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Friday, May 31, 2013

Report on Money Laundering in Cyprus

Outi Keranen on "Managing the (EZ) Crisis Through Secrecy

P. Krugman and G. Papandreou V N. Gingrich and A. Laffer

My preferred duo won  the Munk debate. The motion was:
Be it resolved, tax the rich (more)…
For P Krugman's presentation check here 

iAGS 2013 is titled Failed Austerity in Europe: The Way Out

The report was commissioned by the S&D Group in the European Parliament and prepared by three economic institutes: the OFCE (Paris); the IMK (Düsseldorf) and the ECLM (Copenhagen).

My annotation of the Executive Summary
The euro area suffered primarily from a balance of payments crisis due to the build-up of current account imbalances between its members. 
I would argue that that was the root of the EZ crisis, and fully agree with  the authors who refer to
a fallacious diagnosis according to which the crisis stems from the fiscal profligacy of member states
 If Greece and, to a lesser extent, Portugal are guilty of fiscal profligacy does not change the core argument. Greece is a very special case.
The sustainability of public debt is a major concern for national governments, the European Commission and financial markets, but successive and unprecedented consolidation programmes have proven unsuccessful in tackling this issue.
I am not quite happy with that. The sustainability of public debt is definitely NOT the  issue of the consolidation programmes of all EZ members. The issue is, at least in the short-to-medium-term, to bring down annual deficits to the level of 3% of GDP as provided for by the Growth and Stability Pact. It was an issue for the countries under "troika" loan support.

During normal times, sustainability of public debt is a long-term issue, whereas unemployment and growth are short-term ones. Yet, fearing an alleged imminent surge in interest rates and constrained by the Stability and Growth Pact, and although transition towards more normal times had not been completed, member states and the European Commission reversed priorities. 
This is somewhat odd. What do the authors suggest is that governments made their priorities to increase unemployment and depress growth.

They go on with this
But it is equally reflecting a dogmatic view in which fiscal policy is incapable of demand management
One can accuse the ECB, Commission, Eurogroup, IMF, and also national governments of many things but not that they are dogmatic neo-liberals.

As I assume the report itself is similarly slanted... so I will pass it by.

Friday, May 24, 2013

Michael Pettis thinks that.....

in Spain you are not really supposed to talk about abandoning the euro if you want to be taken seriously

His take of the recent "good"news about the Eurozone is that
 the debt-burdened countries of peripheral Europe are going to suffer a decade of weak growth, high unemployment, and contentious politics, all the while the debt growing faster than the economy. 
 

Matina Stevis dissects IMF's “Sovereign Debt Restructuring — Recent Developments and Implications for the Fund’s Legal and Policy Framework,”

and she does a great job. She sees  a future dissociation of the IMF from the euro zone.
Reading her column makes reading the IMF paper redundant

Barry Eichengreen interview for Cleveland FED

Wednesday, May 22, 2013

Ο Christopher T. Mahoney συμφωνεί με Π. Λαφαζάνη

Ο τ.Αντιπρόεδρος της Moody's θεωρεί ότι As long as the troika persist in their deflation policies, there is no hope for growth for Southern Europe. Επο πλέον,
Why have a prolonged depression prior to D-Day, if D-Day is inevitable? Right now the most important question is whether there is any hope of negotiating an orderly exit with the troika, including transitional financial assistance.

Χμ... ενδιαφέρουσα άποψη! 

Thursday, May 16, 2013

Paul Krugman: How the Case for Austerity Has Crumbled

Arguably the definitive answer to the austerians by you-know-who in The New York Review of Books
He takes the opp of a post by Noah Smith, a young economist buck of note who bloggs at Noahpinion to come back to the subject, and use yet another new angle.