Monday , June 18 2018
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Travelling mostly today …

Summary:
I am travelling most of today and into remote regions to do some fieldwork so I do not have time to write anything substantial. I am researching various issues while in transit and will resume normal services tomorrow when I discuss minimum wages. Then, next Monday’s blog post will discuss the issue of bond spreads, which has been in the news in the last few weeks with the Italian situation. Further, there have been claims that the ECB is deliberately manipulating Italian bond purchases to drive up the spread against the German bund and thus place further pressure on the Italian political mess. Some have argued that by fomenting a sense of crisis in Italy (the rising bond spreads), the ECB has been supporting conservative forces horrified at the prospect of a Euro-skeptic government. It is

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I am travelling most of today and into remote regions to do some fieldwork so I do not have time to write anything substantial. I am researching various issues while in transit and will resume normal services tomorrow when I discuss minimum wages. Then, next Monday’s blog post will discuss the issue of bond spreads, which has been in the news in the last few weeks with the Italian situation. Further, there have been claims that the ECB is deliberately manipulating Italian bond purchases to drive up the spread against the German bund and thus place further pressure on the Italian political mess. Some have argued that by fomenting a sense of crisis in Italy (the rising bond spreads), the ECB has been supporting conservative forces horrified at the prospect of a Euro-skeptic government. It is a little more complex than that but I will write about that in detail next Monday.

The Italian situation – can central banks control spreads

This is just a teaser for what will come from me next Monday.

I have read several times in the last few weeks, particularly in relation to Italy, that central banks cannot really control spreads.

The most awful, and thankfully outgoing Vice President of the ECB, Vítor Constâncio told the Italian press (May 30, 2018) – Si allentano le tensioni sullo Spread. Constancio esclude ipotesi scudo BCE:

L’ipotesi di attivare il meccanismo di scudo anti-spread della BCE sull’Italia richiederebbe l’accettazione, da parte dell’Italia, di un programma di aggiustamento dei conti pubblici”.

Per tutti quelli che “la BCE non può controllare lo spread”.

Which translates to Constâncio bullying nations into austerity submission – that the only way that a nation could benefit from the ECB’s ‘anti-spread’ protection via its Outright Monetary Transactions, is if it accepted the fiscal rules and reduced its deficit.

So they can control any bond spread they choose. However, in the Eurozone, such is the dysfunction, that the central bank becomes the blackmailer.

They hang the Damocles sword over the heads of Member States – a sort of – we will send you broke unless you comply with the Brussels austerity ideology.

The democratic deficit is alive and well.

I will discuss the ins-and-outs of all this next Monday.

In short, the recent suspicion that the ECB has manipulated Italian spreads in recent weeks to undermine the proposed new coalition government does not appear to be supported by the evidence.

That is all I have time for today.

Music to travel by …

Today, I was listening to one of my favourite guitar players – the master of the 1953 Fender Telecaster and volume control techniques – Roy Buchanan – who died in suspicious circumstances on August 14, 1988 at the age of 48.

I say suspicious because he died in a police cell allegedly a suicidal hanging but witnesses say his head and body was bruised (from a beating). He had been drunk.

The legendary Les Paul said once: “A guitar player said to me: hey there is this guy down here that really plays the hell out of the guitar … He is different … He’s cruising down his own lane. I said who might that be. He said, his name is Roy Buchanan”.

This track is taken from a live concert in 1976 recorded at Austin City Limits on November 15, 1976. The album released is “Live from Austin Tx” and was released in 2011 (New West Records).

It is one of my favourites.

This is track 5 of 5 – The Messiah will come again – which may reflect his strict Pentecostal background.

His band at the time was John Harrison (bass), Byrd Foster (drums) and Malcolm Lukens (keyboards).

The Hammond organ player in the video (Malcolm Lukens) gave an interview in 2012 and was asked about his time playing with Roy Buchanan.

He said:

Are there any memories from Roy Buchanan, which you’d like to share with us?
An original with his own unique style. You could hear two guitar notes and know it was Roy. He was very generous in letting me stretch out on keyboard solos. That Austin City Limits vid from 1976 is still all over Youtube. I’ll never forget the years touring and recording with Roy. I miss him.

Great travelling music.

His first album by the way is called Buch and the Snakestretchers (1971) – a classic.

And Roy Buchanan inspired heaps of other players including Jeff Beck, who devoted the following track to Buchanan as a tribute to his playing.

From his 1975 Blow by Blow album – Cause We’ve Ended As Lovers.

Hard to beat.

That is enough for today!

(c) Copyright 2018 William Mitchell. All Rights Reserved.

Bill Mitchell
Bill Mitchell is a Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW, Australia. He is also a professional musician and plays guitar with the Melbourne Reggae-Dub band – Pressure Drop. The band was popular around the live music scene in Melbourne in the late 1970s and early 1980s. The band reformed in late 2010.

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