Home > Uncategorized > Links. Banks, Money, Solar energy unbound, Great Depression and money, competitivety and productivity.

Links. Banks, Money, Solar energy unbound, Great Depression and money, competitivety and productivity.

1) Tim Worstall has a nice piece on the shortage of (hotel quality) toilet paper in Venezuela, which shows that he mastered institutional ideas about how markets work (there is more between heaven and earth than USA chartered listed companies).

2) Nice piece about the plunging costs of storing energy. Yes, ‘Tesla batteries’ but also something as simple as compressed air. We will see hundreds of billions of investments in decentralized, sustainable energy production and storage in the coming decades (around the North Sea this even cheap storage of wind and solar will however not solve the problem of foggy december days).

3) A new Levy Institute report about central banks and the crisis: “Our most important finding in this report was that the Fed originated over $29 trillion in loans to rescue the global financial system” and “There is a recognition that financial crisis support necessarily results in winners and losers, and the socialization of losses. At the end of the 1980s , when it became necessary to rescue and restructure the thrift industry, Congress created an authority and budgeted funds for the resolution. It was recognized that losses would be socialized with a final accounting in the neighborhood of $200 billion. Government officials involved in the resolution were held accountable for their actions, and more than one thousand top management officers of thrifts went to prison. While undoubtedly imperfect, the resolution was properly funded implemented, and managed to completion and in general it followed the procedures adopted to deal with bank resolutions in the 1930s. By contrast, the bail outs in the much more serious recent crisis were uncoordinated, mostly off budget, and done largely in secret and mostly by the Fed. There were exceptions, of course. There was a spirited public debate about whether government ought to rescue the auto industry. In the end, funds were budgeted and government took an equity share and an active role in decision making, openly picking winners and losers. Again, the rescue was imperfect, but ex post it seems to have been successful. Whether it will still look successful a decade from now we cannot know, but at least we do know that Congres s decided the industry was worth saving as a matter of public policy. No such public debate occurred in the case of the rescue of Bear Stearns, the bankruptcy of Lehman Brothers, the rescue of AIG, or the support provided to a number of the biggest global banks”

4) When talking about banks: it seems that, contrary to the promises made by conservative politicians, by far the larger share of the 62 billions or so used to rescue the Spanish banks won’t be recovered by the spanish government: the government as the share holder of last resort (article by Stefan Adolf in todays Volkskrant, no link).

5) Nice piece by Brad deLong about the Great Depression and the Great Recession and why MIlton Friedman style (bank-)money printing did not work as well as many people thought it would. Need to stress this: Koo showed that the increase of money in the USA after 1933 was caused by the government borrowing directly from banks; this money was used to spend. Like many of his chicago compatriots Friedman seems not to have mastered double accounting, let alone quadruple accounting (which shows that (A) the government borrowed the money and (B) the government did spend the money). The reason why Chicagoeans do not bother to master the most basic of all economic models, which is among other things the backbone of monetary and GDP statistics but also, is out in the open – but my hypothesis is that it shows too many inconvenient thruths.

6) A new ECB report about competitivety. It’s much, much more about productivity than about wages.

  1. graccibros
    May 6, 2015 at 3:33 pm

    Thanks very much for this, “M.” Especially the summary of the Levy Institute’s findings on the Fed’s taking over “loan origination.” I would think the MMTer’s would like that summary and “revelation,” shrouds ripped away from the process, but they’re going to have to speak for themselves, I’m an outside observer.

  2. Nietil
    May 6, 2015 at 6:19 pm

    “We will see hundreds of billions of investments in decentralized, sustainable energy production and storage in the coming decades. ”

    Which will badly worsen our climate problem, thanks to all the fossil fuels we will need to burn to built these things, as already installed renewables will not be sufficient at such a growth rate. There is an optimal rate of deployment for solar energy ; above or under this rate, we lose in environmental terms.

  3. Vanek
    May 8, 2015 at 5:52 pm

    My favorite close to clear-cut conclusion from the ECB report:
    “One may be tempted to tentatively conclude that the high and persistent current account surplus of the Netherlands does not seem to reflect a major problem of the Dutch economy itself and that no significant policy interventions are called for especially since arguably the current account of a country should not be considered a policy variable to be targeted directly. However, on closer inspection a less benign interpretation may be warranted.”

  4. Ack Nice
    May 9, 2015 at 2:40 pm

    just a guess, but wouldn’t $29 trillion have paid off every mortgage on the planet had it not been funneled to the Banksters?

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