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Stabiliseringspolitik
Over the next week some of the world’s leading policymakers and economists will be addressing in the FT the all-consuming contemporary economic debate: austerity versus stimulus. The writers, including Larry Summers, Jean-Claude Trichet and the FT’s Martin Wolf will argue whether cutting now risks suffocating the fragile recovery of the global economy.
FT July 18 2010
Future generations will curse us for cutting in a slump
In 1937 Keynes wrote: “The boom, not the slump, is the right time for austerity at the Treasury.” Jean-Claude Trichet disagrees.
Robert Skidelsky and Michael Kennedy, FT July 27 2010
Economics is not hard - Part I: Don’t let professional economists tell you otherwise
Why did economics bloggers appear in the years after the collapse of the tech bubble in the early 2000s and flourish during the rise of the housing bubble starting in 2002?
Answer: to fill the vacuum created by the professional economics community that repeatedly failed to protect consumers from the ravages of not one but two asset bubbles in ten years that resulted in the greatest wealth transfer in world history and the near dismantling of the remnants of the world’s once most productive economy.
Itulip 13/7 2010
Is America facing an increase in structural unemployment?
When an economy experiences a severe recession associated with a sharp decline in aggregate demand, we should not begin by asking whether structural unemployment is the problem.
Instead, we should first try to see how much of the unemployment can be explained by nominal shocks.
Structural unemployment is a sort of residual; it represents those long-term unemployed that would be without jobs even if aggregate demand was on target.
Scott Sumner The Economist July 25th 2010
When the private sector is deleveraging even with zero interest rates, the economy enters a deflationary spiral as it loses aggregate demand equal to the sum of unborrowed savings and debt-repayments every year.
If left unattended, the economy will continue to contract until either private sector balance sheets are repaired, or the private sector has become too poor to save any money (=depression).
The last time this deflationary spiral was allowed to materialise was during the Great Depression in the US.
Richard Koo, Chief economist, Nomura Research Institute, The Economist Jul 26th 2010
Since the government cannot tell the private sector NOT to repair its balance sheets, the only thing the government can do to keep the economy going is for the government to borrow and spend the unborrowed savings in the private sector and put them back into the economy’s income stream.
In other words, fiscal stimulus becomes indispensible in a balance sheet recession. Moreover, the stimulus must be maintained until private sector deleveraging is over.
In fact, banks have virtually ceased to function as financial intermediaries since 2008, preferring to use the zero cost of money provided by the Fed to finance purchases of Treasury securities instead of supplying loans to households and small businesses.
John H. Makin, American Enterprise Institute, July 2010
After a financial crisis, banks become much more risk averse, as is manifest in their willingness to lend only to the government instead of to households and businesses. That development is deflationary because it means that a sharp boost in the monetary base engineered by the Fed does not translate into faster monetary growth at a time when the precautionary demand for money has been boosted by elevated uncertainty.
The increased demand for money that results from higher desired precautionary balances and stingy monetary creation by the banks is deflationary, just as an excess supply of money is inflationary.
The fear that a sharp rise in the size of the Fed's balance sheet--the reflection of a sharp boost in the monetary base--is inflationary is misplaced for two reasons.
First, such fear does not recognize that the money multiplier has dropped so rapidly that the money supply--a key determinant of inflation--has stagnated.
Additionally, it overlooks the increase in the precautionary demand for money that adds to the deflationary excess demand for money.
There is a bigger risk that deflation will intensify sharply because once the price level actually starts to fall, the demand for money will be further enhanced. A deflationary spiral--a self-reinforcing, accelerating drop in the price level--can result.
This is because a falling price level means that cash "earns interest" since it enhances the purchasing power of otherwise sterile cash assets that pay zero interest, just as interest on a bond adds to its value in terms of its ability to be used to buy goods and services.
Full text---
So do not be fooled by anybody who says that the central bank should cut interest rates for the benefit of innocent citizens, Wolfgang Munchau and
Let me tell you a little secret, folks. A few years of nice profits will help offset the big losses from past blunders, Allan Sloan
What lessons does history have to teach us about Jean-Claude Trichet’s call for immediate, rapid, and substantial fiscal and monetary retrenchment and austerity
- his full-throated endorsement of the agenda of the Pain Caucus?
Brad DeLong, FT July 23 2010
Unfortunately, the front-loaded deficit reductions may push economically weak countries into recession for the next year or two. That is the cost of achieving the needed long-term deficit reduction in the current economic and political environment.
However, government officials are not warning the public that this is the choice that they have made.
Instead they are claiming that the front-loaded fiscal deficit reductions will not weaken the economy
Martin Feldstein, FT July 22 2010
Our economies are emerging from the worst economic crisis since the second world war, and without the swift and appropriate action of central banks and a very significant contribution from fiscal policies, we would have experienced a major depression.
Now is the time to restore fiscal sustainability.
But the timing remains disputed.
Jean-Claude Trichet, FT July 22 2010
The world economy is entering a new phase after the failure of fiscal stimulus to create a sustained recovery in either the US or Europe.
Consumers will not provide the engine of recovery, nor should they after overspending for a decade.
Jeffrey Sachs FT July 21 2010
Today’s Keynesians have learnt nothing
Niall Ferguson, FT July 19 2010
It is far too soon to end expansion
Greece, Ireland, Spain, Portugal and Italy need to be austere.
But Germany, Britain, America and Japan do not.
Brad DeLong, FT July 19 2010
My new maxim, never to stand in the middle of a fight between Paul Krugman and Niall Ferguson
It says a lot about the talents of John Maynard Keynes – and just as much about the shortcomings of modern macroeconomics – that when the financial crisis struck, policymakers instinctively reached not for their fancy models, but for the Keynesian idea of fiscal stimulus
Tim Harford, FT July 20 2010
The academic evidence on Keynesian growth effects of fiscal deficits is thoroughly inconclusive.
Kenneth Rogoff, July 20 2010
Krugman versus Ferguson: Round Two
Not since Ken Rogoff’s famous attack on Joe Stiglitz has the dismal science of economics provoked such pompous, self-important, personalised squabbling.
The reality is that nobody knows what cutting the deficit into a weak economic recovery is going to do to output and jobs
Jeremy Warner, The Daily Telegraph, 20 July 2010
Jeremy Warner, assistant editor of The Daily Telegraph,
is one of Britain's leading business and economics commentators.
Professors Paul Krugman and Niall Ferguson, of course, have form; they’ve been at it on and off for nearly a year now over the efficacy of deficit spending in fighting the downturn
Ferguson, an eminent economic historian, has penned for the Financial Times on the dangers of attempting to spend your way to economic recovery. Foolishly – or perhaps deliberately, for it is sometimes possible to imagine that the two have secretly agreed to slag each other off for the publicity – he mentions Krugman by name.
Quick as flash, Krugman has risen to the bait. On his New York Times blog, he writes “Brad DeLong does the necessary on Niall Ferguson; no need for me to pile on”.
Ferguson is a “mere” historian of finance. Krugman, by contrast, is a Nobel prize winner. The last time they quarrelled, Krugman wrote:
The reality is that nobody knows what cutting the deficit into a weak economic recovery is going to do to output and jobs
And as for citing the historical evidence of the Depression, where apparently premature fiscal tightening caused the economy to dip back down again, the precise mechanisms by which this occurred are again highly debatable
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In an unusually personal and public rebuke, the International Monetary Fund's top economist accused Nobel-winning economist Joe Stiglitz of slander, self-aggrandisement and intellectual vanity.
Mail Guardian Online 1 January 2002
The blunt assault on Stiglitz, a former World Bank chief economist, came from IMF Chief Economist Ken Rogoff in response to the Columbia University professor's best-selling new book, "Globalization and its Discontents," which takes what the IMF man sees as too many cheap shots.
In his book, Stiglitz contends that IMF prescriptions of demanding that crisis-torn countries implement budget cuts and higher interest rates to restore market calm worsen recessions and plunge more people into abject poverty.
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"Vi anser att aktiv stabiliseringspolitik inte skall bedrivas"
Someone has to actually run a current account deficit.
"Åtstramning för expansion"
I sydeuropeiska länder kan finanspolitiken fungera på ett omvänt sätt.
Stora underskott och viss risk för statsbankrutt kan behöva motverkas med drastiska nedskärningar.
Men detta borde inte gälla mer välskötta länder trots deras underskott.
Danne Nordling 17/7 2010
Ekonomkåren har manifesterat en avsevärd vilsenhet det senaste året både när det gäller att dimensionera och varaktighetsbestämma finanspolitisk stimulans.
Detta har särskilt blivit manifest i samband med Greklandskrisen våren 2010.
Den ekonomiska vetenskapen har inte kunnat komma fram till en teori som beskriver hur den finansiella ekonomin hänger ihop med den reala.
Danne Nordling blog 5 juni 2010
Economics may be dismal, but it is not a science
The failures of economics in the recent crisis are most evident in two areas:
The inadequacies of the efficient market hypothesis, the bedrock of modern financial economics,
and The irrelevance of recent macroeconomic theory.
