If the President’s budget were enacted by Congress, and OMB’s projections over the next decade hold, it would almost certainly mean economic stagnation punctuated by recession over the next decade. Would it also mean austerity?
Read more...Why Obama’s budget is yet another economic policy failure.
Read more...Yves here. I’ve written from time to time how openly partisan the Congressional Budget Office is, not in the traditional sense of favoring one party over the other, but as serving as an key enforcer of neoliberal ideology. For instance, its projections of government debt to GDP ratios were highly misleading by virtue of failing to net out financial assets. And after being called out for that error in paper, what did the CBO do? Make it even harder to find the data to prove the magnitude of their misdirection.
Read more...ves here. This Real News Network interview with Yilmaz Akyuz, formerly the Director of the Division on Globalization and Development Strategies at the United Nations Conference on Trade and Development (UNCTAD), describes how the problems that produced the financial crisis have morphed into new, no less troubling problems. One key part of this discussion focuses on how China has adapted to its considerably smaller trade surplus, and why having Germany as the new excessive exporter poses new perils to the global economy.
Read more...Paul Krugman can’t explain why the deficit issue has suddenly dropped off the agenda. Perhaps I can help.
Read more...Yves here. With Argentina one of the emerging markets economies whose currency has taken a huge tumble, its aggressive pro-labor, redistribution-oriented policies have come under attack (as an aside, one has to note that Turkey, which was touted as a model emerging economy a few years back, is also fighting a currency downspiral). And a predictable by-product is that some of Argentina’s policies have been misrepresented. For instance, it’s widely accused of “living beyond its means”. Yet as this post shows, the government ran surpluses in eight of the past ten years.
Read more...Heiner Flassbeck is one of the few economists to get into positions of influence despite being firmly opposed to the prevailing doctrine of neoliberalism. He’s also direct and articulate.
Read more...Yves here. Please welcome Igancio Portes to NC. He’s a sophisticated young writer who has a sharp eye for power dynamics and is keenly interested in why the left (the genuine left as opposed to the fake version we have in the US) so often fails to achieve its intended results when it gets control of a government. He’ll be providing posts from time to time on Latin America, which is too often covered in a cursory and propagandized manner in the mainstream English language press.
Read more...Economist Ann Pettifor discusses how economies around the world moved from using borrowing to support productive investments to fueling speculation and consumption, and how that led to the financial crisis. She also describes how the post-crisis response to the debt overhang isn’t merely ineffective but in fact counterproductive.
Read more...James Galbraith is a particularly effective communicator for an economist, so I thought readers would enjoy seeing him on the RT show Boom & Bust (although the theme song strikes me as designed to generate a headache).
Read more...This is a stupendous story. Possibly for the first time in its tainted history, the International Monetary Fund had a major change of heart and tried to do the right thing by a ‘program’ country, only to be turned down by that very same country’s finance minister!
Read more...The Obama administration and the mainstream media are now talking up an imminent recovery, perhaps even a modest boom. There is no reason why we should be optimistic now.
Read more...Warren Mosler tells a good story that shows how our economy works at its most basic level.
Imagine parents create coupons they use to pay their kids for doing chores around the house. They “tax” the kids 10 coupons per week. If the kids don’t have 10 coupons, the parents punish them. “This closely replicates taxation in the real economy, where we have to pay our taxes or face penalties,” Mosler writes.
So now our household has its own currency. This is much like the U.S. government, which issues dollars, a fiat currency. (Meaning Uncle Sam doesn’t have to give you something else for it. Say, like a certain weight in gold.) If you think through this simple analogy, all kinds of interesting insights emerge.
Read more...Yves here. I continue to get requests to explain Modern Monetary Theory. It isn’t easily done in a few words, but fortunately, the academics and writers associated with the New Economics Perspectives blog keep publishing primers of various sorts. This one takes a different approach in using visuals to help illustrate the difference between how most people believe the money system operates versus how it really works.
Read more...Yves here. I don’t know whether to be relieved or annoyed to see Carmen Reinhart and Ken Rogoff retreat from their pro-austerity stance and endorse debt restructuring, since their prior view (that budget-cutting was necessary and productive) served to justify considerable and unnecessary pain being inflicted on periphery Eurozone countries to preserve the illusion of health of French and German banks.
But as Yanis Varoufakis points out, although Reinhart and Rogoff are retreating from much of their erroneous thinking, they haven’t renounced all of it.
Read more...