Keynes, Schumpeter and the Great Post-War Mistake
Nasar, Sylvia. n January 1919, as the Allied leaders met in Paris to hammer out a treaty ending World War I, famine and pestilence raged from St. Petersburg to Istanbul. To the Britons and Americans who came to survey the damage, the whole continent seemed to be in extremis. Eight weeks after the signing of […]
Eye on the market:The debt crisis in the European Monetary Union as seen by a 9-year old, and US recession risks
For the last two years, if the Eye on the Market had a single dominant theme, it was that a common monetary policy does not by itself create a durable monetary union; that European asset markets were not adequately pricing in the risk that the European Monetary Union could fail, or require massive transfers to […]
The Contradictions of Export-led Growth
Palley, Thomas The export-led growth paradigm is a development strategy aimed at growing productive capacity by focusing on foreign markets. It rose to prominence in the late 1970s and became part of a new consensus among economists about the benefits of economic openness. According to Thomas I. Palley, this paradigm is no longer relevant because […]
The Great Bank Robbery
Taleb, Nassim Nicholas, Spitznagel, Mark. For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years. In the United States, the sum stands at an astounding $2.2 trillion for banks that have filings with the US […]
Ben Bernanke’s Dream World
DeLong, Bradford. US Federal Reserve Board Chairman Ben Bernanke is not regarded as an oracle in the way that his predecessor, Alan Greenspan, was before the financial crisis. But financial markets were glued to the speech he gave in Jackson Hole, Wyoming on August 26. What they heard was a bit of a muddle. Πηγή: […]
Give Karl Marx a Chance to Save the World Economy
Magnus, George. Policy makers struggling to understand the barrage of financial panics, protests and other ills afflicting the world would do well to study the works of a long-dead economist: Karl Marx. The sooner they recognize we’re facing a once-in-a-lifetime crisis of capitalism, the better equipped they will be to manage a way out of […]
A First Dark Age of Macroeconomics…
DeLong, Bradford. In 1829 John Stuart Mill, Thomas Robert Malthus, and even Jean-Baptiste Say understood that excess demand for liquid cash money was excess supply for currently-produced goods and services, was a “general glut”. And once you recognize that your key financial asset, your medium of exchange–money–is also a savings vehicle (a store of value) […]
Market psychology, high unemployment and rational bubbles
Farmer, Roger. One explanation for the 2007-09 global crisis is that consumers, markets, and politicians were gripped by “irrational exuberance” that led them to believe the record-high house prices and stock prices were sustainable. This column proposes a new explanation based on rational behaviour and microeconomic theory. It argues that however high stock prices rise, […]
Is Capitalism Doomed?
Roubini, Nouriel. The massive volatility and sharp equity-price correction now hitting global financial markets signal that most advanced economies are on the brink of a double-dip recession. A financial and economic crisis caused by too much private-sector debt and leverage led to a massive re-leveraging of the public sector in order to prevent Great Depression […]
Current-account imbalances: Can structural policies make a difference in Germany?
Bornhorst, Fabian & Ivanova, Anna. The German current-account surplus peaked at 7½% of GDP in 2007, coinciding with the emergence of imbalances elsewhere. This column argues that these large imbalances in large part reflected a booming world economy rather than structural factors. It adds that any sustainable rebalancing would require an ambitious reform agenda aimed at […]