Western understanding of China has never greatly progressed beyond Charles de Gaulle’s statement that: “China is a big country, inhabited by many Chinese”. Despite constant analysis of developments in China in excruciating detail, economists seem to have only recently its identified debt problems. In fact, the country has had a 35-year addiction to cheap credit.Quantum … Read more
Last week Darby Beck of LEAP (Law Enforcement Against Prohibition) sent me a statement on drug legalization by Major Neill Franklin (Ret.) Franklin, now LEAP’s executive director, is a 34-year veteran of the Maryland State Police and the Baltimore Police Department. Like other members of his organization, he now advocates ending the war on drugs, … Read more
As for the so called emerging markets, not only should we not get too easily excited by this seemingly attractive concept, which, sadly, happens to too many economists but, on the contrary, we need to defy it. The term “emerging markets” was proposed not so much in relation to a society that allocates its resources … Read more
The Austrian school of economics has experienced a renaissance in recent decades. Its adherents have put their distinctive paradigm to work in nearly every field within their discipline. This post is the first of two that will examine the Austrian approach to environmental economics, with special emphasis on the problem of air pollution. (Follow this … Read more
Having ridden roughshod over Ukraine, Russia’s annexation of the Crimea is now over and a new chapter in Ukrainian politics is about to begin—but it won’t be much different than the last chapter, with the same old faces surfacing for May presidential elections. In the aftermath of the Maidan protests that overthrew president Viktor Yanukovych … Read more
In case you have not listened to it, this program on Minsky is actually quite good. Pay attention to the clips from Minsky’s own talks at Levy, and also to the praise coming from Larry Meyer–former colleague of Minsky at WashU (I was Meyer’s TA; he also funded our softball team, which was pretty good … Read more
A lot of things have happened in China since my last entry – in the FX markets, in the banking system, in the announcements of default, and in the continuing lowering of growth expectations – but for all the turmoil, as I see it nothing has happened that was unexpected and that has not been … Read more
The Greek government has reached agreement with the Troika (European Central Bank, European Commission, and IMF) on a set of policies putting its program back on track and opening the door for €8.1 billion in tranches over the summer, which should finance the government until September. To get this done involves moving forward lending originally scheduled for later … Read more
I was looking over FT Alphaville’s recent summary of Nomura’s Richard Koo’s work on the root cause of imbalances in the Eurozone. The main thrust of the thesis is that the ECB held interest rates low last decade to support Germany because Maastrict rules forbid a fiscal policy solution to Germany’s woes. But rates were … Read more
The European Central Bank is in a pickle. The pillars of monetary policy, money supply growth and inflation, are crumbling. The main interest rate it influences, the repo rate, is already at a lowly 25 bp. Excess liquidity is trending lower as European banks returned funds borrowed under the Long Term Repo facility. This is … Read more