John Kay, FT April 13 2010
Det är ett sedan länge känt faktum att sysselsättningen svänger med konjunkturen. Hög efterfrågan, från in- och utland, gör att sysselsättningen stiger. Låg efterfrågan, från in- och utland, gör att sysselsättningen sjunker.
Den närmast till hands liggande förklaringen är således att se efter hur det är med efterfrågan, från in- och utland, i Sverige och i USA, nu och i gången tid. Som alla vet är det inte bara att öka efterfrågan, från in- och utland, för att få ökad tillväxt och stigande sysselsättning. Då hotar nämligen handelsbalansen att försämras, när importen stiger. När handelsbalansen försämras blir det antingen (vid fast växelkurs) valutakris följt av förlorade år, eller (vid rörlig växelkurs) fallande växelkurs och ökande inflationstryck.
I dag har Sverige ett större handelsbalansöverskott än Japan i förhållande till BNP. USA har nu ett rekordstort handelsunderskott. Huvudspåret är således att den låga sysselsättningen i Sverige beror på för låg efterfrågan, och att den höga sysselsättningen i USA beror på för hög efterfrågan. Detta är huvudspåret.
Om man vill förklara världen med hjälp av nya eror (USA) eller strukturproblem av gammalt datum (Sverige) har man bevisbördan.
Rolf Englund i polemik med Mats Svegfors 1998
Sverige, Estland och Luxemburg
Den ekonomiska krisen har slagit sönder många länders offentliga finanser.
3 av 27 länder som inte är föremål för EU:s underskottsförfarande
Anders Borg DN Debatt 2010-07-13
It is far too soon to end expansion
Greece, Ireland, Spain, Portugal and Italy need to be austere.
But Germany, Britain, America and Japan do not.
Brad DeLong, FT July 19 2010
With their debts valued by the market at heights I had never thought to see in my lifetime, the best thing they can do to relieve the global depression is to engage in co-ordinated global expansion.
Expansionary fiscal, monetary and banking policy, are all called for on a titanic scale.
But, the members of the pain caucus say, how will we know when we have reached the limits of expansion? How will we know when we need to stop because the next hundred billion tranche of debt will permanently and irreversibly crack market confidence in dollar or sterling or Deutschmark or yen assets?
Followers of the US economist Hyman Minsky say the monetarists and the Hicksians (usually called Keynesians, much to the distress of many who actually knew Keynes) are sometimes right but definitely wrong when the chips are as down as they are now.
expansionary monetary and fiscal and banking policy, we need all of them – until further government action begins to crack the status of the US Treasury bond as a safe asset
The US has exorbitant privileges that give it freedom of action that others such as Argentina and Greece do not have.
Trust me, we will know when the time comes to stop expansion.
Financial markets will tell us.
Many today are complaining about Alan Greenspan’s monetary stewardship, which kept these three locomotives stoked:
“serial bubble-blower” is the most polite phrase that I have heard.
But would the world economy really be better off today under an alternative monetary policy that kept unemployment in America at an average rate of 7% rather than 5%?
Brad DeLong April 05, 2008
There are two schools of thought on how to respond.
On the one hand, we have the new and unexpected coalition of monetarists and Keynesians.
On the other, there is the Austrian school
Jamil Baz, FT July 13 2010
The so-called “Washington consensus” /monetarists and Keynesians/ sees policymakers in the US pursuing a combination of fiscal expansion and monetary stimulus, thus uniting former ideological enemies in an attempt to reprime the world financial and economic system.
On the other, there is the Austrian school, which draws on the ideas of Ludwig von Mises, Carl Menger, Friedrich von Hayek and others, and is given expression in the restrictive monetary and fiscal policy favoured by the EU today.
These economists are social libertarians who believe the role of the state in society should be limited. While this conjures up visions of Tea Party extremists and hillbillies decamping to Montana, their ideas have a substantial intellectual pedigree.
Pressure from the bond market has forced Greece to deleverage, and it is the continuing indulgence of the bond market that allows the US to prolong the party by maintaining its twin budget and trade deficits.
Dagens globala finanskris har utlöst en kris för ämnet nationalekonomi.
Sökandet efter bättre ekonomisk analys pågår för fullt.
Lars Jonung kolumn DN 29/4 2010
Keynes Versus Hayek, 1932
It’s deeply tragic that we’re having to have this debate all over again,
as the world economy slides into deflation and stagnation
Paul Krugman July 9, 2010
Kevin Daly som är makroekonom på finansjätten Goldman Sachs, och som nu besöker Almedalen, håller med om att den svenska ekonomin ser stark ut.
Och han tillägger att den svenska regeringen gått och väl skulle kunna lätta på finanskranarna för att stimulera ekonomin ytterligare
Ekot 5 juli 2010
Samtidigt som det svenska skattetrycket går ned kraftigt och börjar närma sig EU-snittet, har Borg etablerat de borgerliga som mer trovärdiga i ekonomiska frågor än de rödgröna.
Borg har vittring på något stort. Han får se upp så att framgången inte stiger honom åt huvudet.
Peter Wolodarski, DN 2010-07-05
So what is the material difference between the optimists and the pessimists?
The optimists divide into two groups. There are those who have difficulties counting to zero,
who cannot add up the global private, public, and foreign balances, which must equal zero by definition.
Wolfgang Münchau, FT July 11 2010
The pessimists believe that a strong global recovery is unlikely given the persistence of financial stress, and the deleveraging of the private and public sectors across the industrialised world.
The optimists divide into two groups. There are those who have difficulties counting to zero, who cannot add up the global private, public, and foreign balances, which must equal zero by definition.
And then there are the rational optimists, whose expectations of resurgence in private sector demand must surely rest on the assumption of a return to even greater global imbalances than before the crisis, to which the eurozone will this time contribute actively. But this is surely not a sustainable position.
Grekland, Spanien och grunderna i macro
Rolf Englund blog 2010-05-29
They (G-20) may hope that retrenchment now will spur on private spending.
But what is their plan if it turns out that it does not?
Martin Wolf, July 6 2010
The efficient-markets hypothesis
My conclusion, then, is that the advanced countries remain highly short of demand.
In this environment, rapid cuts in fiscal support make sense if, and only if, monetary policy can be effective on its own and expanding the interest-elastic parts of the economy is the best way to climb out of the hole. There is reason to doubt both ideas.
Martin Wolf, July 6 2010
Homeowners - the root of all evil?
On Monday, the yield on 10-year government bonds was 1.1 per cent in Japan, 2.6 per cent in Germany, 3 per cent in the US and 3.3 per cent in the UK.
Based on yields on index-linked securities, real interest rates on borrowing by these governments are very low (1.2 per cent, or less, in the US, Germany and UK).
Investors are saying that they view the risk of depression and deflation as greater than that of default and inflation.
Martin Wolf, July 6 2010
Next Bubble Is Forming: U.S. Government Bonds
Is monetary policy too expansionary or not expansionary enough?
Martin Wolf blog June 27, 2010
First, the monetary base does not itself have any impact on spending by the public.
Second, such reserves have no direct impact on lending by commercial banks (their assets) or on the broad money supply (their liabilities).
Fourth, the policy of expanding the balance sheet of the central bank has an inflationary impact if and only if it succeeds in expanding the overall broad money supply beyond what the public wishes to hold, given the levels of economic activity, interest rates and expected inflation.
Such an inflationary impact of “money printing” can indeed only happen if the overall money supply starts to grow rapidly. This is not now happening.
what is happening to broader measures of money (principally the liabilities of the banking system). The former has exploded. But the growth rate of the latter is extremely low. (Look at the chart that accompanied my column, “Why it is right for central banks to keep printing”)
What matters is the overall supply of credit and money in economies. This continues to be stagnant in the developed world. Concern about an imminent outbreak of inflation is consequently a grave mistake. To the extent that there is a danger of “monetisation” of debt, it will emerge only if we fail to return to growth, because that is the situation in which it is most likely that public sector deficits will fail to close.
...
Why it is right for central banks to keep printing
By Martin Wolf, FT June 22 2010
If the economy were a coal mine, the job market would be an 800-pound canary,
warning of a recovery that is running out of oxygen. Congress has failed to provide even the most basic support — extended unemployment benefits and bolstered aid to states.
New York Times editorial 2nd July 2010
http://www.wisegeek.com/what-does-it-mean-to-be-a-canary-in-a-coal-mine.htm
http://www.wisegeek.com/what-do-people-mean-when-they-refer-to-an-800-pound-gorilla.htm
There is undeniably a risk that tightening policy too early will cause the economy to dip back into recession. But ...
In the view of The Times, the balance of risks suggests that policymakers should begin to withdraw the stimulus.
The Times editorial, July 2 2010
When the financial crisis of 2007-08 plunged the global economy into recession, policymakers adopted exceptional measures to arrest the downturn. But economics is no exact science, and the remedial measures have turned out to have consequences. Policymakers at the Bank of England have expressed concerns this week about a steady rise in inflation even while economic recovery remains fitful. Their comments are timely.
There is undeniably a risk that tightening policy too early will cause the economy to dip back into recession. But there are always uncertainties in any economic course, and these are magnified when the statistics are volatile.
