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Archive for the ‘crisis’ Category

A Response to Krugman on Greece and the Euro

May 16, 2011 4 comments

from Mark Weisbrot

Paul Krugman responds to my op-ed earlier this week on Greece and the eurozone with agreement and disagreement. He agrees that “Argentina is the right parallel” for the Greek situation, and that “the program for Greece is not working; it’s not even close to working.”  But he disagrees on exiting the Euro, for two reasons:  Read more…

Brookings’ “Heckuva Job, Brownie” moment: Greenspan’s keynote address

February 16, 2011 8 comments

from Dean Baker

The Brookings Institution stands alongside Harvard, Yale and Princeton, among the nation’s elite intellectual institutions. This is why it so striking that it chose to invite former Federal Reserve Board Chairman Alan Greenspan to give the keynote address at a forum on reforming the home mortgage finance system last week.

It would be difficult to imagine a more disastrous failure than Alan Greenspan. Read more…

The Budget Deficit Chicken Hawks

August 2, 2010 2 comments

from Dean Baker

Most people are familiar with the concept of “chicken hawks.” Chicken hawks are the politicians who are anxious to send other people to risk their lives in war, but somehow managed to avoid service when they had the opportunity to fight themselves. Former Vice-President Dick Cheney and former President George W. Bush are the leading members of the chicken hawk society.

It turns out that we have a similar story with budget policy, where there appears to be a large contingent of budget deficit chicken hawks. The deficit hawks have been filling the news lately. These are the folks who are yelling that something terrible will happen if we don’t reduce the deficit. Most of them seem to have missed the fact that something terrible is now happening. We have almost 15 million people unemployed and 9 million underemployed, with several million facing the loss of their home in the next few years.

People of all ages are seeing their lives wrecked by a economic disaster that was entirely preventable, if the folks running economic policy were not too incompetent to notice an $8 trillion housing bubble. In fact, one of the reasons that this bubble did not get noticed was that even before the bubble burst – creating large deficits – the deficit hawks were running around yelling about the deficits. These deficit hawks were able to get far more attention for their whining than the people who were warning about the dangers posed by the housing bubble. 

Read more…

Circuit Theory and the state of Post Keynesian Economics

December 18, 2009 7 comments

I gave a presentation at the 4th Dijon Money conference,  December 10-12 2009.   (A podcast of it is available here.)  Briefly, my paper explained how various conundrums that have stymied the development of Circuit Theory for 20 years were in fact the result of confusing a stock (an initial loan) with a flow (the economic transactions that loan could initiate over a year). With a proper dynamic approach, Read more…

4 Years of Calling the GFC

December 10, 2009 2 comments

I first realised that the world faced a serious financial crisis in the very near future in December 2005, as I prepared an Expert Witness Report for the NSW Legal Aid Commission on the subject of predatory lending.

My brief was to talk about the impact of such contracts on third parties, since one ground to overturn a loan contract was that it had deleterious impacts on people who were not signatories to the contract itself. I was approached because the solicitor in the case had heard of my academic work on Hyman Minsky’s “Financial Instability Hypothesis”.

Minsky’s hypothesis argued that a capitalist economy with sophisticated financial institutions could fall into a Depression as an excessive buildup of private debt occurred over a number of financially-driven business cycles. I had built Read more…

A new framework to address overshoot

December 8, 2009 1 comment

As an independent economic thinker rather than an affiliated academic, I can perhaps offer a fresh approach to our ecological predicament.

The current approach is typified by recent posts regarding cap-and-trade, including Edward Fullbrook’s request that economists evaluate James Hansen’s “fee and dividend” proposal.  These posts are attempts to reform the current system – that is, to improve on business-as-usual.  Such reforms are worthwhile, but strikingly inadequate to prevent the collapse that Fullbrook and many others rightly fear.

