Archive for the ‘financial crisis’ Category

What do Banks Actually DO? Teach-In for Occupy Toronto

November 7, 2011 5 comments

What do banks actually DO?  Create credit out of thin air.

Were Canadian banks bailed-out?  Absolutely, to the tune of $200 billion.  And they are still protected and subsidized more than any other sector of the economy.

What must be done with these banks?  Tax them, control them, and ultimately take them back.

Those are the “take-aways” from a short talk on the banking system that I was honoured to give as part of an Occupy Toronto rally last weekend at the corner of King and Bay in downtown Toronto. Read more…

George Monbiot Seminar

October 27, 2011 27 comments

from Steve Keen

This is the link to video of the seminar I gave in Oxford earlier this month that The Guardian‘s George Monbiot attended. George then wrote the feature “It’s in all our interests to understand how to stop another Great Depression“, which briefly propelled the new edition of Debunking Economics to No. 89 on Amazon UK‘s Bestseller list.  Read more…

Why Poland and Sweden escaped the crisis, to an extent, and some other Baltic states didn’t

October 25, 2011 Leave a comment

from Merijn Knibbe

Introduction: the real lesson of the graphs below is that ‘investment booms’, induced by large flows of (international) capital, have to be prevented.  And they can be prevented. Poland seems to have managed this by having an ‘outdated’ financial system, which disabled the free flow of foreign capital (and yes, according to graphs 2 and 3 a land tax might help, too).

Paul Krugman recently Read more…

Break up the banks

October 24, 2011 4 comments

from Peter Radford

Before they break us up. Again.

I have stayed away from discussing the banks in recent months largely because I consider the solution to our banking problems to be self evident. They’re too big. Make them smaller. Arcane debates over capital ratios, naked CDS prohibitions and other bureaucratic responses are all small fry and akin to re-arranging deck chairs. The chairs are just fine. It’s the Titanic we need to worry about.  Read more…

Wall Street under seige?

October 5, 2011 4 comments

from Steve Keen

The Occupy Wall Street campaign is now in its 17th day–making it easily the longest political protest of the Global Financial Crisis. Unfortunately, even I wasn’t aware of it when I was in New York two weeks ago, a few days after it started, since it received very little coverage from the media prior to the arrest of about 700 protesters on the Brooklyn Bridge.

Now it’s entrenched, and growing. Read more…

Santa Claus and the S&P Market Crash

September 2, 2011 11 comments

from Dean Baker

Most adults know that there is no Santa Claus. They should also know that there was no stock market crash associated with the Standard and Poor’s downgrade of U.S. government debt. However, because powerful interests want to spread misinformation about the downgrade, people are likely to be much better informed about Santa Claus.

Before addressing the specifics of the S&P downgrade and its impact on the market it is important to discuss some background. Read more…

Please don’t interrupt us, we’re robbing the banks….

September 1, 2011 Leave a comment

from Merijn Knibbe

On Bloomberg (emphasis added):

Global regulators should scale back plans to impose capital surcharges of as much as 2.5 percentage points on banks that would cause global financial system turmoil if they failed, because the requirements may damage economic recovery, a group representing European lenders said. Read more…

Bailing out the financial aristocracy

August 26, 2011 7 comments

from David Ruccio

We’ve known all along about the TARP funds.* Now, thanks to Bloomberg, we know about the $1.2 trillion of public money, which is about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages, Fed Chairman Ben S. Bernanke showered on the Wall Street aristocracy.  Read more…

Which economic indicators?

August 23, 2011 13 comments

Despite the abundance and omnipresence of economic indicators in the media and in our professional outlets, the economics profession in the main failed to observe the approach of the Global Financial Collapse.  But what about that small minority of economists, many of whom were nominated for the Revere Award, who saw it coming and gave warning. From which indicators did they gain their foresight?  Given that there has been no major reform of financial systems, the same indicators that foretold approaching disaster last time will most likely also provide the means of doing so in the future.

The world needs a short list of such indicators with concise explanations of how to interpret them.  Ideas anyone?

Debate: The US Economy post the 2008 Crash

August 23, 2011 2 comments

from Steve Keen

The ABC Radio National program Rear Vision is a current affairs program that presents “contemporary events and people in their historical context”.

I was recently interviewed by Rear Vision for a retrospective on the crisis, entitled “Here we go again: A look at the US economy post the 2008 GFC crash” which debated why the crisis is still with us today.

Other speakers were Ed Harrison from Credit Writedowns, with whom I’m very much in agreement, economic historian Richard Sylla from New York University, and Steve Hanke from John Hopkins with whom I almost completely disagree.  Read more…

Bits and pieces from the front line

August 19, 2011 7 comments

from Peter Radford

Historians will surely love to reflect on these days. Each seems to bring some violent twist. Each adds to the amounting confusion. Each makes the story that much more difficult to tell.

