Abandoning the euro to save Europe

Without a European sovereign, no real budget; and without a budget, no viable economic policy. As long as Europe does not emerge from this dilemma, the euro area will remain stuck in the vicious circle of stagnation, resentment and conflicts of responsibility. If fiscal federalism is out of reach, then it is crucial to be able to adjust exchange rates to boost growth and employment by leaving the monetary union.

Read more ...

Towards a new European Monetary System – Not the solution to everything, but better than the status quo

The European Monetary System (EMS) that existed between 1979 and 1998 attracts increasing attention among those who oppose the European austerity regime. A discretionary exchange rate regime such as the EMS would better fit to Europe’s heterogeneous economic conditions than the Euro does, but it would surely not eliminate all transnational tensions within today’s Eurozone.

Read more ...

Why 5.2 percent income growth still leaves us in the doldrums

John Komlos, professor emeritus at the University of Munich and author of “What Every Economics Student Needs to Know and Doesn’t Get in the Usual Principles Text,” explains why the superb news from the census report released last week doesn’t feel so superb for many Americans.

Read more ...

New UNCTAD report calls neoliberalism an epic failure and argues for global Keynesian stimulus policies

The new United Nations’ report The World Economic Situation and Prospects, 2016, a joint product of the United Nations Department of Economic and Social Affairs (UN/DESA), the United Nations Conference on Trade and Development (UNCTAD) and the five United Nations regional commissions, shows in essence that the mainstream neoclassical policies of the last thirty to forty years have been radically wrong and that they are bringing the world to the brink of economic collapse. Another debt crisis is unavoidable, unless we quickly and radically change course.

Read more ...

Thomas Piketty, neoclassical economics and reality

The French economist Thomas Piketty is regarded by many on the Left as something of a lifesaver. Did Piketty not clearly and unequivocally demonstrate that distribution ratios frequently change in favour of capital, because the return on capital is regularly higher than growth? The formula r > g which expresses this has become famous. Many consider this a particularly important insight because Piketty’s analysis remains strictly wedded to a neoclassical model. However the economy functions, be it Marxist or neoclassical, according to Piketty the result will always be the same: capital will win. Friederike Spiecker and I have explained on two occasions in recent years that things are far from so simple.

Read more ...

Austerity: stagnating wages for 70% in the developed world. Producing, sanctioning and killing the poor and increasing the number of billionaires

A new report calculates that wages did not rise for more than half a billion people in the developed world between 2005 and 2014. Up to 70% of people in the developed countries saw their incomes stagnate. Half a billion people in 25 of the west’s richest countries suffered from flat or falling pay packets in the decade covering the financial and economic crisis of 2008-09. The report found there had been a dramatic increase in the number of households affected by flat or falling incomes and that today’s younger generation was at risk of ending up poorer than their parents. As a comparison, only 2% of households lived through the period from 1993 to 2005 – a time of strong growth and falling unemployment – without seeing their incomes rise. The report notes that a majority of people who had seen no increase in their incomes tended to be pessimistic about the future both of themselves and their children, that they oppose migration and that they are more likely than those who are advancing to support nationalist parties such as the Front National in France or support the Brexit in the UK.

Read more ...

No miracles in the Spanish economy: Gaps and contradictions in the Annual Report of the Bank of Spain

As every year, in June was released the Annual Report of the Bank of Spain - BE (2015). A report that probably has less impact now than a few years ago because the BE has lost all authority over monetary policy. Competences which have now passed into the hands of the European Central Bank (ECB). However, the analysis from the BE over the economy of the previous year (2015 in this case) and the lines that it points out about the guidelines for economic policy in the future remain interesting, especially as a point of view qualified of the dominant groupthink.

Read more ...

What J.M. Keynes meant by ‘We simply do not know.’

In these times of crisis and stagnation sometimes amazing things happen. The executive editor of the Financial Services of the Frankfurter Allgemeine, Gerald Braunberger, cited two extremely important quotations of John Maynard Keynes, not, as one could expect, in order to refute or denounce him, but as evidence of the state of the world that we are in (see here). It is clear that something is starting to slip. We expected this already for a long time, but previously it was not successful because all dissent was blocked by the inertia which is created by the forces of the powerful ruling doctrine.

Read more ...

The looting of the Greek economy: The case of the Greek railway and Public Power Corporation

With the implementation of the third bailout agreement being fast-tracked and the groundwork being laid for a new one in the guise of a medium-term framework, the Greek economy is undergoing structural changes that, on the heels of the social insurance and tax legislation, will further impede it in relation to other developed economies. Self-employment in small and midsize businesses, private sector salaried work, and ownership of small and midsize enterprises have been crushed, only to be followed by “renationalization” of public infrastructure and public utilities for the benefit of foreign states.

Read more ...

Italy’s banking crisis

The problems of the Italian banking system have been public knowledge for quite some time, but since Brexit it seems that these problems have worsened with Italian banks having suffered a dramatic decline in their value on the stock market and the oldest bank in the world and Italy’s third-largest lender, the Banca Monte dei Paschi di Siena, facing serious troubles. As The Economist put it, "another, potentially more dangerous, financial menace looms on the other side of the Channel—as Italy’s wobbly lenders teeter on the brink of a banking crisis". This is a concern shared by other economic newspapers, such as the Financial Times or the Wall Street Journal , and world leading media.

Read more ...

Greek Banks: A Serial Financial Crime

The bank recapitalization demanded by the end of 2015 as a condition of Greece’s third bailout agreement, despite the assurances of both the Greek government and its creditors that the main concern was the banks’ protection, achieved the absolute worst: for the country to lose the control of its systemic banks at a huge cost to the Greek public sector.

Read more ...

The weakness of the German trade unions and the weakness of the euro zone

Gustav Horn recently defended the unions against my accusation that they hold back too much in tariff policies. Horn argues that if the unions could do as they wish, everything would be fine. In such a situation, they would indeed fight for higher wages, deflation in Europe would disappear and the German competitiveness would be significantly reduced. But, says Horn, the balance of power in the labour market prevents such actions. And for this, the unions cannot be blamed.

Read more ...

Democratizing the energy sector in Spain

An urgent process in Spain, one recently assumed by the new municipal governments of the left, is guaranteeing universal access to energy at reasonable conditions. This service is essential to enforce basic rights, and it is necessary to democratize it and turn it back into a common good. Recent technological advances in the field of renewable and local generation allow us to think of a model of energy as a public service in a different way to those known in the twentieth century, producing energy in a clean and at reasonable costs. Moreover, thanks to information technology and to new organizational culture management of generation and demand can be carried out through more flexible and distributed networks, which will allow municipal councils to undertake comprehensive and active energy policies, thus democratizing the sector.

Read more ...

Eurozone’s so-called recovery masks a dark secret: mercantilism.

Broad opposition in Europe to the Trans-Atlantic Trade and Investment Partnership has prompted its supporters to summon the “protectionist” spectre. In response to the criticism of TTIP by US presidential candidates and progressive politicians in Europe they, according to media reports, are talking up the end of “free trade” that has allegedly brought so many benefits (to so few).

Read more ...

Some pieces of information and legal considerations on the privatization of regional airports in Greece

The process of the regional airports’ privatization has begun in 2011 and is at the moment in its most critical phase. The contract/agreement between TAIPED (the public company, authorized by law for the privatizations in Greece) the Greek state and the FRAPORT AG-SLENTEL Ltd holding, which will undertake the exploitation and the management of the airport for forty (40) years, has already been signed-during the last summer. But this process will not be completed before the final validation of the legal transfer to the holding by the Greek Parliament before the end of 2016.

Read more ...