The Greek ruling coalition and European politicians and bureaucrats say they want to avoid a Grexit, Nevertheless, it makes sense to examine that scenario. We start with the payment system and Target2 balances.
Read more...Many observers have become unduly excited about what they depict as efforts to break the dollar hegeomony, such as the joint effort by the so-called BRICS nations to form a development bank. While having a suite of internationals funding entities, particularly ones focused on activities that in theory increase the collective benefits of relying on a reserve currency, are seen to be important, it does not follow that launching useful new funding institutions will break dollar dominance. As much as US abuse of its position as issuer of the reserve currency is correctly resented, there isn’t a competitor waiting in the wings. The Eurozone has blown it with its failure to clean up even sicker banks than the US has, and by compounding a bad situation with its adherence to destructive austerity policies. China clearly has the potential to displace the US longer-term, but it is unwilling to run the requisite trade deficits, since that means exporting demand and hence jobs. And no country had made the transition from being a major exporter to being consumer-driven smoothly; a crisis or protracted malaise would also delay China displacing the US as currency top dog.
But not being able to get rid of the dollar any time soon does not mean that countries that the US is trying to punish by using its influence over international payments system won’t find nearer-term escape routes.
Read more...I strongly suggest you read Georgetown law professor Adam Levitin’s new post on why he believes Apple’s newly announced Apple Pay service puts Apple under the CFPB’s jurisdiction but virtue of having made itself a regulated financial institution. And Levitin means all of Apple’s consumer services, not just Apple Pay. He believes that Apple is […]
Read more...It’s really easy to default to cynicism these days, since you are almost always certain to be right. And that goes double as far as bank regulators are concerned.
So that makes it even more important to call attention to exceptions to that sorry rule. One big one is the New York Superintendent of Financial Services, Benjamin Lawsky. As we’ll discuss later in this post, he’s again the subject of a top story in the Financial Times for doing what the banks treat as horrifically unwarranted behavior: punishing them for failing to live up to agreements to reform their conduct. Didn’t he get the memo that that was all theater for the rubes, and no one takes those commitments seriously?
Read more...This Real News Network interview with Bill Black provides a good high-level overview of what is right and (mainly) wrong with the $8.9 billion settlement with BNP Paribas over money-laundering charges. Black stresses that financial crime remains a very attractive activity for both the enterprise and its employees. As usual, no executives were charged or even fined, although thanks to the intervention of New York financial services superintendent Benjamin Lawsky, eleven employees of the French bank lost their jobs.
Read more...Yves here. I must confess that I am at a loss to understand the deep emotional reactions some readers have to MMT. It’s like raging at a thermometer because it shows you your body temperature. Virtually all of the complaints about MMT are based on a failure to understand what it says about how money works. MMT is descriptive of our current system, and it also has a message that progressives (the real kind, not the Democratic fauxgressive kind) ought to welcome, that the Federal government as a sovereign does not need to run a balance budget, and that a balanced budget is in fact destructive when the economy is as slack as it is now. That means the government not only can but should spend more, which is in contrast to all those barmy arguments about how we can’t spend to [fill in your priorities, have national health care, improve our infrastructure, feed low income kids in school, etc.]. If you don’t like the Federal government directing that much spending, there’s a remedy for that too: revenue sharing, which was instituted under that great liberal Richard Nixon, who though the Federal government raised revenues more efficiently than state and local governments, but state and local government were better at setting spending priorities.
MMT provides a basis for rejecting neoliberalism and austerity, and people who ought to embrace it are instead being told falsehoods about it and are becoming skeptical. That assures that the current crop of looters can continue their work unperturbed.
However, MMT does require that you turn the conventional stories about money inside-out. It takes some mental rewiring to understand it, and that degree of reorientation seems to be a big reason for the heated reactions.
Read more...Under the odd conventions of journalism, if someone else writes about a topic, especially if it resembles a “scoop,” nobody else can write about it. So if you go down the road for a week or so chasing a story and then you see it in your friendly neighborhood copy of The Huffington Post, you can basically stop chasing. Thanks for taking food out of my mouth, HuffPo!
But in this case, the complicated story in question warrants more attention, because it’s a really good lesson in how “lobbying” incorporates more than just paying rich people in suits to sweet-talk politicians and regulators. This is the darker side of lobbying, with the venerated “small business owners” everyone loves to deify caught in the crossfire.
Read more...Bitcoin is getting hammered today.
Read more...Yves here. Not only is the Bank of England siding with Post-Keynesian ideas about money, but it has even taken to creating layperson-friendly videos about the nature of money.
Read more...Naked Capitalism readers have frequently called for the Post Office to offer basic banking services, as post offices long have in many countries, notably Japan. That idea has gotten an important official endorsement in the form of a detailed, extensively researched concept paper prepared by the Postal Service’s Inspector General.
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