Climate change is clearly a major threat to ecosystems, but it is only a symptom of the underlying problem we face – ecological overshoot.  For the first time in history, humankind has violated environmental limits on a global basis.  This situation is unprecedented, and therefore requires an unprecedented solution. Read more…

Cleaning house at the WTO

(with Timothy A. Wise)

This week, the 10th anniversary of the infamous “Battle in Seattle,” ministers assembled in Geneva with renewed hopes of reviving world trade talks. To dampen expectations, World Trade Organisation chief Pascal Lamy bills the event as a mere “housekeeping session,” rather than full-fledged negotiations.

There is no question the WTO needs to clean house. The organisation charged with developing a fair and legitimate multilateral trading system has been left in the dust of world economic events. Read more…

Banking on Heaven

November 29, 2009 1 comment

Banking on Heaven: economics as confessional

 Jamie Morgan

‘I should like,’ said young Jolyon, ‘to lecture on it: “Properties and quality of a Forsyte. This little animal, disturbed by the ridicule of his own sort, is unaffected in his motions by the laughter of strange creatures (you or I). Hereditarily disposed to myopia, he recognises only the persons and habitats of his own species, amongst which he passes an existence of competitive tranquillity.”’ John Galsworthy, The Forsyte Saga.

The recent comment in the Sunday Times (8/11/09) by the Goldman Sachs CEO, Lloyd Blankfein, that banks serve a ‘social purpose’ and do ‘God’s work,’ was a controversial one. Reference to the Almighty in business and banking often leads to satirical exegesis. Many might respond that the liturgy of banks is public worship of quite another kind than might be ascribed to a divine being. Others might suggest that Read more…

Political documents vs. scientific ones

November 13, 2009 5 comments

Tuesday the International Energy Agency released its annual “World Energy Outlook” report http://www.iea.org/speech/2009/Tanaka/WEO2009_Press_Conference.pdf, in which it forecast that by 2030 world oil production would increase from the current 85 million barrels per day to 105.  But yesterday the Global Energy unit at Uppsala University in Sweden issued a report “The Peak of the Oil Age” which claims oil production is more likely to be 75 million barrels a day by 2030.  The diagrams below, from the Guardian, illustrate the radical difference between these two views of our next twenty years.   Read more…

A question regarding comparability of unemployment rates

November 6, 2009 2 comments

The just announced 10.2% current unemployment rate for the US is one of six unemployment rates, known as U1 – U6, that the US Bureau of Labor Statistics computes.  Today’s 10.2% figure is the U-3 rate – the one that the media almost always uses but never specifies.  U-4 includes, in addition to persons unemployed and currently actively looking for a job, persons who have given a job-market related reason for not currently looking for a job.  U-5 counts, in addition to those included in U-3, persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.  U-6 includes U-5 persons plus those employed part time who want and are available for full-time work but have had to settle for a part-time schedule.  

At any point in time large differences exist between these rates.  For example, today’s announced unemployment rates for October 2009, in addition to U-3, are U-4 = 10.7%, U-5 = 11.6% and U-6 = 17.5%.  My question is: when we are told that at some point in the Great Depression the unemployment rate was x%, which of the four unemployment concepts that I have described is the most comparable?

Stimulus and Jobs: We Can Do Better

November 3, 2009 13 comments

The Obama administration came out with its first set of numbers on the jobs impact of its stimulus package. It’s pretty much along the lines of what was predicted. To date, the package has created close to one million jobs. That is good news, but in an economy with more than 15 million unemployed workers, it is not nearly good enough. We need to do more, much more.   Read more…

Happy Anniversary Wall Street

November 1, 2009 7 comments

If I was asked to nominate the wisest aphorism of all time, Mark Twain’s “History doesn’t repeat, but it sure does rhyme” would definitely be one of my top two candidates.

On song, today Wall Street is replaying the 1930s, but to a slightly different meter. With the 80th anniversary of  the Great Crash of 1929 falling on October 29th of this year, Wall Street is celebrating in characteristic style–with a euphoria-led bubble that now appears to be crashing up against economic reality. Read more…