In the view of The Times, the balance of risks suggests that policymakers should begin to withdraw the stimulus. The coalition Government is right to embark early and decisively on deficit reduction. The Bank should be wary of maintaining an easy monetary stance for long.
Goodbye Keynes, hello Hoover
To Keynesian critics the switch to austerity is a colossal blunder.
Supporters of the shift to austerity believe by boosting firms’ and households’ confidence and lowering the risk premium on government debt, well-designed fiscal consolidation can actually boost growth.
(RE: Ha, ha, ha. Det var det som Bildt, Wibble, Carl B Hamilton och Olle Wästberg, med flera trodde)
The Economist print July 1st 2010
To Keynesian critics the switch to austerity is a colossal blunder. Paul Krugman, an economist who writes in the New York Times, frets that officials who “seem to be getting their talking points from the collected speeches of Herbert Hoover” will push the world economy into a depression. With unemployment high, output far below its potential, private spending still weak and interest rates close to zero, Mr Krugman and his allies argue that fiscal stimulus remains an essential prop to the economy and that deficit-cutting now will spell stagnation and deflation.
From the other side, supporters of the shift to austerity believe it is both essential and appropriate: deficit spending cannot go on for ever, and by boosting firms’ and households’ confidence and lowering the risk premium on government debt, well-designed fiscal consolidation can actually boost growth. Jean-Claude Trichet, president of the European Central Bank, argues that fiscal thrift will increase private spending by reducing uncertainty about government tax policy and debt.
Both sides in the row over stimulus v austerity exaggerate, but the austerity lobby is the more dangerous
Gabriel Stein: The BIS ought to know better"
The Bank for International Settlements has warned authorities across the developed world that they cannot rely on ultra-low interest rates to cushion the blow of austerity measures.
The Swiss-based "bank for central bankers" said ultra-low rates and massive fiscal stimulus saved the world from an economic meltdown during the credit crisis, but the balance of advantage has since shifted.
Ambrose Evans-Pritchard, 28 JunE 2010
"Such powerful measures have strong side-effects, and their dangers are becoming apparent. The time has come to ask how they can be phased out," it said.
"There are limits to how long monetary policy can remain expansionary. Keeping interest rates near zero for too long, with abundant liquidity, leads to distortions and creates risks for financial stability. We cannot wait for the resumption of strong growth to begin the process of policy correction."
Dominique Strauss-Kahn, the IMF chief, warned against zealous self-flagellation at the G20 summit. "It could be a catastrophe if all the countries were tightening, it could totally destroy the recovery."
Gabriel Stein, of Lombard Street Research, said the BIS is playing with fire. "Fiscal and monetary tightening were tried in tandem in the early 1930s and it didn't work then. The BIS ought to know better," he said.
Alla kan inte exportera sig ur krisen, för då är det ingen som köper.
Grekland och Spanien måste skära ned drastiskt, inget annat kan återställa finansmarknadernas förtroende.
Tyskland ska ha ordning på statsfinanserna, men ....
DN-ledare 29 juni 2010
Likaså måste det finnas grader när det gäller hur länder hanterar sina budgetunderskott. Grekland och Spanien måste skära ned drastiskt, inget annat kan återställa finansmarknadernas förtroende. Tyskland ska ha ordning på statsfinanserna, men behöver också stimulera den haltande inhemska privata konsumtionen. Detsamma gäller Kina, som dessutom behöver bygga ut de sociala skyddsnäten. USA klarar att ha större underskott. En yngre befolkning och större invandring gör det lättare att möta den demografiska utmaningen än i Europa och Japan.
Världsekonomin är nära en ny depression, och om en sådan utveckling blir verklighet beror det främst på en misslyckad politik.
Paul Krugman i New York Times med anledning av helgens G20-möte i Toronto.
DI 2010-06-28
Han konstaterar att medan recessioner är vanliga så är depressioner mycket ovanliga. Enligt Paul Krugman är det bara två perioder som kan betraktas som depressioner; den "långa" depressionen med deflation och instabilitet som följde på den stora paniken 1873, och den "stora" depressionen, åren med massarbetslöshet som följde finanskrisen 1929-1931.
"Och denna tredje depression kommer primärt vara ett politiskt misslyckande. Runt om i världen - senast vid helgens nedslående G20-möte - oroar sig regeringarna för inflation när det verkliga hotet är deflation, de predikar behovet att dra åt svångremmen när det verkliga problemet är otillräckliga utgifter", skriver Paul Krugman.
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The Third Depression
You might have expected policy makers to realize that they haven’t yet done enough to promote recovery.
But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy
Paul Krugman, New York Times June 27, 2010
Future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.
In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.
Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits.
But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors.
On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.
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Only a closer union can save the eurozone
I am aware that, at a time of rising nationalism and regionalism throughout the EU, there is no consensus for such sweeping reforms
Wolfgang Münchau, FT, June 27 2010 19:52
Wolfgang Munchau on the BIS annual report
ultra-low nominal interest rates play a significant role during the built-up of bubbles – a role that may not yet be sufficiently understood
Eurointelligence 30 June 2010
In his FT Deutschland column, Wolfgang Munchau says the Bank for International Settlements had a disturbing good track record during the crisis, and that one should listen when it says that persistently low interest rates would cause a rerun of the crisis.
He says such a recommendation is not rooted in any macroeconomic models currently in use, but he suspects that the BIS might be right nevertheless, that ultra-low nominal interest rates play a significant role during the built-up of bubbles – a role that may not yet be sufficiently understood.
...
Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken. Finanspolitiska Rådets chef Lars Calmfors är inne på liknande tankar:
- Lars Calmfors budskap är: Riksbanken måste agera. Annars hotar en bolånebubbla
The age of easy credit and its aftermath
Is there life after debt?
The Economist print, Jun 24th, 2010
For a long time debt in the rich world has grown faster than incomes. As our special report this week spells out, it is not just government deficits that have swelled. In America private-sector debt alone rose from around 50% of GDP in 1950 to nearly 300% at its recent peak
The origins of the boom go even further back, reflecting huge changes in social attitudes. In the 19th century defaulting borrowers were sent to prison. The generation that lived through the Great Depression learned to scrimp and save. But the wider take-up of credit cards in the 1960s created a “buy now, pay later” society. Default became just a lifestyle choice. The reckless lender, rather than the imprudent debtor, was likely to get the blame.
For policymakers, the priorities are clear. First, they need to focus on generating growth.
Second, policymakers need to begin the long task ofrebalancing the world economy.
GDP = C + I + G + (X-M)
John Mauldin 18 June 2010
We have discussed the above equation before, but let's look at it again from a different angle. Basically, the equation is another accounting identity. GDP (Gross Domestic Product) for a given country is the total of Consumption (personal and business) plus Investments plus Government spending plus exports minus imports.
The Keynesians argue that when there is a drop in C due to a recession that the G must rise to offset the drop. That was at the heart of the argument for stimulus packages in so many countries. And there is no doubt that stimulus did help keep a very deep recession from turning into an even deeper depression. One can legitimately argue about the size of the stimulus, or about the nature of the spending, but it is difficult to argue that it did not have an effect.
Now, of course, the hope is that a recovery will allow C to begin to rise so that there is no more need for government deficits. Keynes argued that governments should run surpluses in good times, which is conveniently forgotten by most government spending types. The problem is that we are still running massive deficits. Tax receipts are way down (10% unemployment will do that to you!) and show no sign of turning back up soon all over the developed world.
If you reduce government spending, that also has a negative effect on GDP in the short run. But in past recoveries the growth of the private sector has overcome that negative effect. Normally at this time in a recovery growth is in the 7% range. This is a very tepid recovery in the US and the developed world.
There are loud calls in the US and elsewhere for more fiscal constraints. I am part of that call. Fiscal deficits of 10% of GDP is a prescription for disaster. As we have discussed in previous letters, the book by Rogoff and Reinhart (This Time is Different) clearly shows that at some point, bond investors start to ask for higher rates and then the interest rate becomes a spiral. Think of Greece. So, not dealing with the deficit is simply creating a future crisis even worse than the one we just had.
But cutting the deficit too fast could also throw the country back in a recession. There has to be a balance.
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Grekland, Spanien och grunderna i macro
BNP är C + I + G +/- X Skall det vara så svårt att förstå för microhjärnorna?
Rolf Englund blog 2010-05-29
Euron är främst ett politiskt projekt, ett nödvändigt steg mot Europas Förenta Stater.
Om det bara handlade om ekonomi finns det fördelar med euron, men också nackdelar. Jag menar att fördelarna uppväger, men det är ganska jämt.
De politiska fördelarna med att vara med i eurokretsen är däremot huvudskälet för att vara med.
OLLE WäSTBERGS NYHETSBREV 17 JUNI 2010
Att Euron är en problematisk valuta har sagts från början. Länderna som ingår har olika förutsättningar att parera ”asymmetriska chocker”, d v s stora utifrån kommande problem som drabbar ett land. Ett gemensamt valutaområde kräver både penning- och finanspolitik, och euroområdet har bara penningpolitik, d v s endast en riksbank och inget finansdepartement.
