Monthly Archives: August 2016

Is the euro a foreign currency for peripheral Eurozone (EZ) countries?

Posted on August 11, 2016 by | Comments Off on Is the euro a foreign currency for peripheral Eurozone (EZ) countries?

By Ignacio Ramirez Cisneros

Some considerations on the IMF’s Independent Evaluation Office (IEO) latest assessment on the handling of the euro crisis.

Part I

The most recent IEO assessment of the IMF’s role in the lending and structural adjustment programs in Greece, Ireland and Portugal (and Cyprus) makes reference to a past held belief within the IMF ‘that large current account imbalances were little cause for concern [for the IMF], and sudden stops could not happen within a currency union that issues a reserve currency’ (IEO 2016, 46). In the document, it is made clear that this understanding of EZ financial realities was mistaken given all the financial and economic turmoil since 2010.

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Thomas Friedman Worships Lifetime Learning but Refuses to Learn

Posted on August 11, 2016 by | 5 comments

(4th column in my series on Friedman advising Hillary to Move Hard Right)
William K. Black
August 10, 2016     Bloomington, MN

Thomas Friedman has written two columns advising Hillary Clinton to win the election by adopting traditional Republican economic dogmas.  Friedman despairs that Hillary Clinton refrains from:

[T]elling people the hardest truth: that to be in the middle class, just working hard and playing by the rules doesn’t cut it anymore. To have a lifelong job, you need to be a lifelong learner, constantly raising your game.

Friedman has two big pieces of economic advice for Hillary – financial deregulation and ratifying the Trans-Pacific Partnership (TPP).  Friedman treats TPP as if the issue were “trade,” but as I explained earlier in this series, TPP is actually crafted by corporate elites to eviscerate effective financial, health, and safety regulation.  Trade is simply the pretext for TPP’s passage.

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An Open Letter to Hillary Clinton about Pragmatism in 2016

Posted on August 10, 2016 by | 12 comments

June Carbone
Robina Chair in Law, Science and Technology, U. Minn. Law School
August 10, 2016     Bloomington, MN

I like Hillary.  Would I like to have a mimosa with her?  Wrong question.  I suspect that that neither she nor I have much interest in partying during the mimosa part of the day.   Indeed, I suspect that no woman who meets the mimosa test would run for President or be elected if she did.  Instead, for me, a detail oriented policy wonk, the more relevant question is whether I would find a discussion of political strategy to be exhilarating.  And in spite of the fact that I have supported Hillary for the last thirty years (since I was thrilled to discover that someone who had worked for the Children’s Defense Fund was running for Yale Alumni Trustee) and went out of my way to stick up for her over Bernie Sanders in the Minnesota caucuses, I still have no idea whether she sees the issues – the defining issues of our day – in the same terms that I do.

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Minsky Meets Brazil

Posted on August 10, 2016 by | 3 comments

By Felipe Rezende

Part I

This series will discuss at length the underlying forces behind Brazil’s current crisis.

A consensus has emerged in Brazil (and elsewhere) blaming Rousseff’s “new economic matrix” policies for the country’s worst crisis since the Great Depression (see here, here, here, here, and here).  With the introduction of policy stimulus through ad hoc tax breaks for selected sectors seen as a failure to boost economic activity and the deterioration of the fiscal balance – which posted a public sector primary budget deficit in 2014 after fifteen years of primary fiscal surpluses – opponents argued that that government intervention was the problem. It provided the basis for the opposition to demand the return of the old neoliberal macroeconomic policy tripod and fiscal austerity policies. There was virtually a consensus that spending cuts would create confidence, reduce interest rates, and stimulate private investment spending. Fiscal austerity, according to this view, would be expansionary and pave the way for economic growth.

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Thomas Friedman: This Time is Different: Deregulation Makes Banking Safe

Posted on August 10, 2016 by | 4 comments

(3d column in my series on Friedman advising Hillary to Move Hard Right)

William K. Black
August 8, 2016     Bloomington, MN

In this column I focus on Thomas Friedman’s plea that Hillary Clinton embrace deregulation, desupervision, and de facto decriminalization (the three “de’s”) and the Trans-Pacific Partnership (TPP) as a “knock-out” political strategy against Donald Trump and as a means to produce dramatic economic growth and financial stability.  He claims that embracing the three “de’s” and the TPP creates an “open system.”

