debating progressive politics in Europe and beyond
A number of commentators have been discussing the use made of the now debunked Reinhart-Rogoff findings by EU economics commissioner Olli Rehn. (Wolfgang Munchau is in good form.) He repeatedly referred in speeches and publications to a 90% rule that, we now know if we didn’t already, is humbug. It is worth looking a little [...]
Euro Area economies remain stuck in recession but in the corridors of the European Council, the austerians in charge are congratulating themselves, pretending that their strategies are starting to deliver good results. Falling external deficits: Not a sign of success but of an economy in meltdown A first fairy tale is to claim that wage [...]
I won’t repeat the numerous points that have been made in the debate of the past couple of days over the Reinhart and Rogoff paper “Growth in a time of debt”. A useful overview is provided by Bruegel here. I will emphasise a few points based, not on the original paper nor on what recent [...]
France is planning to relax budgetary targets in the current year, failing to meet prior commitments, delaying the return to a balanced budget and incurring slippage in reversing the rise in the debt-to-GDP ratio, now set to peak at 94.3 per cent of GDP next year. About time too! Under the new economic governance rules [...]
The biggest economic debate is between Keynesians (who want more government spending and lower interest rates in order to fuel demand) and supply-side “austerics” (who want lower taxes on the wealthy and on corporations to boost incentives to hire and invest, and who see government deficits crowding out private investment). But both approaches have problems. [...]
Last week the ECB published a report containing an incredible revelation: Cypriot and Spanish households are wealthier than German households.[1] How is this possible? We are dealing with an accounting fiction. Spain and Cyprus have a much higher rate of home ownership than Germany, and most household wealth consists of real estate. Both countries saw [...]
The debt sustainability analysis (DSA) along with other documents related to the program for Cyprus was leaked today on the wires first by Reuters and then the actual documents were published in the Brussels blog of the FT. The DSA is as expected based on massaging numbers and ignoring risks to arrive at a baseline scenario with [...]
According to new research undertaken by the Open Society Foundations there still is: Despite the different challenges facing European nations, the large majority of Europeans believe that standing in solidarity and working together is the best way of getting out of the current crises facing the continent. Two thirds (67 percent) of Europeans surveyed say [...]
It’s surprising how the language of growth diagnostics and binding constraints springs up in all kinds of unexpected places. The latest example is the IMF’s new report on jobs and growth. The IMF’s analysts say all the usual things about the primacy of macroeconomic stability and fiscal sustainability – no surprise there. But then we get a [...]
Simon-Wren Lewis (here and on these pages) is as disappointed by the ECB’s lack of action as I am. He makes a number of important additional points, such as the fact that the ECB’s perceived upside risks to price stability (administered prices, VAT and oil) are things that most sensible macroeconomists do not believe that [...]
Or rather, why isn’t it doing something? Consumer price inflation is currently 1.7%. The OECD expects 1.6% as a whole for 2013, and 1.2% for 2014. The ECB sees downside risks due to the impact from lower activity, which it acknowledges is falling but which it hopes will recover soon. The OECD expects GDP to [...]
I planned to blog on the failure of the ECB to take the opportunity of its Council meeting today to inject confidence and optimism (or at least counter fear and pessimism) in the face of the recession, record unemployment and falling inflation by announcing concrete steps to underpin the promise “to do all its takes” [...]
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