Keynes är verkligen död
John Maynard Keynes (och samtidigt Bertil Ohlin och andra i Stockholmsskolan) lanserade för 75 år sedan tanken på att stater ska kunna parera konjunktursskiften genom en aktiv finanspolitik. Det är en politik som fått nytt uppsving i de senaste finanskriserna. Obamas stora stimulans tycks fungera.
Jag tillhör de skeptiska. När Keynes och Stockholmsskolan kom med sina teorier hade de utvecklade ekonomierna mindre än 15 procent av sin ekonomi i den offentliga sektorns regi. Måttliga ekonomiska stimulanser i dåliga tider och skatteökningar i sämre fungerade. När nu den offentliga andelen av ekonomin i Sverige ligger på 50 procent är stimulansvapnet långt mer trubbigt.
Dessutom fungerade demokratin för 75 år sedan sämre i den bemärkelsen att människor hade svårare att följa vad som hände i makroekonomin samtidigt som politikerna var mindre beroende av den omedelbara folkopinionen.
Regeringar klarar att stimulera i dåliga tider, men att strama åt i goda är långt svårare. Det är svårt att i en opinionskänslig och ganska upplyst demokrati bedriva konjunkturpolitik. Och den internationella finansmarknaden slår tillbaka med räntehöjningar när stater börjar låna för mycket.
När stater stimulerar står det en hord av bankekonomer i TV-rutan och talar om att det kommer surt efter – och då väljer många att spara. Därför fungerar Keynes recept dåligt idag.
It appears the existing home inventory is still rising,
Calculated risk July 21, 2010
The initial response to the crisis (sharp cuts in interest rates, bank bailouts, stimulus spending) probably averted a depression.
But the crisis has also battered the logic of all major theories: Keynesianism, monetarism and "rational expectations."
Robert J. Samuelson, June 28, 2010
The Keynesian logic seems airtight. If consumer and business spending is weak, government raises demand through tax cuts or spending increases.
But in practice, governments' high debts impose financial and psychological limits. The ratio of government debt to the economy (gross domestic product) is 92 percent for France, 82 percent for Germany and 83 percent for Britain, reports the Bank for International Settlements in Switzerland.
That's lunacy, writes Martin Wolf, chief economic commentator for the Financial Times. Concerted austerity may destroy the recovery.
Exactly, echoes Nobel Prize-winning economist and New York Times columnist Paul Krugman, who argues that the U.S. economy needs more stimulus and bigger deficits. "Penny-pinching at a time like this . . .," he writes, "endangers the nation's future."
There's a great deal economists don't understand. Not surprisingly, the adherents of "rational expectations" -- a theory that people generally figure out how best to respond to economic events -- didn't anticipate financial panic and economic collapse. The disconnect between theory and reality seems ominous.
Krugman: "That '30s Feeling" In the NY Times
Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere ...
CalculatedRisk 6/17/2010
Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession.
Alan Greenspan writes in the WSJ:
An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon.
I believe Greenspan is flat wrong
Den kritiska frågan är:
Hur ska man få ned den totala skuldsättningen i världsekonomin
utan att förvärra krisen ännu mer?
Det oroande svaret på denna fråga om åtstramningar är nog att det inte finns några framträdande ekonomer som kan ge besked.
Danne Nordling blog 11 juni 2010
De akademiska nationalekonomerna är pinsamt medvetna om sitt eget tillkortakommande. Det framgick t ex av diskussionen på Nationalekonomiska föreningen i januari 2010. Ytterligare en indikation finns i senaste numret av Ekonomisk Debatt (4/10) där hela häftet ägnas åt "makroekonomins kris".
Här inleder professor Assar Lindbeck med en artikel (pdf) om "Lärdomar av finanskrisen".
Han är kritisk till teorin om effektiva finansiella marknader och s k ny klassisk makroteori.
Professor em Axel Leijonhufvud avslutar med en mera personlig redogörelse för olika nationalekonomiska inriktningar och skolor.
Teorin drev fram de s k DSGE-modellerna (dynamisk stokastisk allmän jämvikt) som kan kalibreras med empiriska data. Denna Lucasversion av monetarismen ersattes sedan med teorin om reala konjunkturcykler där den monetära utvecklingen inte finns med som en förklaringsfaktor. Diskretionära finans- och penningpolitiska åtgärder ses där som farliga och skadliga.
Den ekonomiska vetenskapen har inte kunnat komma fram till en teori som beskriver hur den finansiella ekonomin hänger ihop med den reala.
Nästa steg är att denna (hypotetiska) teori måste få sådant genomslag att aktörer och kommentatorer agerar utifrån denna institutionella ram.
Först därefter kan man med större säkerhet uttala sig om vilka olika konsekvenser störningar och stabiliseringsåtgärder sannolikt kommer att ha.
Danne Nordling blog 5 juni 2010
Nationalekonomins makroteori och den stabiliseringspolitiska teoribildningen står inför en mödosam uppbyggnadsprocess. Den kommer att ta många år.
Are these hardships necessary?
The trick of the British establishment is to turn discussion from “whether to” into “how to” questions. The media debate is on which government services to cut or on the balance between spending cuts and tax increases. Once the discussion has been channelled into these trenches the establishment has won.
The real argument, however, should be on whether we need unparalleled fiscal austerity or not.
Samuel Brittan, FT June 17 2010
In the last resort, however, the government can borrow directly from the Bank, a course recommended in such situations not by Keynes but by no less dangerous a firebrand than Milton Friedman.
We could live with an old-time religion Conservative Budget if the rest of the world stayed with sensible demand management. The real harm is that the British government has tipped the balance in favour of ill-timed financial austerity at gatherings such as the Group of 20.
And all is not lost so long as the Obama administration and China’s leaders stick to quasi-Keynesian policies.
While it's certainly too early for historical perspective on the stunning events of 2007-2009, I venture to guess that, when the history of the period is written, it will read something like this:
For a host of reasons the U.S. economy was struck by a calamitous financial crisis followed by a vicious recession.
The government—including two administrations, Congress, and the Fed—marshaled enormous resources to save the financial system and to fight the recession.
It worked.
Alan S. Blinder, WSJ 16 June 2010
Mr. Blinder, a professor of economics and public affairs at Princeton University and vice chairman of the Promontory Interfinancial Network, is a former vice chairman of the Federal Reserve Board.
---
Enligt en allmänt vedertagen uppfattning bör industriländerna möta globaliseringen med satsningar på utbildning så att den egna sysselsättningen kan uppgraderas när låglöneländer tar över de enklare jobben.
Alan Blinder avfärdar det som en myt och konstaterar att sambandet mellan utbildning och outsourcing är nästan noll.
Lennart Pehrson, DN 15/4 2007
In a sea of academic economic literature, there are a handful of essays that provide lifelong analytical anchors.
Some Unpleasant Keynesian-Minsky Logic
Paul McCulley June 2010
The unemployment rate for teenagers remains at 26.4 percent, while 15.5 percent of African Americans and 12.4 percent of Hispanics can’t find jobs.
Seventeen states, along with the District of Columbia, still have jobless rates well in the double digits, and the fate of the long-term unemployed is terrifying.
Newsweek 4 June 2010
The BIS noted in a separate report that, while large depreciations in currencies tend to be associated with substantial permanent losses of output, since the losses usually take place before the fall in the currency, it is likely the factors that spur the drop in the currency's value rather than the depreciation itself that is the trigger.
Taken alone, the currency depreciation can actually be good for output.
Wall Street Journal 14 June 2010
.The eurozone’s tragic small-country mindset
One of the most important characteristics of a small open economy is that its own actions have little impact on the rest of the world.
Wolfgang Münchau, FT 13 June 2010
BNP är C + I + G +/- X Skall det vara så svårt att förstå för microhjärnorna?
Rolf Englund blog 2 februari 2010
Grekland, Spanien och grunderna i macro
Rolf Englund blog 2010-05-29
Tyskland, G20, Grekland EU/SPV
Rolf Englund blog 2010-06-08
The fixed-exchange mechanism had gone horribly wrong
The tragedy of the interwar years in Germany was that the Social Democrats - then the world’s foremost socialist party - became fatally tainted by acquiescing in /accepting/ Bruning’s deflation torture from 1930 to 1932.
They did so, of course, because they dared not confront the orthodoxies of the Gold Standard.
The result in Germany was the Reichstag election of July 1932 when the Communists and Nazis won over the half the seats.
Ambrose Evans-Pritchard 23 May 2010
It is an elementary fact of accounting that the private sector as a whole can only spend less than it earns if some other sector spends more than it earns.
That sector has tended to be the government, usually as automatic stabilizers kicked in while recessions deepened.
nakedcapitalism MAY 17, 2010
Indeed, most of the dramatic widening of government deficits is due to a collapse in tax revenues, not to discretionary stimulus.
Pursuing fiscal retrenchment in order to reduce government debt default risk will merely raise the odds of private sector debt defaults. Cash flow will be taken from households and firms attempting to rebuild their net saving positions, and private debt servicing will falter.
