Tag Archives: austerity

Will the EU’s Austerity Prove as Radicalizing as the Washington Consensus?

By William K. Black

President Rafael Correa of Ecuador owes a triple debt to John Williamson, the economist who coined the term “the Washington Consensus” in a paper he first presented in 1989.  His paper is open about the focus of that consensus: Latin America.  Latin America was to be transformed through policies on which the United States Government, the International Monetary Fund (IMF), the World Bank, and the Washington “think tanks” had reached a consensus.  Those policies had four key components.

  • Require a sufficient stream of payments of interest by Latin American debtors to U.S. banks to ensure that the banks would not have to recognize large losses on their loans
  • Require Latin American nations to adopt austerity
  • Require substantial deregulation, and
  • Require substantial privatization

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The Dangerous Lure of Austerity to Progressives Seeking to Reduce Pentagon Spending

By William K. Black

William K. Black

I spent today in Washington, DC presenting and attending a conference put together by Ralph Nader on left-right convergence.  The theme was that there were many issues on which large elements of the left and right agreed and could change existing policies if they worked together.  I spoke about the desirability of effective financial regulation to break the Gresham’s dynamic and prevent or at least minimize the damage of future financial crises and the desirability of prosecuting the elites that run financial “control frauds.”

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Peterson/CBO Beat for Austerity Goes On!

By Joe Firestone

Recently, I’ve been writing about oligarchs advocating for entitlement cuts and austerity. I’ve discussed attacks on entitlement benefits for the elderly from Abby Huntsman (of MSNBC’s The Cycle) and Catherine Rampell (a Washington Post columnist), both the children of well-off individuals. These posts have come in the context of the English language release of Thomas Piketty’s Capital in the Twenty-First Century, and the more recent pre-publication release of a study by Martin Gilens and Benjamin I. Page using quantitative methods and empirical data to explore the question of whether the US is an oligarchy or a majoritarian democracy. They conclude:

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Heard (but not understood) On the Street: The WSJ and Deflation

By William K. Black

A brief update is in order after my three part series on how the troika (the ECB, EU, and the IMF) was acting contrary to its stated policies on deflation, Mario Draghi’s (the head of the ECB) confession that he favored deflation in the eurozone periphery because he wanted these nations to have lower prices and wages so that they could increase exports, and the disgraceful reporting of the subject in the New York Times and the Wall Street Journal.  The WSJ’s Heard on the Street” feature is out with an April 3, 20014 story on deflation that epitomizes each of these defects.  The title of the article foreshadows the analytical black hole that follows: “Inflation, Euro Test Draghi’s Resolve at ECB.”

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The Kamikaze Economics and Politics of Forcing Austerity on the Ukraine

By William K. Black

We all understand why Russia is waging economic war on the Ukraine, but why is Obama doing so?  The New York Time’ web site has posted a remarkable Reuters story (dated April 5, 2014) entitled “Ukraine PM Says Will Stick to Austerity Despite Moscow Pressure.”

“The Kiev government will stick to unpopular austerity measures ‘as the price of independence’ as Russia steps up pressure on Ukraine to destabilise it, including by raising the price of gas, Prime Minister Arseny Yatseniuk told Reuters.”

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An Open Letter to Don Beyer, VA – 8th Candidate for Congress

By Joe Firestone

My Congressman, Jim Moran, is retiring this year and his seat is up for grabs in the VA – 8th Congressional District. This is a solidly blue district made even more solid by the Republican gerrymander following their win in the disastrous elections (for poor people, for women, for the middle class, and for minorities) of 2010 in Virginia. So, the question is, which of the eleven candidates who are running in the primary will win it, and become the heavy favorite to win the Congressional election in November.

The heavy primary favorite is Don Beyer, a noted auto dealer in Northern Virginia, who has served as Lieutenant Governor twice, and also as Ambassador to Switzerland. My impression of Ambassador Beyer has been favorable. I have a friend who bought cars from him over many years and who had his Volvos serviced at his dealership all the while, and he had nothing but good things to say about the integrity of the service he received.

That said, however, and personal characteristics aside, I’d like Beyer to clarify his positions on the issues. So, I’m addressing this open letter to him.

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Still Not Over: CPC Update

By Joe Firestone

The Congressional Progressive Caucus (CPC) recently issued its “Better Off Budget” document as an alternative to the White House/OMB document, and the coming House budget document, a Republican/conservative alternative. The “Better Off Budget” has received enthusiastic evaluations from writers affiliated with the DC progressive community. Richard Eskow’s recent treatment is typical and provides other reviews that are laudatory. These “progressives” clearly see the CPC budget as anything but an austerity budget. But is it, or is it not?

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No, Virginia, the Austerity Era Is Not Over

By Joe Firestone

If the President’s budget were enacted by Congress, and OMB’s projections over the next decade hold, it would almost certainly mean economic stagnation punctuated by recession over the next decade. Would it also mean austerity, however? Let’s see.

The Sector Financial Balances (SFB) model is an accounting identity, and these are always true by definition alone. The SFB model says:

Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0.

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If New York Times Reporters Won’t Read Krugman about Austerity Will they Read Brooks?

By William K. Black
(Cross posted at Benzinga.com)

The New York Times Incompetence in Macroeconomic Reporting (IMR) Award

I have written repeatedly about the New York Times’ needs to create a prize in incompetence in macroeconomic reporting (IMR) and suggested that the paper award the IMR prize to its reporters.  I suggested that the prize consist of a two hour lunch with Paul Krugman in which he will provide them with a remedial lecture on why austerity is an economically illiterate response to a recession.

NYT columns discussing austerity, particularly in the eurozone, demonstrate that its reporters religiously avoid reading Krugman’s scores of columns on austerity.  As always on this subject, I want to make express that I don’t insist that the reporters agree with economics.  It is fine for reporters to state that economics has known for 75 years that austerity is a self-destructive response to a recession but that some economists disagree.   It is fine for the reporter to explain why he agrees with the austerian economists.  It is not acceptable journalism to ignore the dominant economic view, 75 years of supporting events, and the empirical studies by austerians (the IMF) finding that fiscal changes have more powerful effects on the economy consistent with the dominant theory.  It is not acceptable journalism to ignore unemployment and inequality and the role of austerity in increasing both.  I end by expanding on Krugman’s column about a tragic financial media meme by discussing three related memes that are causing great harm.

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Bipartisan Budget Deal

NEP’s Bill Black appears on TheRealNews.com. The discussion is about the new budget deal and the fact that it secures austerity policies and fails to extend unemployment benefits. (Bill appears at the 8:00 minute mark).