First, we would like to clarify that we are strong supporters of the European monetary integration project. Our view is that the single currency involves significant potential economic and political benefits for all its participants which far outweigh its potential costs. We thus believe it is right to spare no effort to ensure the euro’s … Read more
One of the most interesting papers to come out of the Jackson Hole conference this year, both in title and content, was “The Dog and the Frisbee.” The paper, presented by Andrew G. Haldane, Executive Director for Financial Stability at the Bank of England and co-authored by Vasileios Madouros, an economist at the same institution, … Read more
When and if it occurs, the desirable recovery of the global economy will challenge the current combination of controlled exchange rate and low interest rates. With the 0.5% reduction of the base rate (Selic) last Wednesday, August 29, the current cycle of monetary easing reached the same amount that had been accumulated in the aftermath … Read more
I have repeatedly described myself as a Euroskeptic. The current combination of politics and economics looks likely to at worst doom the Euro to failure, at best to commit the Continent to a deep and long-lasting recession. Moreover, the pace of deterioration in Greece, combined with an economic structure that seems completely at odds with … Read more
Facebook went public a week ago, to great embarrassment. NASDAQ creaked under the strain and, more important, the price dropped from an offer price of $38 to as low as $27 over the next week as investors decided that Facebook wasn’t so exciting now that anyone off the street could buy it. In the long … Read more
John Cochrane has analyzed the implications of the expansion of the Federal Reserve’s activities from its traditional targeting inflation and unemployment to its more recent allocating credit to sectors of the economy by acquiring non-traditional financial assets such as mortgage backed securities. Ben Bernanke offered a justification for buying non-traditional assets Friday at the annual … Read more
Charles Kindleberger’s classic book on the Great Depression was originally published 40 years ago. In the preface to a new edition, two leading economists argue that the lessons are as relevant as ever. The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening. We see unemployment, youth unemployment especially, … Read more
Yesterday, the Financial Times reported that borrowing costs for small businesses in the periphery were rising relative to the core using the ECB’s release of July MFI interest rate data. I highlighted this point exactly on August 1 following Draghi’s now famous London speech, where he cautioned that monetary transmission mechanism is ‘hampered’. As opposed … Read more
I examine how highly conservative newspapers are covering the interplay of widespread “control frauds” by the world’s most elite banks, the carefully structured de-evolution of financial regulators through descent from the subphylum Vertebrata into the phyla of the invertebrates, and the global failure to prosecute the elite frauds that drove the ongoing financial crisis. The … Read more
First, of all, it is not Mr. Basci, it is Dr. Basci, as Indiana’s sidekick insisted, but so was Feynman, or maybe not- I think the incident that gave rise to the title of the book happened while he was still in grad. school. Actually, Dr. Basci was not even at today’s Central Bank of … Read more