That’s the title of a piece my colleague Andrew Reschovsky has in the Fall La Follette Policy Report. With the admission of failure by the Supercommittee, it’s important to recall the basic choices facing the Nation. In principle, solving the nation’s debt problems is easy. Almost all experts agree that a combination of reduced spending … Read more
Much of the latest issue of the newsletter, sent out two weeks ago, was on disaggregating the trading performance of the RMB to separate market sentiment from PBoC actions, but since this was pretty technical stuff I am not including it in this blog entry. This means that once again most of the current entry … Read more
I’ve been doing quite a bit of research on the balance of payments flows within the Euro Area (EA). Given the complexity of the balance of payments, there are too many angles to tackle in one post. Therefore, spanning the next week I will dedicate my commentary to the EA balance of payments. In this … Read more
“Nervous investors around the globe are accelerating their exit from the debt of European governments and banks, increasing the risk of a credit squeeze that could set off a downward spiral. Financial institutions are dumping their vast holdings of European government debt and spurning new bond issues by countries like Spain and Italy. And many … Read more
When discussion turns to the possibility that some country might leave the euro, much is often made of the technical difficulties of introducing a new currency, especially of the months, even years, of planning that went into launching the euro in the first place. Sample: “Computers will have to be reprogrammed. Vending machines will have … Read more
It is beginning to look like a Greek exit is ever more likely, which means that the end of the EMU could be near.Even if exits and a break-up are not inevitable, countries should have a plan on the shelf. It is clear that Germany is going to insist on the maximum austerity it can … Read more
The story that (extreme) left and most right-wingers are now telling about the new Monti government is that a coup is taking place in Italy. The “obscure powers” of international finance, thanks to the the centre – left Democratic Party and to President Napolitano, through heavy speculation against the Italian debt, have succeeded in driving … Read more
As I predicted last week, the run out of Euro government debt would spread from the periphery to the supposedly fiscally sound countries of the center and north. Today it happened. The inevitable was inevitable. The problem was never one of profligate Mediterraneans with lax fiscal policy. No Euro nation should ever have run chronic … Read more
Europe’s slowing economy is a wake-up call for the austerity-now folks. Industrial production in the euro-zone fell 2% in September, a sharp drop from August’s 1.4% rise, EuroStat reports. The annual pace is still positive, but a slowdown is evident here as well with September’s year-over-year rise of 2.2% vs. 6.0% in August. Germany is … Read more
Summary: Among our most serious problems is the success of well-funded engines of propaganda at manipulating public opinion, making effective public policy reforms almost impossible. Here we examine one example, convincing Americans that the government caused the housing bubble. This is a follow-up to Facts are an obstacle to the reform of America. People become easily led once … Read more