Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller
The economy bulls are back at it again, claiming that all is well.
Read more...Yves here. Wolf Richter’s latest post may seem a bit breathless, but my assumption is that this rhetorical choice is an effort to try to penetrate Eurocrisis fatigue. The continuing decay, the ongoing last minute patch-ups, the Punch and Judy show between Germany and anyone who dares say anything bad about its perverse creditor moralism, is feeling so stale that it’s easy to tune out.
Yet even though the headlines all seem to be of a muchness, they mask an ongoing deterioration that at some point will produce a state change.
Read more...Yves here. One of the not-suffiently-discussed topics in the financial media is the tug of war over currency values, with the need to do post crisis damage control as the cover. For instance, after the initial round of QE, Brazil and India complained vociferously about the dual impact of a weaker dollar and higher commodity prices (yes, Virginia, some economists do think financial speculation can influence commodity prices) on their economies. If Europe contracts while growth in the US and China are also decelerating, it isn’t hard to imagine that the currency front will heat up even more.
This piece by Daniel Gros illustrates, surprisingly, that one currency manipulator has managed to operate under the radar so far.
Read more...While deathbed conversions might earn you a spot in heaven in some religions, they don’t carry you very far here on Planet Earth.
Christine Lagrade has taken too small a step in the right direction far too late to do much good.
Read more...Earlier today, El-Erian in the Financial Times released a short and apt note on the limits of the central bank put.
Read more...By Richard Alford, a former New York Fed economist. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side.
Five years after the financial crisis and halfway to a lost decade, economists, policymakers and the public are looking for answers that will restore economic health and vibrancy. Their concern has increased recently with the approaching “fiscal cliff” and the possibility of a double-dip recession. To find remedies, they’ve examined past financial crises that were followed by protracted economic downturns. In the US, the precedent studied and cited most frequently has been the Great Depression of the 1930s, including the double dip of 1938. Unfortunately, economists have produced a variety of inconsistent explanations for both the initial contraction and the prolonged period without a self-sustained recovery.
Read more...Starting late last week, there’s been a marked shift in the mix of headlines in the major media outlets. While it may simply be post fall equinox moodiness or a confluence of downer reports leading to a rare moment of sobriety, suddenly the big venues are concerned about the economic outlook.
Read more...Spanish Prime Minister Mariano Rajoy has a singular problem: 84% of all voters have “little” or “no” confidence in him. The fate of Alfredo Perez Rubalcaba, leader of the opposition Socialist party, is even worse: 90% of all voters distrust him! Those are the two top political figures of the two major political parties, and the utterly frustrated and disillusioned Spaniards are defenestrating them both.
Read more...Yves here. I’m featuring a MacroBusiness post, “What If the GFC is Permanent?” despite its being a bit meandering, because it asks some Big Questions, and therefore will give readers something to chew over.
Read more...By Randy Wray, Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College, New York. Cross posted from Economonitor
OK, I know you think this is yet another critical column on Chairman Ben Bernanke.
Read more...Michael Hoexter is a policy analyst and marketing consultant on green issues, climate change, clean and renewable energy, and energy efficiency. Originally published at New Economic Perspectives.
Shrinking “Their” Economy Shrinks Yours
The word “economy” comes from the Greek “oikos” meaning “hearth” or “household”. Everybody has a household economy that looks slightly different from that of their neighbors. However, because of the nature of a monetary economy, household economies are linked quite tightly together and trends that effect one household start to have effects in other households soon or over the longer term. While within the same economy some households can prosper while others do not, generally there is a movement in tandem for some obvious reasons related to how society and the monetary system work.
Read more...By Philip Pilkington, an Irish writer and journalist living in London. You can follow him on Twitter at @pilkingtonphil
There’s been a bit of confusion of late in blogland about whether endogenous money really matters all that much. Endogenous money is, of course, the theory that, contrary to what mainstream economics would have you believe, private banks in modern capitalist economies actually create money out of thin air. In my experience, theoretical economists grasp very quickly how much of an impact such a theory would have if it were accepted as true. Less theoretically inclined commentators who are generally more interested in policy and practical matters, however, often express confusion over what exactly all the fuss is about. “Does endogenous money really matter?” they ask.
In what follows I will lay out the three leading reasons why endogenous money does, in fact, matter.
Read more...Even though most economic commentators focus on the deterioration of the periphery and are nervously taking note of how that is coming to impair the core countries, the strength of the German economy is nevertheless seldom questioned outside the Eurozone.
This Real News Network segment focuses on a generally-overlooked issue: wage suppression and the increasingly precarious conditions that German workers face, and how that plays into Eurozone politics.
Read more...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 talked about yesterday the outcomes of the failing policies enacted by European leaders in the face of the economic crisis boil down to a lose-lose struggle between international creditors and national citizens.
Read more...By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.
I genuinely thought the Europeans were getting somewhere in the last few weeks as I detected (or maybe that should be optimistically hoped) a change of rhetoric from some of the more hardened camps and a growing realisation that the current approach to “solving” the crisis is failing. My optimism was helped by the fact that the OMT, like the LTRO before it, has driven down sovereign yields which has given the European leaders yet another opportunity to sit down away from the fire fighting and discuss outcomes beyond a short term market window.
But alas, this is Europe and I appear to have been wrong.
Read more...