monumental effort to quickly build, virtually from scratch, the largest and most sophisticated war machine ever to exist on the planet—is that there is nary a peep of concern or argument about how this enormous task would be paid for. All of the anguish and struggle had not to do with finding enough “money” to pay for things, but rather with finding enough things to buy—and enough skilled labor to properly marshal it all together. In the end, virtually every real resource available in the continental U.S.—oil, gas, steel, aluminum, rubber, copper, sugar, tin, and man-hours of labor—was purchased by the Federal government to build the Army, Navy, Air Force and Marine Corps that ultimately defeated the Axis powers. The scale of the sovereign spending is almost beyond comprehension—especially given the fact that, at the starting gate, the U.S. economy was still decimated and impoverished by the Great Depression. At the finish line, however—VJ day, September 2, 1945—the U.S. had become the most powerful, efficient, and equitable economic power the world had ever seen. So how did it all get paid for? And even more important, how did we travel from that VJ day of economic triumph to our sorry state of today, where we think we are so “broke” we can’t even afford to hire enough fire-fighters and equipment to put out the forest-fires raging in our western states?
Read more...Yves here. It almost seems quaint to think that someone (in reality, large swathes of the investor and orthodox economics community) thinks the US economy will someday bear a passing resemblance to its former bubble-stoked vigor.
Read more...John Kenneth Galbriath’s book, The Good Society: The Humane Agenda, creates a blueprint for a more just, prosperous and stable world. I’m re-reading it for the nth time because I continue to believe we might just get there one day. Indeed, I’m convinced we must.
Read more...I’ve said this before in other venues, but this really is the chart that explains modern America:
Refinancing mortgages is a phenomenally profitable and nearly risk-free business for banks, and one of the few growth sectors that were actually spawned by the Fed’s herculean efforts to force down long-term interest rates through waves of quantitative easing. Banks went on a hiring binge to shuffle all this paper around and extract fees along the way before they’d dump most of these mortgages into the lap of government-owned and bailed-out Fannie Mae and Freddie Mac. And then they’d run.
Read more...Yves here. We had predicted that the sharp rise in mortgage rates precipitated by the Fed’s taper talk would put a damper on the housing “recovery” and could even send it into reverse if rates continued to increase. They’ve in fact fallen over the past few weeks but are still markedly higher than in the spring. The central bank has been sending mixed signals over the last week or so, on the one hand seeming more inclined to taper based on its cheery view of the fundamentals, but concerned over what a budget slugfest might do to the confidence fairy.
Read more...Philip Mirowski is the Carl Koch Professor of Economics and the History and Philosophy of Science University of Notre Dame. Professor Mirowski’s latest book is Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown
The interview was conducted by Nathan Tankus, a student and research assistant at the University of Ottawa. He is currently a Visiting Researcher at the Fields Institute
Read more...By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth, Cross posted from Automatic Earth
It’s a state of mind, a way of thinking and a belief system bordering on outright religion all in one. If it would be recognized as a religion, it would be the world’s biggest. Its followers and proponents hold that growth is a necessary element of survival, that technology is capable of solving all problems (especially those caused by mankind), and that the earth, nature, the living environment, is there for mankind to be exploited at will to achieve that growth
Read more...How Congress made itself a big part of the “where are the jobs?” problem.
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