BNP är C + I + G +/- X Skall det vara så svårt att förstå för microhjärnorna?
Rolf Englund blog 2010-02-02
G20 drops support for fiscal stimulus
FT June 5 2010
Finance ministers from the world’s leading economies ripped up their support for fiscal stimulus on Saturday, recognising that financial market concerns over sovereign debt had forced a much greater focus on deficit reduction.
The meeting of the Group of 20 finance ministers and central bank governors in Busan, South Korea, also dropped proposals for a global banking levy, instead giving countries leeway to do what they thought best for their domestic circumstances.
The communiqué of the meeting made it clear that the G20 no longer thought that expansionary fiscal policy was sustainable or effective in fostering an economic recovery because investors were no longer confident about some countries’ public finances. “The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability,” the communiqué stated.
“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” it added. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”.
These words were in marked contrast to the G20’s previous communiqué from late April, which called for fiscal support to “be maintained until the recovery is firmly driven by the private sector and becomes more entrenched”.
The G20 communiqué in full - Jun-05
Tyskland ska spara 771 miljarder
DI 2010-06-07
Right or wrong – whether this plunges the whole world into a deflationary abyss from which there is no escape or if, somehow, this has the desired effect of restoring financial stability over time –
it’s nice to see that there are at least a few elected officials in the world who question the idea of simply piling on more debt to cure the world’s economic ills.
Tim Iacono 7 Jun 2010
Madmen in Authority
Rereading my post on the folly of the G20, it seems to me that I didn’t fully convey just how crazy the demand for fiscal austerity really is.
Here’s the IMF’s estimate of sources of the growth in debt over the next few years
Paul Krugman 7 June 2010
So how much we spend on supporting the economy in 2010 and 2011 is almost irrelevant to the fundamental budget picture. Why, then, are Very Serious People demanding immediate fiscal austerity?
To repeat: the whole argument rests on the presumption that markets will turn on us unless we demonstrate a willingness to suffer, even though that suffering serves no purpose.
Lost Decade, Here We Come
The deficit hawks have taken over the G20
Paul Krugman June 6, 2010
It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labor market progress in the US.
But don’t we need to worry about government debt? Yes — but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt. Costly, because it depresses the economy further; ineffective, because by depressing the economy, fiscal contraction now reduces tax receipts.
A rough estimate right now is that cutting spending by 1 percent of GDP raises the unemployment rate by .75 percent compared with what it would otherwise be, yet reduces future debt by less than 0.5 percent of GDP.
Yet the conventional wisdom now is that these countries must nonetheless cut — not because the markets are currently demanding it, not because it will make any noticeable difference to their long-run fiscal prospects, but because we think that the markets might demand it (even though they shouldn’t) sometime in the future.
Utter folly posing as wisdom. Incredible.
...
Time to plan for post-Keynesian era
Mainstream Keynesian economics is facing its last hurrah. The global fiscal stimulus championed last year by the Obama administration is coming undone, repudiated by the same Group of 20 that endorsed it last year.
Jeffrey Sachs, FT June 7 2010
The new OECD Economic Outlook is a terrifying document
OECD wants the Fed to start raising interest rates soon
what’s scary is the utter folly that now passes for respectable opinion
Paul Krugman, NYT 27 May 2010
What possible reason would there be to tighten monetary policy now, when the economy will still have vast excess capacity and inflation that’s too low at the end of next year?
What’s so scary about this is that the OECD virtually defines conventional wisdom; it’s a numbered-paragraph sort of place, where a committee has to sign off on everything, policing the nuances as they say.
So what we get from this is that among sensible people the idea that you should undermine recovery to appease those who think there might be inflation even though actually there isn’t has become conventional wisdom — so conventional that it’s treated as self-evident.
This is really, really bad.
What’s the greatest threat to our still-fragile economic recovery?
I currently find most ominous is the spread of a destructive idea:
the view that now, less than a year into a weak recovery from the worst slump since World War II, is the time for policy makers to stop helping the jobless and start inflicting pain.
Paul Krugman 30 May 2010
When the financial crisis first struck, most of the world’s policy makers responded appropriately, cutting interest rates and allowing deficits to rise. And by doing the right thing, by applying the lessons learned from the 1930s, they managed to limit the damage: It was terrible, but it wasn’t a second Great Depression.
Both textbook economics and experience say that slashing spending when you’re still suffering from high unemployment is a really bad idea — not only does it deepen the slump, but it does little to improve the budget outlook, because much of what governments save by spending less they lose as a weaker economy depresses tax receipts.
It sounds crazy. And it is. Yet it’s a view that’s spreading. And it’s already having ugly consequences. Last week conservative members of the House, invoking the new deficit fears, scaled back a bill extending aid to the long-term unemployed
Paul Krugman blogs (Martin Wolf Is Not A Serious Person): And neither am I.
As Ricardo Caballero says (It’s the general equilibrium, stupid), the big problem right now is that the world economy has too little safe high-quality financial assets, and thus excess demand for them is, by Walras's Law, producing excess supply of goods and services
Brad DeLong 30 May 2010
Hur långt är ett snönre?
How long is an "Extended Period"?
Short answer: Longer than many analysts expect.
CalculatedRisk on 4/28/2010 with very nice chart
This graph shows the effective Fed Funds rate (Source: Federal Reserve) and the unemployment rate (source: BLS)
In the early '90s, the Fed waited more than a 1 1/2 years after the unemployment rate peaked before raising rates. The unemployment rate had fallen from 7.8% to 6.6% before the Fed raised rates.
Germany
Four professors will launch a legal challenge in early May at the Verfassungsgericht (high court).
Should they secure an injunction, EMU may fly apart.
EMU shut the warning signals, disguising risk.
What investors overlooked is that currency risk mutates into default risk in a monetary union
The EU-IMF "therapy" of deflation for Greece repeats the catastrophic errors of Chancellor Heinrich Bruning in the early 1930s and must lead to a depression
Ambrose Evans-Pritchard, 25 Apr 2010
The Taylor Rule
Professor Taylor made one huge, simplifying assumption, that the neutral real Fed funds rate is a constant 2%.
Paul McCulley April 2010
A year later, the evidence is in: Depression 2.0 has indeed been avoided.
No, I haven’t yet bought that second home. In fact, I actually sold my only one, at a good level, as I was no longer using it, preferring to live in a little rental house on the water where I have my 32-foot fishing boat, named the Moral Hazard, and my 18-foot electric Duffy boat, named the Minsky Moment. Yes, I am sorta non-normal.
Paul McCulley April 2010
More evidence has arisen that the "strategic default" consumer spending thesis is correct
- and that the economic recovery on the whole is based on a rotten sham.
In this sleazy imitation of a free market economy, liars, cheats and deadbeats are the ones getting rewarded.
Marcet Oracle, Apr 20, 2010 By: Justice_Litle
Financial markets and rating agencies fail to see
the interconnectedness of government and private debt
Paul De Grauwe Eurointelligence 6/5 2010
It is true of course that government deficits and debt levels in the Eurozone, but also in the US and the UK, are not sustainable, and that at some point measures to reduce these deficits will be necessary. Financial markets and rating agencies today focus on this fact.
They fail to see, however, the interconnectedness of government and private debt.
The main reason, if not the only one, why government debts have exploded is that governments correctly judged that the expanion of their own debt was necessary to save the private sector, and in particular, the financial institutions. For every euro of extra government debt stands a euro of private debt that has been taken over or made sustainable by the government.
Deflation is the only way Greece can effectively tackle its debt problems,
International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn was quoted on Monday as saying.
CNBC 12 Apr 2010
Greece must squeeze a further 13pc of GDP from the budget to stabilise debt costs by 2012, and do so during a slump when every euro of tightening leads to €1.5 to €2 in lost demand.
"The risk is of a viscious downward cycle," Mr Johnson, the IMF's former chief economist, wrote in the Huffington Post.
Ambrose Evans-Pritchard, 11 Apr 2010
The most audacious monetary experiment in modern history ended on April Fools' Day.
The US Federal Reserve has completed its purchase of $1.7 trillion of mortgage securities, agency debt and US Treasuries,
the conjuring trick of "credit easing" that allowed Ben Bernanke to create stimulus equal to 12pc of GDP.
Ambrose Evans-Pritchard, 04 Apr 2010
audacious = intrepidly daring, adventurous, recklessly bold
The Fed's money creation has been more or less the size of Washington's borrowing needs for the last year, as Beijing notes with suspicion.
We will never know whether it was wise to go nuclear. My view – anathema to readers, I fear – is that Ben Bernanke and Britain's Mervyn King saved us from potential calamity. We were all too close to the tipping point illustrated in Irving Fisher's Debt Deflation Causes of Great Depressions, the moment when the sailing ship catches water and capsizes instead of righting itself by natural rhythm.
The orthodoxy on inflation is certainly shifting.
The best policy may well be to talk tough about inflation while keeping interest rates low for as long as possible.
The Economist print March 11th 2010
Across Europe, from profligate Greece to newly strait-laced Ireland, countries are promising deep, painful cuts in public spending even as they face the likelihood of a new recession.