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Three Tales of Rigged Elections: The Narratives of The Political Revolutionary, The Billionaire, the Ballot Bandit, and the Corporate Media

Posted on August 9, 2016 by | 6 comments

By Payam Sharifi

An oft repeated phrase you hear every election cycle is that “this is (one of) the most important elections in our lifetime”.  This is usually said within the context of competing and (supposedly) incommensurable policy positions, during a (supposedly) rare moment of crisis that will transform American policy at home and abroad for at least four years.  Yet this phrase has, much to my surprise, not been said once by anyone in the media or among the social media groups that celebrate either Hillary Clinton or Donald Trump.  Instead, it is characterized as a historical moment where the threat of a neo-fascism in the form of Donald J. Trump must be stopped.

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Thomas Friedman Wants A “Center-Left” Democratic Party Based on Austrian Economic Myths

Posted on August 9, 2016 by | 5 comments

(2d column in my series on Friedman advising Hillary to Move Hard Right)

William K. Black
August 7, 2016     Bloomington, MN

Thomas Friedman has written two columns advising Hillary Clinton to renounce her campaign promises and the Democratic Party’s platform and move to the right of the Republican Party on economic issues.  My first column in this series critiqued the centerpiece of his plea to her – deregulate banking.

This column discusses Friedman’s economic assumption, which he probably does not understand he was making, that is (a) false and (b) dangerous.  Friedman doesn’t cite it as an economic assumption.  Instead, he makes a systems theory assertion without even trying to explain why it would be applicable to his proposed sharp move to the right on economic policies.

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Why Don’t Giuliani’s Critics Attack Him For What He Actually Said?

Posted on August 9, 2016 by | 1 comment

Part 6 of my series on Race, Crime, and Policing

William K. Black
August 7, 2016     Bloomington, MN

Former NYC Mayor Rudy Giuliani made a series of comments on race, crime, and policing on when he was interviewed recently on “Face the Nation.”  I am a strong critic of Giuliani’s approach to the intersection of race, crime, and policing.  Giuliani said several objectionable things in his interview that he could not defend.  The mystery is why his critics keep ignoring those comments and attacking other comments me made in that interview that are essentially correct.  In the course of their efforts to bash Giuliani his critics are repeatedly misstating what he said in the passages they seek to ridicule and demonstrating such fundamental analytical errors that they must be allowing their eagerness to hurt Giuliani shut down their critical faculties.

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Thomas Friedman’s Big Idea for Hillary: Embrace Wall Street and Deregulation

Posted on August 8, 2016 by | 8 comments

William K. Black
August 7, 2016     Bloomington, MN

Thomas Friedman’s economic illiteracy and sycophancy for Wall Street “elites” have never been in doubt, but he has (unknowingly) plumbed new depths in his columns advising Hillary Clinton to remake the Democratic Party in Bill’s image – by embracing Wall Street’s dream of deregulation.  Friedman has literally learned nothing from the three great epidemics of accounting control fraud (“liar’s” loans, inflated appraisals, and fraudulent resale of these fraudulently originated mortgages) that drove the financial crisis and the Great Recession.

In other columns in this series on Friedman’s columns advising Hillary on moving the Democratic Party well to the right of the Republican Party on economic issues, I show that Friedman has literally learned nothing from the successes of stimulus, education, and infrastructure, the horrific failures of austerity and deregulation, or his repeated distortion of “capitalism” and “socialism.”.  Friedman gives no indication that he realizes that (1) his economic dogmas were all falsified by our recurrent financial crises and (2) the policies implemented on the basis of those dogmas proved disastrous.

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Another Dimension

Posted on August 6, 2016 by | 14 comments

By Thornton “Tip” Parker

As NEP readers know, the economy consists of  private, government, and foreign sectors.  Financial flows among the sectors always add up to zero; that is, one sector’s deficits must be offset by surpluses in either or both of the others.

If the private sector imports more than it exports, ignoring investment flows, it will run a financial deficit while the foreign sector runs a surplus and the economy will then slow down as money in the private sector becomes scarce.  Unless the trade deficit is reduced, the only way to keep the economy running is for the government to run large deficits, as is it is doing now.  While few people understand the sectoral view of the economy, many are aware of problems that this one-dimensional view does not explain.       Continue reading →

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