Global crisis special issue of Economic Policy

A virtual issue of Economic Policy, bringing together a selection of articles dealing with the global financial, and eurozone, crises, is described here and is available here.

5 replies on “Global crisis special issue of Economic Policy”


Yves Smith in fine form; a must read …

‘Deflation is the worst possible place to be in an economy with heavy debt levels. Economists have managed to forget the most basic lesson of the Great Depression, and tell themselves the bizarre story that putting money even more on sale will lead people to borrow and spend. Earth to central bankers: they won’t if they are worried about their future. What is needed is more demand, which means more fiscal spending and better incomes for workers, which means more labor bargaining power. Yet orthodox policymakers are deeply allergic to both ideas.

The intersection of weak institutions and poor policymaking is most acute in the Eurozone.’

[…] final set of reasons why European banks are likely to be the breaking point if economic and marker conditions continue to deteriorate is Europe’s poor policy choices. Europe is firmly dedicated to deflationary policies: an explicit policy of reducing wage rates and labor bargaining power; Germany’s continuing contradiction of not wanting to finance its trade partners, yet continue to run trade surpluses with them; and the Maastrict restrictions on deficit spending, when deficit spending is what is most needed.’

Economists are driving blind. The Phillips curve and the Taylor rule have all the relevance of 50s dating conventions. 7bn in negative yield bonds is literally unprecedented. NIRP means net present value no longer works since normally a lower discount rate means less risk whereas NIRP is actually more risky. The principles of neoliberalism are Incoherent. Paying bond holders off in full wasn’t just cowardly. It was stupid. Because they weren’t interested in making the system safer. And now it is on the verge of falling apart. Too much debt. Up 40% since Lehmann. Not a hope of being repaid in full. And debt as risk free? Ludicrous.

A massive crash is inevitable. Income Inequality and peak debt to drive it. Bernie and SF are the canaries. Healthcare and the 1% together suck almost 50% out of US gdp.

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