Tag Archives: Eurozone

Bill Mitchell has written a great post here about the Eurozone’s threat to democracy: Bill Mitchell, “Democracy in Europe requires Eurozone Breakup” Billy Blog, January 6, 2016. It is a pity that more professional Post Keynesian economists do not take this view, for it is so obviously true.

On October 30th 2015, I gave a keynote speech at Birmingham University's Finance Forum on the implications of Grexit and Brexit for financial stability. I've now written this up as a paper.I start by outlining the purpose of financial stability. Since the 2007-8 financial crisis, “financial stability” has been all the rage. We must prevent another crisis: we must solve the problems that make our financial system “unstable”.  But what exactly do we mean by “financial stability”? Most people...

In my last post, I warned about "siren voices" calling for tighter monetary policy while the Eurozone economy is stuck in a toxic equilibrium of low growth, zero inflation and intractably high unemployment. Specifically, the so-called "German Council of Economic Experts (GCEE)" has called for the ECB to reduce or unwind QE: ...the European Central Bank should slow down the expansion of its balance sheet or even phase it out earlier than announced. Of course, the GCEE is only concerned...

"The euro area economy is gradually emerging from a deep and protracted downturn. However, despite improvements over the last year, real GDP is still below the level of the first quarter of 2008. The picture is more striking still if one looks at where nominal growth would be now if pre-crisis trends had been maintained." So said Peter Praet, Member of the Executive Board of the ECB, in a recent presentation to the FAROS Institutional Investors' Forum.He's not wrong. From his presentation,...

At the Bank of England's Open Forum in London's Guildhall on Wednesday 11th November, an increasingly desperate-sounding Mario Draghi said this: As the majority of money is issued by private banks - bank deposits - there can only be a single currency if there is a single banking system. For money to be truly one, it has to be truly fungible, independent of its form and independent of its function. This is far from being the first time that Signor Draghi has pushed the case for common...

An interesting interview here with Yanis Varoufakis.[embedded content]Now although I do admire Varoufakis, especially for his excellent attack on Postmodernism described here, I see some very troubling points here about Marxism.Varoufakis says that Marxism is libertarian in some sense, and it is true that Marxism’s ultimate aim was a stateless, utopian paradise. But (as far as I can see) that is not the sense in which Varoufakis calls himself a “libertarian.” For Varoufakis goes on to say...

My Forbes post on the threat to democracy in the EU touched a nerve. Well, several nerves, actually. Some people regarded my invocation of the Prague Spring as insulting to the people who suffered under Soviet oppression: others objected to my comparison of the benevolent EU with the evil USSR: and a few complained that I had presented the Syriza government as "martyrs", when they are nothing of the kind. And lots of Portuguese called me out for misrepresenting how their parliamentary...

Anti-austerity demonstrators in Helsinki, Finland The ratings agency Fitch has affirmed the AAA rating on Finland's sovereign debt. But on reading Fitch's analysis, the justification for this is very hard to see.Finland's economic situation is, to say the least, dire.  This is what Fitch has to say about it: The Finnish economy is adjusting to sector-specific shocks in key industries (electronics, communications and forestry), is already experiencing the impact of an ageing population...

Everyone has been so transfixed by Yanis Varoufakis's "Plan B" revelations that his defence of the ECB's Mario Draghi passed unnoticed. Here it is, transcribed from the Lamont tape by Peter Spiegel at the FT:Mario Draghi has handled himself as well as he could, and he tried to stay out of this mire, the political mire, impressively. I have always held him in high regard. I hold him in even higher regard now, having experienced him over the last six months. Having said that, the European...

The atmosphere in the Greek standoff is turning ugly. On Tuesday, after new Greek finance minister Euclid Tsakalotos turned up to Eurogroup talks with nothing but hastily-drafted notes written on hotel paper, Eurozone leaders told the Greek government in no uncertain terms that if it did not produce credible proposals by Sunday 12th July Greece would be thrown out of the Eurozone. "We have a Grexit scenario prepared in detail", said European Commission president Jean-Claude Juncker.The...