But some argue that Berlin is pressing too hard, and that the region’s new fixation on debt has created a “cult of austerity” that could make it harder to recover from the slump.
New York Times 17/3 2010
Det finns alltid bedömare som i vaga ordalag hävdar att utvecklingen kommer att gå åt skogen. Svårigheten ligger i att kunna skilja fantasterna från dem som har hittat fundamentala orosfaktorer av sådan karaktär att de borde tas på allvar.
En sådan person är den iransk-israeliske ekonomen Nouriel Roubini
Vad som skulle behövas är en utvärdering av varför Roubinis varningar inte togs på allvar. Hur såg de första varningarna i september 2006 ut?
Danne Nordling 16/3 2010
Greece, Ireland, Portugal and Spain will cut the demand
So, unless as-yet-unspotted foreign cavalry ride to Europe’s rescue by buying up the continent’s products, aggregate demand will fall.
Less competitive Eurozone countries will be forced to deflate and shrink their economies to match Europe’s diminished and diminishing circumstances.
FT Editorial March 15 2010 20:16
So, to use Ms Lagarde’s tactful phrase, “those with surpluses could do a little something”.
If the big savers were to start consuming, they could allow the continent’s big spenders to cut back and start living within their means without dooming Europe to years of hairshirted stagnation.
Europe must rebalance. It can do so, as Mr Schäuble would have it, by forcing Europe to import less from Germany. Or, as Ms Lagarde suggests, Germany could start importing more from the rest of the currency union
Greece, Ireland, Portugal and Spain - Germany
Thomas Mayer, economist at Deutsche Bank, said the latest Greek austerity measures could cause the economy to shrink by 4 per cent this year, making the government’s task even more formidable.
“The adjustment remains a Herculean task, and the costs of the adjustment in terms of lost output could be larger than policymakers currently anticipate,” Mr Mayer said.
FT March 15 2010
Establishing the EMF would require a new treaty
We must note an even greater difficulty. The notion that the big threat is fiscal indiscipline is false.
Martin Wolf FT March 9 2010
Leading the PIIGS to an (as yet) Unrecognized Slaughter
Everyone cannot export their way out of this crisis.
Someone has to actually run a current account deficit.
Rob Parenteau at John Mauldin 9/3 2010
If we divide the economy into three sectors
- the domestic private (households and firms), government, and foreign sectors,
the following identity must hold true:
Domestic Private Sector Financial Balance + Fiscal Balance + Foreign Financial Balance = 0
It is not out of the question that fiscal rectitude at this juncture could place the private sectors of a number of nations on a debt deflation path - the very outcome policy makers were frantically attempting to prevent but a year ago.
If eurozone countries try to return to 3% fiscal deficits by 2012, as many of them are now pledging, unless the euro devalues enough or some other measure produces a large current account swing, then either
a) the domestic private sectors of many nations will have to adopt a deficit spending trajectory, or
b) nominal private income will deflate, and Irving Fisher's paradox will apply (as in the very attempt to pay down debt leads to more indebtedness), thwarting the ability of policy makers to achieve fiscal targets.
we remain hard pressed to identify which nations or regions of the remainder of the world are prepared to become consistently larger net importers of Europe's tradable products. Countries currently running large trade surpluses view these as hard won and well deserved gains. They are unlikely to give up global market shares without a fight, especially since they are running export led growth strategies.
Policymakers are desperate to unwind the “unconventional support”, to activate “exit strategies” and begin the long march back to normality.
But there is still little sign of the sustained private-sector recovery required to take up the slack.
Jeremy Warner Daily telegraph 5 Mar 2010
At the level of the early 80s.
A very nice graph shows the employment-population ratio;
this is the ratio of employed Americans to the adult population.
Calculated Risk 5 March 2010
Even long-term rates are low — the real interest rate on
10-year bonds is below 1.5 percent.
Paul Krugman NYT March 5, 2010
Keynes och moral hazard
Min hypotes är att det finns en makroekonomisk moral hazard (ung trygghetsrisktagande) som innebär att själva föreställningen, att det finns en kraftfull stabiliseringspolitik att ta till om det skulle gå snett, kan leda till stora obalanser.
Danne Nordling 4 mars 2010
"Rädslans politik" är rubriken på en signerad ledarartikel i DN idag 4/3-10 av Henrik Berggren. Den handlar om ideologier med tillbakablick mot Keynes och Hayek
Han tar sin utgångspunkt i en artikel av den brittiske historikern Tony Judt i NYRoB som utmynnar i att socialdemokratin inte står för någon särskild idé om staten: Alla partier delar nu socialdemokratins föreställning att staten har ett grundläggande ansvar för medborgarnas välbefinnande.
även om deras slutsatser skiljer sig åt är både Hayeks och Keynes teorier födda ur rädsla.
De är inte utopiska, de utlovar inget framtida lyckorike. De säger bara att den som följer deras läror har en god chans att undvika social kollaps, anarki och diktatur.
DN-ledare 4 mars 2010 signerad Henrik Berggren
även om borgerliga partier över hela Europa kanske vill ha en något mindre stat i allmänhet delar man i stort sett socialdemokratins föreställning om denna stats grundläggande ansvar för medborgarnas välbefinnande.
Det var inte rädsla som skapade ett brett stöd för välfärdsstat och marknadsekonomi över hela västvärlden på femtio- och sextiotalet utan medborgarnas framtidstro och hopp om ett bättre samhälle.
Top of page with links to Hayek and Keynes
"I allt väsentligt kan staten jämföras med hushållet", skriver Svegfors,
med en formulering som kan komma att bli (herostratiskt?) ryktbar.
ökar penningmängden för mycket kan det bli överhettning i ekonomin.
Att det läget inte nu råder beror på att andra aktörer, hushåll, byggbolag, banker, ägnar sig åt kreditkontraktion, i st f kreditexpansion som under 80-talet.
Mats Svegfors har humor. Det framgår av att han idag 940531 skriver att Keynes och Friedman har tänkt fel och att Anne Wibble har tänkt rätt.
Rolf Englund 13 jun 1994
Rolf Englund 5 mars 2010:
Jag kom att tänka på mitt meningsutbyte med Svegfors sommaren 1994 när jag häromdagen såg ett diagram i en artikel av Martin wolf.
Jumps in fiscal deficits are the mirror image of retrenchment by battered private sectors.
In the US, the financial balance of the private sector (the gap between income and expenditure) shifted from minus 2.1 per cent of GDP in the fourth quarter of 2007 to plus 6.7 per cent in the third quarter of 2009, a swing of 8.8 per cent of GDP.
Martin Wolf February 16 2010
The big intolerably uncertain question for Britain and America (and for Greece, Ireland and others) is
can we reduce our debts in an orderly way
- one which would be gruelling for us, as we save more and consume less, but not unbearable?
Robert Peston, the BBC's business editor, 30 December 2009
The “inflation fundamentalists”
This elite of central bankers, top economic officials, politicians, academics and journalists maintains the risks of allowing inflation to climb above 2 per cent are unacceptable.
Uri Dadush and Moisés Naím, FT March 4 2010
Their view is informed by the disastrous experience with hyperinflation in Germany in the 1930s and stagflation in industrial countries in the 1970s and 1980s. Undoubtedly, moderate inflation can creep up to become high inflation. But, like many good ideas that take on the mantle of a cult, inflation fundamentalism can hurt.
There is little if any empirical evidence that moderate inflation that stays moderate hurts growth.
This misunderstanding pops up now and then, also in this article:
"the disastrous experience with hyperinflation in Germany in the 1930s"
But the hyperinflation was in the 1920s, not in the 1930s.
In the 1930s there was unemploymnet, as we all know.
Rolf Englund FT March 4 2010
We need a Plan B to curb the debt headwinds
An unsustainable level of private sector debt
is the main factor explaining the present severe downturn,
as well as many previous downturns in history.
William White FT March 2 2010
The writer is chair of the Economic and Development Review Committee at the OECD and was economic adviser at the Bank for International Settlements
Policymakers have responded to successive economic downturns in essentially the same Keynesian way since the 1950s.
Fiscal deficits have been allowed to rise and interest rates to fall to stimulate aggregate demand.
Though Keynes hardly anticipated such repeated use of macro instruments, these policies have worked.
The problem with debt is that it constitutes a claim on future earnings, which cannot be met if earnings expectations fail to materialise.
Both monetary and fiscal policies may now have reached the limits of their effectiveness.
Encouraging an orderly deleveraging of balance sheets, both household and financial, is one route. But as saving rates rise, multiplier and accelerator effects might interact to produce a much less orderly outcome than anticipated.
Economics is often about hard choices. If the headwinds of debt have overwhelmed the capacity of macro policies to stimulate real growth, then other, more structural, measures must be turned to. Failing to muster the political will to do so would increase the likelihood of an inflationary solution to the debt problem.
Why have markets reached their exposed position? The answer is that success breeds excess.
This is the argument of a fascinating new paper from William White, economic adviser to the Bank for International Settlements.
