Tag Archives: Eurozone

The Eurozone’s “Nascent” Recovery

Posted on January 31, 2014 by | 4 comments

By William K. Black

On January 19, 2014 I posted a column entitled “Deflation: The Failed Macroeconomic Paradigm Plumbs New Depths of Self-Parody” that discussed the insanity of the Eurozone’s approach to “the threat of deflation.”  The EU’s troika cannot understand that deflation is produced by inadequate demand and that the way to prevent it is to use fiscal policy to fill the gap in demand rather than waiting for deflation to hit and then trying to check it through “quantitative easing (QE).”

My January 25, 2014 column (“Spain Rains on Rehn’s Austerity Victory Parade: Unemployment Rises to 26%”) explained how a few weeks after the troika cited Spain as its success story proving the wisdom of austerity, unemployment in Spain – already above Great Depression levels – increased to 26%.

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Deflation: The Failed Macroeconomic Paradigm Plumbs New Depths of Self-Parody

Posted on January 19, 2014 by | 16 comments

By William K. Black

Patient bleeding out?  Don’t treat the bleed; keep the crash cart nearby

Imagine you were a doctor in the ER when a patient was brought in presenting symptoms indicating a likely internal bleed.  Here are the two critical questions you face.

  1. Would you (a) find and stop the bleed or (b) wheel the patient off to a “recovery” room with instructions to alert the crash cart to be ready to try to revive the patient should he go into cardiac arrest due to the continued, untreated bleed?
  2. If you chose option (b) in response to the first question, would you tell them to (a) use the crash cart that is known to be most effective, or (b) use the experimental prototype crash cart that has never been used successfully to revive a patient suffering from a cardiac arrest triggered by an untreated bleed and that most physicians think employs a methodology that is inherently incapable of reviving such patients?

If you picked option (b) in response to both questions, congratulations!  Your patient may have died and your career in medicine may be over but you have demonstrated that you are the very model of the modern chief economist of the IMF, OECD, and ECB.  Your initial salary in those positions may not dwarf your income as an incompetent physician, but the financial industry loves to make wealthy the “useful idiots” of the IMF, OECD, and the ECB and similar entities as soon as they leave what is termed “public service” (rather than “servicing the banksters”).

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How to Exit Austerity, Without Exiting the Euro

Posted on December 6, 2013 by | 81 comments

By Rob Parenteau

First of all, if a government stops having its own currency, it doesn’t just give up ‘control over monetary policy’…If a government does not have its own central bank on which it can draw cheques freely, its expenditures can be financed only by borrowing in the open market, in competition with businesses, and this may prove excessively expensive or even impossible, particularly under ‘conditions of extreme urgency’…The danger then is that the budgetary restraint to which governments are individually committed will impart a disinflationary bias that locks Europe as a whole into a depression it is powerless to lift.

So wrote the late Wynne Godley in his August 1997 Observer article, “Curried Emu”. The design flaws in the euro were, in fact, that evident even before the launch – at least to those economists willing to take the career risk of employing heterodox economic analysis. Wynne’s early and prescient diagnosis may have come closest to identifying the ultimate flaw in the design of the eurozone – a near theological conviction that relative price adjustments in unfettered markets are a sufficiently strong force to drive economies back onto full employment growth paths.

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William Black at CFIA Conference

Posted on May 7, 2013 by | 1 comment

South-South News interviews NEP’s William Black at CFIA Conference. He provides his extended dispair with Eurozone policies.

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The New York Times Thinks Bleeding Cyprus is “Strong Medicine”

Posted on April 8, 2013 by | 3 comments

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

I’m announcing the New York Times award for incompetence in macroeconomic reporting (IMR, pronounced like “screamer”).  I suggest that the paper offer as a prize to awardees a two hour lunch with Krugman in which he provides a remedial economics lecture.  My premise is that it is impossible to be a NYT reporter and fail to know that the paper has a Nobel Laureate in economics who writes a regular column for the paper and frequently discusses making economic downturns worse by inflicting self-destructive austerity.  Even the most casual reader of Paul Krugman’s columns would know that opposition to austerity has long been the dominant view among economists and that over the last five years events here and in Europe have again confirmed that view.  Continue reading →

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Comparing Unemployment During the Great Depression and the Great Recession

Posted on April 5, 2013 by | 4 comments

By William K. Black

Barry Eichengreen’s and Tim Hatton’s January 1988 paper entitled “Interwar Unemployment in International Perspective” is a useful starting point for any effort to compare unemployment during the Great Depression and the Great Recession.

It is useful to begin by recognizing three related cautions that the authors make in that paper.  First, the modern sense of the term “unemployment” (willing and able to work, but unable to find a job commensurate with the worker’s skills) was not common until the decades before the Great Depression.  The prior assumption was that people were unemployed because they were lazy.  There was little understanding of business cycles or inadequate demand, little sympathy for the unemployed, and no sense that business or government were primarily responsible for the the level of unemployment.  This meant that keeping data on unemployment was rarely a concern of government.  Data on unemployment in Europe was largely collected through industrial trade unions.

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Euro-da-Fé

Posted on April 3, 2013 by | 27 comments

By Dan Kervick

(Brussels)  Nonplussed by this week’s unemployment report showing the Eurozone jobless rate rising to an unprecedented 12%, members of the European Parliament and Europe’s national governments pressed ahead on Wednesday with passage of a stringent new package of austerity measures.  Dubbed “hyperaustérité” or “Übersparpolitik” by its backers, the new program of ruthless cuts and social demolition promises to deliver even higher levels of joblessness, misery and hopelessness than has been achieved so far by earlier rounds of austerity.

Along with the new economic measures, the European Union (EU) also announced its intention to change its name to the “European Sadomasochistic Cult.”  The new ESC will take the leading role in the implementation of European hyperausterity.

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The EU Needs a Bill Seidman to Save It from Itself: Cyprus and the “Reverse Toaster Theory”

Posted on March 18, 2013 by | 11 comments

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

Everyone involved in financial regulation in modern times with any broad knowledge of the field will know of Bill Seidman, Chairman of the FDIC and the RTC.  In 1989, the newly elected President Bush (the First) had a very good idea that became the Financial Institution Reform, Recovery and Enforcement Act of 1989 (FIRREA).  FIRREA was one of the very unusual cases of enhancing financial regulation.  It was prompted by the lessons we had learned in containing the Savings and Loan (S&L) Debacle.  The original administration bill, however, had a very bad idea associated with the President’s chief of staff, John H. Sununu.  Sununu is a brilliant guy – who wants you to know how much smarter he is than everybody else.  His wiki biography page informs the reader that: Continue reading →

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German growth goes negative but Merkel’s press becomes more glowing

Posted on January 16, 2013 by | 9 comments

By William K. Black

It is good to be Angela Merkel.  Growth in Germany goes sharply negative in the last quarter of 2012 and press reports emphasize how sound the German economy is because it is a net exporter.  This article analyses how the Wall Street Journal and the New York Times presented the news about Germany’s economy.  I show that the presentation reveals more about the pathologies of our major media than about the pathologies of Germany and the Eurozone.

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Note to Italy: Please send us more Saracenos

Posted on December 6, 2012 by | 4 comments

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

I began writing this article while returning from presenting at a conference on Modern Monetary Theory (MMT) in Reggio di Calabria, Italy arranged by Francesco Toscano and supported by the Regione Calabria and the Provincia di Reggio Calabria.  MMT has sparked considerable interest in Italy because it puts the lie to the constant claim that there is no alternative (TINA) to austerity and deepening recessions in the Eurozone. Continue reading →

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