This post is a continuation of the ideas for a Greek exit for the euro zone that I published on Friday. This post, however, also incorporates specifics that Marshall Auerback has laid out in a separate post and demonstrates why exit is the likely option.Now, the Greek exit scenario I outlined on Friday is identical … Read more
In general, I think Binyamin Appelbaum and Robert Gebeloff’s article on how the same people oppose government handouts and take government handouts is very good. But I think their framing buys into a piece of conventional wisdom that just isn’t true. Here it is, without any shortening (but emphasis is mine): “The problem by now … Read more
Many writers tend to depict the effects of austerity in purely economic terms: loss of wealth and income, lesser income/social mobility. But depressions and accompanying changes in social norms can and do have more serious consequences. A story in Bloomberg illustrates how the combination of budgets slashed thanks to austerity policies leads directly to deaths. … Read more
Yves Smith at Naked Capitalism has long been skeptical of the negotiations by the State Attorneys General and the banksters over the foreclosure frauds (see here http://www.nakedcapitalism.com/2012/02/settlement-breakdown-by-state-plus-other-official-propaganda.html). And while I had held out some hope that California and New York would either refuse to join, or would insist on good terms, today’s announcement of the … Read more
The Greek minimum wage is apparently a point of contention between the Troika (ECB/EU/IMF) and the Greek government. The NY Times cites competitiveness gains as a rationale for the minimum wage cut: The goal of any pay cuts would be to help make Greek workers, who are generally less productive than workers elsewhere in Europe, … Read more
Patrick Chovanec, associate professor at Tsinghua University’s School of Economics and Management in Beijing, China stopped by the RGE offices in NY for a discussion on the likelihood of a hard landing in China and we consider the short and medium-term implications of policy adjustments, leadership transitions, and technology advancements. [22:20] [2:25] – How much … Read more
Could the Fed spark a robust recovery by raising its federal funds rate target? For Bill Gross the answer is yes. He believes a key reason holding back the recovery is that the Fed is engaged in a type of financial repression where financial intermediaries’ net interest margins–the difference between their funding costs and lending … Read more
While we may be hours away from a partial (and certainly a stopgap) agreement in the talks among the Greek government, the troika and private sector creditors, it is doubtful that a deal will emerge in a fully constructed fashion that will survive its application in the real economy. It is likely that the only common view amongst … Read more
Last week Clive Crook opined on some fallacies of labor reform, specifically related to the unions and through the Spanish experience. Labor reform is a highly contentious subject, given its close ties to welfare and politics. Based on Clive Crook’s article, I delved into global temporary employment using OECD data and noticed two things: (1) … Read more
I’m directing a research project on the Fed’s bail-out of Wall Street and am periodically posting updates on the findings. Previously I’ve blogged the preliminary findings of two of my grad students, James Felkerson and Nicola Matthews and the first paper was finished a few weeks ago (my summary here http://www.levyinstitute.org/pubs/op_23.pdf; full paper here http://www.levyinstitute.org/pubs/wp_698.pdf) … Read more