billy blog Thu 2010-07-15 16:35 EDT

Employment gaps -- a failure of political leadership

Overnight a kind soul (thanks M) sent me the latest Goldman Sachs US Economist Analysis (Issue 10/27, July 9, 2010) written by their chief economist Jan Hatzius...It presents a very interesting analysis of the current situation in the US economy, using the sectoral balances framework, which is often deployed in Modern Monetary Theory (MMT)...some of the top players in the financial markets have a good understanding of the essentials of MMT...he US is likely to have to endure on-going and massive employment gaps (below potential) for years because the US government is failing to exercise leadership. The paper recognises the need for an expansion of fiscal policy of at least 3 per cent of GDP but concludes that the ill-informed US public (about deficits) are allowing the deficit terrorists to bully the politicians into cutting the deficit. The costs of this folly will be enormous...

Billy Blog; employment gap; failure; political leadership.

Sat 2010-05-22 13:46 EDT

KOO's "Good News": Nomura Economist Says GDP Needn't Fall In "Balance Sheet Recession"

...Koo's theory and his prescriptions for what currently ails the world are as fascinating as they are unconventional. Considering the woeful track record of orthodox economists (across the entire spectrum from liberal to conservative) in diagnosing, much less treating, the body economic as it has been wracked with credit ills, Koo's fresh perspectives, grounded in the searing experience of Japan's Great Recession, demand careful consideration...

Balance Sheet Recessions; GOOD NEWS; Koo's; Nomura Economist Says GDP Needn't Fall.

Mon 2010-03-01 09:20 EST

AlterNet: Hey, America: It's Time to Redefine the "Good Life"; excerpted from the The Spirit Level: Why Greater Equality Makes Societies Stronger

Richard Wilkinson and Kate Pickett

...We are social epidemiologists; people who usually spend their time trying to understand how social factors affect population health. Our work has focused on different aspects of wellbeing in rich market democracies. Rather than looking at subjective measures, such as happiness, we have looked at objective measures, such as life expectancy, homicide rates, drug abuse, child well-being, levels of trust, involvement in community life, mental illness, teenage birth rates, children's math and literacy scores, and the proportion of the population in prison. Instead of finding that each society does well on some of these outcomes and badly on others, we found that countries tend to be consistently good or bad performers, across the board. If a country has high life expectancy, it also tends to have stronger community life, a smaller proportion of its population behind bars, better mental health, fewer drug problems and children doing better in school. The differences in the performance of more and less equal countries are very large. Rather than things being just a bit worse in more unequal countries, they are very much worse. More unequal countries have three times the rates of violence, of infant mortality and of mental illness. Their teenage birth rates are six times as high, and rates of imprisonment are eight times higher...

AlterNet; America; excerpts; good life; Greater Equality Makes Societies Stronger; redefines; Spirit Level; Time.

Thu 2010-01-07 19:31 EST

Capital City | Mother Jones

Kevin Drum

A year after the biggest bailout in US history, Wall Street lobbyists don't just have influence in Washington. They own it lock, stock, and barrel...This is a story about politics. It's about how Congress and the president and the Federal Reserve were persuaded to let all this happen in the first place. In other words, it's about the finance lobby--the people who, as Sen. Dick Durbin [5] (D-Ill.) put it [6] last April, even after nearly destroying the world are "still the most powerful lobby on Capitol Hill. And they frankly own the place."...It's about the way that lobby--with the eager support of a resurgent conservative movement and a handful of powerful backers--was able to fundamentally change the way we think about the world. Call it a virus. Call it a meme. Call it the power of a big idea. Whatever you call it, for three decades they had us convinced that the success of the financial sector should be measured not by how well it provides financial services to actual consumers and corporations, but by how effectively financial firms make money for themselves. It sounds crazy when you put it that way, but stripped to its bones, that's what they pulled off.

capital city; Mother Jones.

Tue 2009-06-16 00:00 EDT

naked capitalism: Some Musings on Financial Innovation

Martin Mayer ``the whole purpose of the innovation is to get around the existing regulation''; John Maynard Keynes `` When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.'' Yves: ``ncreasing the liquidity of credit risk, even assuming it worked as advertised, seemed guaranteed to mean that everyone would be more casual about assuming it''

financial innovation; mused; naked capitalism.

Sun 2008-08-24 00:00 EDT

Here comes the downsizing of finance

by Martin Hutchinson (Prudent Bear); auction-rate securities (ARS); credit default swaps (CDS); ``CDS market creates many times as much risk as it hedges or transfers''; GSEs ``leveraged more than would have been possible without the governments quasi-guarantee, lobbied like to crazy to ensure they were not properly regulated and collapsed thankfully into the arms of the taxpayer as soon as ill winds began to blow...by their presence they turned the soundest product in financial markets, the home mortgage, into an obscene speculative casino, causing collateral damage of many times their own losses.'' ``much of the financial services innovation of the last generation was spurious and unsound, and needs to be done away with''

comes; downsizing; finance.