Martin Wolf, Financial Times 24/5 2006
To begin with, let’s get reacquainted with the fundamental economic problem of our age – lack of global aggregate demand – and how we got to where we are today:
(1) Twenty years of accelerated globalisation incrementally undermined the real incomes of most developed countries’ workers/citizens,
forcing governments to promote leverage and asset price appreciation in order to fill in what is known as an “aggregate demand” gap – making sure that consumers keep buying things.
Bill Gross March 2010
What if, as Carmen Reinhart and Kenneth Rogoff have pointed out in their book, “This Time is Different”, our modern era was similar to history over the past several centuries when financial crises led to sovereign defaults or at least uncomfortable economic growth environments where real GDP was subpar based on onerous debt levels – sovereign and private market alike.
What if – to put it simply – you couldn’t get out of a debt crisis by creating more debt?
The West risks a slow grind into debt-deflation unless central banks offset fiscal tightening with monetary stimulus – QE, of course – to keep demand alive.
Yet the Fed and the European Central Bank are letting credit contract.
Ambrose Evans-Pritchard, 28 Feb 2010
- Det är klart att Göran Perssons historiska insats är monumentalt betydelsefull för Sverige. Vi kan ha haft olika synpunkter på hur man borde sanerat vår ekonomi. Men den sanering de gjorde är oerhört viktig för att vi har en god ordning i vår ekonomi.
Anders Borg ref. i DN 2010-02-19
The risk premium on Greek government bonds continues to hover around 3 per cent, depriving Greece of much of the benefit of euro membership. If this continues, there is a real danger that Greece may not be able to extricate itself from its predicament whatever it does. Further budget cuts would further depress economic activity, reducing tax revenues and worsening the debt-to-GNP ratio. Given that danger, the risk premium will not revert to its previous level in the absence of outside assistance.
George Soros FT February 21 2010
Cantillon, en irländsk ekonom, bankir och börsspekulant på 1700-talet, var först med att poängtera att
effekten av penningpolitiken beror på de kanaler genom vilka nya pengar pumpas in i samhällsekonomin,
på vem som får pengarna och vad de används till.
Lars Jonung Kolumn DN 2009-12-17
Nu trycker Riksbanken frenetiskt in nya pengar i svensk ekonomi för att möta den globala krisen. Kreditökningen kanaliseras i betydande utsträckning till fastighetsmarknaden. De svenska huspriserna har sedan 1990-talets finanskris stigit mer än de amerikanska huspriserna – innan den amerikanska bolånekrisen bröt ut och huspriserna störtdök i USA.
Vår kris är emellertid en exportkris – inte en bostadskris som i USA. Exporten av Volvobilar kan inte hållas uppe med låga räntor i Sverige.
Dagens låga styrränta är inte långsiktigt hållbar. Den måste förr eller senare höjas. Då finns risken att vi på nytt överraskas av en fastighetsbubbla som brister med dystra konsekvenser. Uppgången i bopriserna har kusliga likheter med den fas då en finansiell bubbla pumpas upp.
Alan Greenspan, förre chefen för den amerikanska centralbanken, ansåg att centralbanken ska ta hand om bubblor först när de spruckit. Bolånekrisen i USA ger oss det motsatta budskapet. Nu vet vi att en politik som ignorerar prisbubblor bär fröet till kommande krasch. Det förstod redan Cantillon. Han gjorde sig nämligen en enorm förmögenhet genom att sälja innan den stora finansbubblan 1719–20 sprack.
Full textKommentar av Rolf Englund:
Det är detta, tror jag, som är en av grundbultarna i tänkandet hos Hayek och de andra österrikarna.
Om man stimulerar ekonomin med sänkta räntor och borttagen fastighesskatt, då ökar efterfrågan på bankaktier, fastigheter, filipinska hembiträden, krogar och Porsche-bilar.
Om man stimulerar eftrfrågan med högre barnbidrag, då ökar efterfrågan på helt andra saker.
Ganska självklart, egentligen.
Both groups might be right.
The Sunday Times letter argued that “the government’s goal should be to eliminate the structural current budget deficit over the course of a parliament”, instead of the two planned by the government.
In response, opponents argued that it would be foolish to slash the structural deficit if this led to a deeper recession and so to an offsetting rise in the cyclical deficit.
Martin Wolf February 25 2010
If all the economists in the world were laid end to end, they would not reach a conclusion. The “battle of the letters” – two letters in the FT, from Lord Skidelsky and others and Lord Layard and others, replying to a letter in the Sunday Times from Professor Tim Besley and others – brings this hoary joke to mind.
An obvious way to combine credibility with a pro-growth stimulus is to close the structural current deficit relatively rapidly, while introducing credibly temporary offsets, particularly via spending on investment and tax holidays.
Jumps in fiscal deficits are the mirror image of retrenchment by battered private sectors.
In the US, the financial balance of the private sector (the gap between income and expenditure) shifted from minus 2.1 per cent of GDP in the fourth quarter of 2007 to plus 6.7 per cent in the third quarter of 2009, a swing of 8.8 per cent of GDP.
Martin Wolf February 16 2010
This massive swing occurred despite the Federal Reserve’s efforts to sustain lending and spending. Similar shifts occurred in other crisis-hit countries.
If these governments had decided to balance their budgets, as many conservatives demand, two possible outcomes can be envisaged: the plausible one is that we would now be in the Great Depression redux; the fanciful one is that, despite huge increases in taxation or vast cuts in spending, the private sector would have borrowed and spent as if no crisis at all had happened.
In other words, a massive fiscal tightening would actually expand the economy. This is to believe in magic.RE: This is to be believe in Rational expectations/The Efficient Market Theory
The Case For Higher Inflation
Olivier Blanchard, currently the chief economist at the IMF,
conclusion, central banks have been setting their inflation targets too low
I’m not that surprised that Olivier should think that; I am, however, somewhat surprised that the IMF is letting him say that under its auspices. In any case, I very much agree.
Paul Krugman, Febr 13 2010
“Why did no one see the crisis coming?”, Queen Elizabeth asked
A seminar at the British Academy tried to answer and the FT has taken up the discussion.
Robert Skidelsky, FT, August 5 2009
What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did.
First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped.
Second, there is a good deal of “leakage” from open economies in a globalised world.
Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect
Niall Ferguson, FT February 10 2010
My new maxim, never to stand in the middle of a fight between Paul Krugman and Niall Ferguson
Fiscal multipliers are certainly fun.
If the fiscal multiplier is 0.5, we’re getting government projects at half price: the government project draws half its resources away from private-sector activity, but the other half is just soaking up slack
Tim Harford, FT July 20 2010
Highly recommended
If new-classical and new-Keynesian economics are both wrong, where do we go from here?
For 30 years, macroeconomists have been of two stripes: new-classical and new-Keynesian.
Neither has anything interesting to say about the current crisis.
Roger E.A. Farmer FT January 28, 2010
In new-classical and new-Keynesian economics, all unemployment is temporary and unemployed workers will quickly find jobs. According to the Keynes of The General Theory, very high unemployment can persist forever. Nobody has taken this Keynesian idea seriously in respectable academic circles since the 1950s
Samuelson’s interpretation of Keynes evolved into a modern incarnation - new-Keynesian economics.
According to new-Keynesians, recessions occur because some firms are stubbornly unwilling to lower their prices in the face of a fall in demand. Workers quit their jobs and choose to take a prolonged vacation. This is not the main theme of The General Theory. But the idea that some firms are slow to change prices is central to new-Keynesian economics. To explain why firms don’t change prices, the new-Keynesians assume that a firm must wait until it’s randomly chosen to be given the privilege to change its price. This option is facetiously referred to as a ‘visit from the Calvo fairy’ after a paper by economist Guillermo Calvo who first introduced the idea into macroeconomics. I don’t believe in fairies.
Many economists recognise that it is time for economics to change. But so far, theoretical economists are trotting out the same tired old solutions and empirical economists are a long way from a consensus on the magnitude of the multiplier.
Say the US government orders a $10bn (£6bn) aircraft carrier. You might assume the effect of this would be merely to pump $10bn into the US economy. Under the multiplier argument, the actual effect would be bigger. The shipbuilder takes on more employees and generates more profits; its workers spend more on consumer goods. Depending on the average consumer’s “propensity to consume”, this could raise total economic output by far more than the amount of public money actually injected.
If the $10bn increase caused total United States economic output to rise by $5bn, the multiplier would be 0.5; if it rose by $15bn, the multiplier would be 1.5.
Read more here
The policies that new-Keynesian economists are advocating stem from a theory that is built on sand. Before economists become policy advocates we need a theory that is internally consistent and that can explain the evidence from the Great Depression, the stagflation of the 1970s and the current economic collapse. The Keynes of The General Theory was right about the problem, but he was wrong about the solution. High unemployment can persist forever unless we do something about it. But fiscal policy is not the way to restore full employment.
If new-classical and new-Keynesian economics are both wrong, where do we go from here?
