Category Archives: Economic fundamentals

Europe Waits for Italy

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

Lambert here: With the Italian parliamentary elections finishing up, this is a very timely piece.

Back in July 2012 I posted on the potential for renewed European economic instability due to the 2013 Italian election outcome. The election is occurring as I type and I must admit that the parallels to last year’s Greek election are quite easy to draw, and it isn’t just the country’s economic situation that makes that so.

The Dog That Isn’t Barking: Why So Little Pundit Attention to the Caliber of Statistics?

Ah, the halcyon days of early 2007, when economics and finance bloggers would study the clouds on the horizon and debate what they foretold. Maybe I’m not hanging out in the right circles these days but now that financial markets seem to be completely in thrall to central bankers, there isn’t much point in doing fundamental analysis. As a result, from what I can tell, the level of bullshitting among market pundits has risen considerably.

Panic-Driven Austerity in the Eurozone and its Implications

By Paul De Grauwe, Professor of international economics, London School of Economics, and former member of the Belgian parliament, and Yuemei Ji, Economist, LICOS, University of Leuven. Cross posted from VoxEU

Eurozone policy seems driven by market sentiment. This column argues that fear and panic led to excessive, and possibly self-defeating, austerity in the south while failing to induce offsetting stimulus in the north. The resulting deflation bias produced the double-dip recession and perhaps more dire consequences. As it becomes obvious that austerity produces unnecessary suffering, millions may seek liberation from ‘euro shackles’.

Martin Wolf Misses the Real Reason the Eurozone’s Unhappy Marriage Has Not Broken Up Yet

The normally astute and blunt Martin Wolf is either having an uncharacteristic bout of circumspection or is managing to miss an important, arguably determining reason why the Eurozone persists in inflicting destructive austerity on much of its population.

Disposable Workers: Why Throwaway Employees are Bad Policy

The media increasingly appears to define the state of the economy based on corporate bottom lines and the experience of the upper echelon, reflected in the way it glosses over the anxiety and distress outside the top 1% of the population.

Blinder Leading the Blind

By Dan Kervick, who does research in decision theory and analytic metaphysics. Cross posted from New Economic Perspectives

The establishment’s debt and deficit hawks have taken flight once again, this time to launch a counterassault against Paul Krugman’s sensible and increasingly successful campaign to get people to stop clutching their pearls over the federal budget situation, and to focus attention on more pressing matters of high unemployment and economic stagnation. Joe Scarborough, Ezra Klein and the Washington Post editorial board are among those springing into action on behalf of deficit worry, and against the dangerous movement of calmness and sobriety breaking out all over. One thing that becomes more apparent as this debate unfolds is that the budget warriors frequently confuse broader public policy challenges that happen to have a budgetary component with narrower problems related to size of the budget deficit itself.

Banks on the Counter-Attack in the Food and Finance Debate

By Jennifer Clapp, Professor in the Environment and Resource Studies Department and CIGI Chair in Global Environmental Governance, Balsillie School of International Affairs, University of Waterloo, Canada. Cross posted from Triple Crisis

NGOs have stepped up their critique of large investment banks’ involvement in agricultural commodity derivatives markets in recent months. Now, it appears that the banks are starting to fight back.

Pettis: China and the History of US Growth Models

Yves here. This is an important piece, in that it bucks conventional wisdom about growth and economic development in several ways.

Yanis Varoufakis: Are Ireland and Portugal out of the Woods? (Updated)

By Yanis Varoufakis, Professor of Economics at the University of Athens. Cross posted from his blog

Ireland and Portugal have, recently, tested the water of the money markets with some success. But does this mean that they are out of the woods?

Is the Euro Crisis Over?

By Robert Guttmann, Professor of Economics at Hofstra University and a visiting Professor at University of Paris, Nord. Cross posted from Triple Crisis

A strange calm has settled over Europe. Following Mr. Draghi’s July 2012 promise “to do whatever it takes” to save the euro, which the head of the European Central Bank followed shortly thereafter with a new program of potentially unlimited bond buying known as “outright monetary transactions,” the market panic evaporated. This calming of once-panicky debt markets has led to optimistic assessments that the worst of the crisis has passed. All this begs the obvious question whether this major shift in mood is justified and as such durable or just a temporary break before the next storm.

Europe’s Imbalances Widen

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

While the latest European PMI is showing some improvement it has become apparent that imbalances are growing ever-greater in the zone.

Reflections on the Current Belief That Housing Will Come Roaring Back

By George Feiger, CEO of Contango Capital Advisors. From Contango’s current “Heard off the Street” newsletter

We question whether the widely held judgment that the US handled its banking crisis much better than the Europeans will survive the inevitable upturn in interest rates.

Richard Koo Debunks the “Deleveraging is Almost Done, American Consumer Getting Ready for Good Times” Meme

Richard Koo of Nomura published an important piece earlier this week which got some attention in the financial blogosphere (Clusterstock, FT Alphaville). It takes issue with a critical part of the economist optimists’ case, namely, that consumer deleveraging is about done and therefore the economy is likely to perform much better in the next few years.

German Hope, French Despair

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

Eurozone Flash PMI for January came out overnight and the news was relatively good overall, although it must be noted that contraction continues across the zone.

China Economic Paradigm Nearing End Game

GMO, in a compelling analysis, not only confirms the skeptics’ case but provides reasons why the Chinese growth model faces an end game. While it may not be nigh, it seems to be closer than most people think.