Inflation is uncomplicated… most of the time. But sometimes economic conditions turn it into a vexing subject. The American mindset is conditioned to treat high/rising inflation as forever bad, and low and falling inflation as perennially good. Thinking in these terms is understandable, given the inflationary bias through time for a fiat monetary system. Most … Read more
The Italian government, Mario Monti informed the country’s parliament last Thursday, is now planning to concentrate its attentions on achieving economic growth. A timely decision this, since the statistics office announcement a day earlier that the country had once more fallen back into recession, while not being a surprise nonetheless does constitute a cause for concern. Not that Italy is … Read more
As I concluded in my previous blog: Olly Olly Oxen Free: it is safe to come out of the dark. A sovereign government faces no financial constraints. We can have payroll tax holiday extensions and unemployment benefit extension. Heck why don’t we go whole-hog and actually create jobs for the unemployed? We need 25 million … Read more
Dear Mario Xmas, This year I have behaved quite well with the students, so I ask you to bring me these reforms (knowing that you may not satisfy many of these wishes, for reasons of political arithmetic). I would like you to bring me: • the privatization of the Fondazioni Bancarie (Banking Foundations), those strange … Read more
“Why there hasn’t been more robust prosecution is a mystery.” -Raymond Brescia, visiting professor, Yale Law School Reuters has an outrageous article detailing the absurdity of the lack of prosecution of financial crimes in modern America. It is a shocking to watch the United States, a nation that once followed the Rule of Law, slip … Read more
Merry Christmas to all readers of the EconoMonitor and The Wilder View! Here’s a nice little model I discussed in 2007: The Economics of Christmas! Hope that you enjoy; I do. (This commentary was written in my more ‘academic days’ when I was inundated with models of theoretical macro. As you have no doubt noticed, I’ve gone the … Read more
Recently I’ve spent time thinking about global bond investors, especially those conservative investors that stick with the high-quality sovereigns. I’ve got news for them: the share of high-quality investment grade sovereigns – BBB- and above is investment grade – is shrinking. Some bullet points comparing ratings in December 2007 to December 2011: From a sample of 76 emerging … Read more
As Mae Moore says, “It’s a Funny World” (2002). Let’s try to make sense of two news reports. Help me if you can. 1. Republicans reject the payroll tax holiday because it does not go far enough. To complicate matters, the Senate has already gone on its Xmas holiday and is refusing to come back. … Read more
One of the key problems facing the world economy right now is a shortage of assets that investors would feel comfortable using as a store of value. There is both a structural and cyclical dimension to this shortage of safe asset problem, with the latter being particularly important now given the recent spate of negative … Read more
It has been striking how little commentary a BIS paper by Claudio Borio and Piti Disyatat, “Global imbalances and the financial crisis: Link or no link?” has gotten in the econoblogosphere, at least relative to its importance. As most readers probably know, Ben Bernanke has developed and promoted the thesis that the crisis was the … Read more