Video and article over at Kansas City’s KSHB highlighting NEP’s Randy Wray’s analysis of the problems with the European Monetary Union and his predictions that it would lead to the European crisis. You can view the video and read the article here.
NEP’s Bill Black appears with Richard “RJ” Eskow on the Zero Hour discussing the DOJ’s change in stance regarding prosecuting elite white collar criminals. You can view the video below.
By Felipe Rezende
The creation of new sources of financing and funding are at the center of discussions to promote real capital development in Brazil. It has been suggested that access to capital markets and long-term investors are a possible solution to the dilemma faced by Brazil’s increasing financing requirements (such as infrastructure investment and mortgage lending needs) and the limited access to long-term funding in the country. Policy initiatives were implemented aimed at the development of long-term financing to lengthen the maturity of fixed income instruments (Rezende 2015a). Though average maturity has lengthened over the past 10 years and credit has soared, banks’ credit portfolios still concentrate on short maturities (with the exception of the state-owned banks including Caixa Economica Federal [CEF] and the Brazilian Development Bank [BNDES]).
By Felipe Rezende
In previous posts (see here and here), I discussed Standard & Poor’s (S&P) downgrade of Brazil’s long-term foreign currency sovereign credit rating to junk status, that is, to ‘BB+’ from ‘BBB-‘ and its decision to downgrade Brazil’s local currency debt to a single notch above “junk” status.
So S&P has downgraded Brazil’s rating on long-term foreign currency debt to junk and lowered its long-term local currency sovereign credit rating to ‘BBB-‘ from ‘BBB+’.
First, what are sovereign debt ratings? Standard & Poor’s sovereign rating is defined as follows:
A current opinion of the creditworthiness of a sovereign government, where creditworthiness encompasses likelihood of default and credit stability (and in some cases recovery).
So that ratings are related to “a sovereign’s ability and willingness to service financial obligations to nonofficial (commercial) creditors.”
What does this tell us? To begin with, credit rating agencies have repeatedly been wrong. The same agencies that rated Enron investment grade just weeks before it went bust, the same people that assigned triple A rating to toxic subprime mortgage-backed securities are now downgrading Brazil sovereign debt. As the FCIC report pointed out “The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval.” (FCIC 2011)
To update our Spanish friends:
In an effort to bring MMT into the political debate in Spain, APEEP will be hosting Warren Mosler for his presentation of the Spanish translation of his book “The Seven Deadly Innocent Frauds of Economic Policy” during a one-week tour through Spain, starting with a presentation in Madrid, on the 14th of September; Valencia on the 15th of September; and Vila-real on the 17th of September.
For all our Italian speaking visitors, our friends over at RETE MMT have undertaken the arduous task of translating Randy Wray’s MMT Primer into Italian. The project is a work in progress and not all posts have been translated as yet. As they add to their list of translated posts, we will update this list to reflect their accomplishments. The links will take you directly to the relevant post on RETE MMT.
For our spanish speaking (and reading) friends, the spanish version of Randy Wray’s book Teoría Monetaria Moderna is now available as a Kindle e-book. The details are available here.