Yesterday we learned that last week’s apparent uptick in the U.S.  labor market was an illusion. At least until next week. New claims for unemployment assistance rose once more above the 400,000 level – to 408,000. Last week they had managed to slide slightly below, although only by a hair to 399,000. Somewhere along the way we have altered our view of what a “good” new claims number is. Read more…

What and who caused the government debt crisis? – 3 graphs

August 18, 2011 2 comments

from Edward Fullbrook

What happened in 2008?  What and who caused it?  Who should pay for it now?  Read more…

U.S. and Europe: slow strangulation is much more likely than financial catastrophe

August 18, 2011 9 comments

from Mark Weisbrot

The prevailing understanding of economic troubles in the U.S. and Europe, the world’s two largest economies, is misunderstood in a number of ways.  First: Imagine that you are driving a car down a road packed with snow and ice and you are worried about an accident. At the same time you are ignoring the fact that you are about to run out of gasoline, leaving you stranded and freezing in the middle of nowhere.

Such have been the main reactions to last week’s extreme volatility in financial markets: There has been much more fear of financial crisis than the slow strangulation that poses the greater risk. Read more…

They told us so

August 16, 2011 1 comment

from David Ruccio

The pundits and politicians seem surprised when civil unrest breaks out amidst the wreckage of the current crises and the imposition of increasingly severe austerity plans. But, as Barry Ritholtz reminds us, we were warned.

We were warned, back in 2008 and 2009, by:  Read more…

S&P Rubbish

August 11, 2011 6 comments

from Peter Radford

As an afterword on the whole downgrade silliness, the world has been full of S&P critiques. Quite why we need to add to the very obvious fact that S&P is clueless as to risk, and very likely corrupt to boot, seems beyond me. Anyone who believed the magical stardust sub-prime mortgage lead into AAA gold alchemy is clearly incapable of even the most simple analytical process. Alchemy is alchemy no matter how you dress it up, and no matter how many MIT economics PhD’s devote their mathematical skills to the problem. Read more…

Ha-Joon Chang explains the turmoil in global markets

from David Ruccio

Ha-Joon Chang [ht: ja] explains that the turmoil in global markets was not inevitable, and it won’t be fixed by controlling budget deficits. Instead, he argues, there’s an “urgent need to reform our financial system, whose dysfunctionality lies at the heart of this crisis.”  Read more…

Will the popular movements teach the European Central Bank economics?

August 9, 2011 4 comments

from Dean Baker

The European Central Bank (ECB) is run by people who are not very good at economics. They continue to adhere to a fundamentally wrongheaded view of the economy and the central bank’s role within it. Unfortunately there is no internal pressure for change because, like the Communist Party in the Soviet Union, acceptance of the ideology is the price for admission into the clique of economists who can influence the ECB. Read more…

Headed to recession?

August 8, 2011 5 comments

from Peter Radford

Well it didn’t take long for the stock and credit markets to vote on the efficacy of American economic policy. Judging by last week’s massive stock market sell off, coupled with the steady decline of bond rates, the vote is clearly a negative one. The markets are giving us the collective thumbs down. Evidently sentiment is gathering behind the notion that the economy is weak, that we have no leadership, that we have no corrective policy, and that the risk of another recession is rising by the hour. To make matters worse there is an epidemic of economic incompetence worldwide, not least in Europe where the leadership seems determined that we need a re-run of 1937. Because, presumably, the first time through was such a thrill. Read more…

Did no-one “see this coming” too?

August 8, 2011 2 comments

from Steve Keen

Beyond the current volatility of the stock market, it is becoming obvious to everyone now that the crisis that began in 2007 is still with us.

When the crisis first hit, many of those whose behavior (or delusional economic models) helped cause this crisis claimed when it hit that “No-one saw this coming”–that it was an unpredictable event. Dirk Bezemer gave the lie to that with his paper of the same name, identifying the handful of academic economists and market commentators who had anticipated this crisis because they focused on the explosion in private debt that had occurred since the 1987 stock market crashRead more…

Productivity in Europe: two graphs

July 28, 2011 3 comments

from Merijn Knibbe

Introduction: instead of looking at an ill defined variable like Unit Labor Cost to investigate competitiveness, it’s better to look at a still quite vague (it excludes household production and social and environmental effects) but better defined variable like ‘productivity’. The transition economies are rapidly closing the EU productivity gap EU.  So do Italy, the UK and even Germany…. Since 2006, Spain increases its relative productivity – but this is to little avail as unemployment in Spain has reached 21%.

Leaders of the EU have negotiated a Greek debt deal. I’m not impressed, yet. Mark Rutte, prime minister of the Netherlands and Jan Kees de Jager, minister of finance of the Netherlands, told the press that the deal involved a total of 109 milliard Euro – while all other heads of state seem to have the idea that the amount involved is 159 milliard Euro…. somebody is fifty milliard wrong (yes, I write milliard). Update: guess who were wrong… all of them. According to a letter Read more…