By William K. Black
Quito: June 25, 2015
The BBC came up with a good “hook” for a story on the troika’s assault on the Greek economy and people. “Yanis Varoufakis, the Greek finance minister, spent his academic career … studying game theory.” Professor Marcus Miller, a UK economist (U. Warwick) wrote an article for the BBC premised on how Varoufakis would apply game theory to Greece’s negotiations with the troika (the IMF, ECB, and the European Commission). Miller is a colleague of the great Robert Skidelsky and has co-authored with him an article explaining the economic illiteracy and self-destructive nature of the troika’s (and UK’s) infliction of austerity in response to the Great Recession.
The BBC, however, is such a great fan of austerity that one rarely reads why the vast majority of economists think that using austerity to respond to a Great Recession is akin to the quackery of bleeding a patient to make him healthier. Miller’s article in the BBC about game theory has the wrong title (recall that the author often does not get to choose the title), the wrong game, the wrong concept, and the wrong payoffs. The title of the article is: “Can game theory explain the Greek debt crisis?” The article does address that issue. It is limited to the issue of the new Greek government’s negotiations with the troika concerning a crisis that they inherited.
By Pavlina Tcherneva
Cross posted from Al Jazeera
“There are red lines in the sand that will not be crossed,” Greek Prime Minister Alexis Tsipras said just weeks ago as he began the long negotiations process with creditors.
Some of these lines included no more pension cuts or value-added tax (VAT) increases, and a debt restructuring deal that incorporates renewed economic assistance from Europe. Tsipras has been working to complete the previous government’s austerity commitments, without any guarantee of a meaningful debt reprieve in the future.
Yet on Monday, he crossed his own previous red lines and offered a round of fresh austerity measures worth 7.9 billion euros ($8.9 billion) — the largest to date — which in turn prompted mass protests at home.
Crafted by the Greeks, an agreement seemed close at hand, but was nevertheless rejected by the International Monetary Fund and Greece’s euro partners at the European Commission and European Central Bank. The fiscal tightening that is currently being discussed is on the order of 2 to 3 percent of gross domestic product (GDP), comparable to that at the peak of the crisis in 2010.
Read the rest of the post here.
By William K. Black
Quito: June 21, 2015
A New York Times article entitled “Championing Environment, Francis Takes Aim at Global Capitalism” quotes a conventional Harvard economist, Robert N. Stavins. Stavins is enraged by Pope Francis’ position on the environment because the Pope is “opposed to the world economic order.” The rage, unintentionally, reveals why conventional economics is the most dangerous ideology pretending to be a “science.”
Stavins’ attacks on the Pope quickly became personal and dismissive. This is odd, for Pope Francis’ positions on the environment are the same as Stavins’ most important positions. Stavins’ natural response to the Pope’s views on the environment – had Stavin not been an economist – would have been along the lines of “Pope Francis is right, and we urgently need to make his vision a reality.”
Stavins’ fundamental position is that there is an urgent need for a “radical restructuring” of the markets to prevent them from causing a global catastrophe. That is Pope Francis’ fundamental position. But Stavins ends up mocking and trying to discredit the Pope.
By William K. Black
Quito: June 15, 2015
The IMF, the heedless horseman of the troika that announced it would stop negotiating with the Greeks and go home, has attempted to justify its position through Olivier Blanchard, its “Economic Counsellor and Director of the Research Department.” Blanchard entitled his defense “Greece: A Credible Deal Will Require Difficult Decisions By All Sides.” That is a “serious person” title, but it is also economically illiterate – and no one knows that better than Blanchard. After all, it is the IMF’s deeply neo-liberal economists whose research has confirmed that the IMF’s austerity policies are self-destructive responses to the Great Recession and that fiscal stimulus programs are even more effective than economists had predicted.