I answer these questions from a new perspective in two new books, Expectations Employment and Prices(written for academics) and How the Economy Works: Confidence Crashes and Self-Fulfilling Prophecies(written for the general public). I argue that the solution is not to replace private demand by public demand through massive fiscal stimulus programs. A more effective policy solution is to maintain and extend the programs of quantitative easing that have been engaged in by central banks throughout the world.
Roger E. A. Farmer's Macroeconomics Page
KeynesAtt stänga av respiratorn
Nu ska räddningspaketen avvecklas.
Första stegen blir strypta lån och högre räntor.
Anders Billing Fokus 22/1 2010
I Sverige har både Riksbanken och Riksgälden åtgärder som fortfarande är i funktion. Riksbanken har till exempel 80 miljarder kronor utlånade till ett antal svenska finansföretag (vilket är långt mindre än de flera hundra miljarder kronor som utlåningen låg på som mest under fjolåret).
Riksgälden har i sitt garantiprogram fortfarande sex banker och finansföretag anslutna (som Swedbank, SBAB och Volvofinans) som med hjälp av garantierna vid årsskiftet hade lånat mellan 250 och 300 miljarder kronor.
För det andra har centralbankerna spelat en aktiv roll genom framför allt räntesänkningar till historiskt låga nivåer under 1 procent, men också genom att tillföra pengar till marknaden via lån. Riksbanken har i dag strax under 300 miljarder i tre sådana lån, som löper ut i sommar och tidig höst.
Full textEven the normally sober Martin Wolf has fallen for this line (FT, December 16 2009). The pre-crisis UK economy, he says, was a “bubble economy”. The bubble made UK output seem larger than it actually was!
Robert Skidelsky December 22 2009
This is old-fashioned Puritanism: the boom was the illusion, the slump is the return of reality.
The government must cut its spending now, because this is what “the markets” expect. These are the same markets that so wounded the banking system that it had to be rescued by the taxpayer. This is unacceptable. The duty of governments is to govern in the best interests of the people who elected them not of the City of London. If that means calling the bankers’ bluff, so be it.
Lars Calmfors har rätt
Det fanns en tid när detta budskap kunde framföras:
"Svenskt Näringsliv avstyrker det föreslagna finanspolitiska rådet. Det finns inget behov för ett sådant eftersom vi anser att aktiv stabiliseringspolitik inte skall bedrivas."
Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken. Finanspolitiska Rådets chef Lars Calmfors är inne på liknande tankar:
- Lars Calmfors budskap är: Riksbanken måste agera. Annars hotar en bolånebubbla
The Great Moderation
The emotional markets hypothesis and Greek bonds
Gillian Tett, FT April 9 2010
The average British, German or American fund investors might have seen some market shocks in their lives. Just think of the 2001 internet crash or 1997 Asian crisis. But these prior shocks tended to be short-lived, relatively contained, and – crucially – did not threaten to bring down the entire system.
Instead, in the decade before 2007 the macro-economic climate appeared to be so utterly benign and stable that economists dubbed it the “Great Moderation”. Investors were so confident – or complacent – that this “moderation” would last, that they kept borrowing more and more, and accepting lower returns for the same risk.
The efficient-markets hypothesis
Paul Krugman in The Economist
Olivier Blanchard, the IMF’s chief economist called for several bold innovations.
Central banks should raise their inflation targets—perhaps to 4% from the standard 2% or so.
The Economist print Feb 18th 2010
Hyman Minsky, points out that stability leads to instability.
The longer a given condition or trend persists (and the more comfortable we get with it), the more dramatic the correction will be when the trend fails.
The problem with long-term macroeconomic stability is that it tends to produce highly unstable financial arrangements. If we believe that tomorrow and next year will be the same as last week and last year, we are more willing to add debt or postpone savings for current consumption.
Thus, says Minsky, the longer the period of stability, the higher the potential risk for even greater instability when market participants must change their behavior.
John Mauldin 26/3 2010
The Great Stabilisation
The Economist print Dec 17th 2009
It has become known as the “Great Recession”, the year in which the global economy suffered its deepest slump since the second world war. But an equally apt name would be the “Great Stabilisation”. For 2009 was extraordinary not just for how output fell, but for how a catastrophe was averted.
Twelve months ago, the panic sown by the bankruptcy of Lehman Brothers had pushed financial markets close to collapse. Global economic activity, from industrial production to foreign trade, was falling faster than in the early 1930s. This time, though, the decline was stemmed within months.
Full textWhy have markets reached their exposed position?
The answer is that success breeds excess.
This is the argument of a fascinating new paper from William White, economic adviser to the Bank for International Settlements.
Martin Wolf, Financial Times 24/5 2006
Was inflation sown in moderation?
"The Great Inflation and Its Aftermath", By Robert Samuelson
Review by Clive Crook, Financial Times December 14 2008
Did inflation targeting fail?
Central banks have mostly escaped blame for the crisis.
How can it have gone so wrong?
Martin Wolf, Financial Times, May 5 2009
Just over five years ago, Ben Bernanke, now chairman of the Federal Reserve,
gave a speech on the “Great Moderation”
Read more here
Recession? What Recession?
Talk about a recession from a very small group of people need to be balanced
against the fact that no major strategist is predicting a recession.
This "great moderation" of the economy has been explained many ways
Bob Pisani, CNBC 24 Aug 2007
'Prophets of doom' will be right in the end
Rolf Englund, Financial Times, June 5 2007
Mot bakgrund av den kraftigaste recessionen i världsekonomin sedan andra världskriget finns det anledning att se över om den politik som centralbanker bedriver kan utformas för att bättre kunna främja en balanserad ekonomisk utveckling.
Vice riksbankschef Karolina Ekholm 2009-12-04
Om hushållens upplåning fortsätter att öka med 8 procent är det inte riktigt hållbart", säger SEB:s chefsekonom Robert Bergqvist.
Det är Statistiska centralbyråns, SCB:s, senaste finansmarknadsstatistik som ser ut som om Riksbanken misslyckats totalt i sin räntepolitik.
Tanken var ju att garantera företagen billiga lån för att få igång investeringarna och skapa nya jobb.
DI 27/10 2009
Hushållens samlade skulder uppgick i september till 2.274 miljarder kronor varav 1.508 miljarder var bostadslån.
Villaägarna - Roten till allt ont?
Idag är John Maynard Keynes mer relevant än någonsin, skriver Krugman bland annat. Han beskriver världsdepressionen i början av 30-talet som en efterfrågekris:
”Det som satte stopp för trettiotalsdepressionen i USA var ett massivt underskottfinansierat program för offentliga arbeten som kallas andra världskriget”.
Carl Johan Gardell, Understreckare SvD 13 augusti 2009
Multiplying multipliers
Mark Thoma, Menzie Chinn, and The Economist all have posts on the question of the size of the fiscal multiplier.
Paul Kruman, October 1, 2009
This piece by Ilzetzki et alis interesting, and offers a wide range of multipliers depending on a country’s situation.
The question for the United States is which estimate is most relevant.
The US Job Numbers for September
263,000 more jobs lost in September, and unemployment now at 9.8 percent
The only reason the numbers don't look worse is that 571,000 workers dropped out of the labor force.
Remember that the economy needs about 125,000 new jobs every month just to keep up with a growing population.
Robert Reich 2/10 2009
Why the Dow is Hitting 10,000 When Consumers Can't Buy And Business Cries "Socialism"
Robert Reich 22/9 2009
The explanation is simple. The great consumer retreat from the market is being offset by government’s advance into the market. Consumer debt is way down from its peak in 2006; government debt is way up. Consumer spending is down, government spending is up. Why have new housing starts begun? Because the Fed is buying up Fannie and Freddie’s paper, and government-owned Fannie and Freddie are now just about the only mortgage games remaining in play.
Lars E O Svensson anses vara en av världens ledande akademiker inom området penningpolitik.
Men hans insatser i riksbanksdirektionen för tankarna till en kapten som slaviskt följer sitt sjökort, även om fartyget kört på ett isberg.
Peter Wolodarski 2009-12-27
Det var en sak att sänka räntan under det akuta krisläget för att avvärja en depression. Men nu när ekonomin börjat återhämta sig bidrar nollräntan bara till att elda på bostadsrallyt. Det är att upprepa de allvarliga misstag som Alan Greenspan begick under flera år på 00-talet – och som bäddade för finanskrisen och senare tvingade fram Ben Bernankes räddningsinsats.
Den som tror att Sverige följer samma ekonomiska tyngdlagar som länder som USA, Storbritannien och Spanien bör förbereda sig på att det smärtsamma prisfallet på bostäder kommer, kanske till och med under 2010.
Man har först en fast växelkurs som förhindrar åtstramningar av ekonomin under högkonjunktur. Och sedan har man fast växelkurs som förhindrar stimulans.
Det hade man under den tid som Lars Svensson var rådgivare åt Bengt Dennis på Riksbanken och under den tid som Kjell-Olof Feldt, nu ordförande i Riksbanksfullmäktige, var finansminister. Det var då som grunden för sammanbrottet lades.
Rolf Englund på Nationalekonomiska Föreningen 1995
RE: Njaa, hur är det med ECB?
Vice riksbankschef Lars E O Svensson om vilka lärdomar man kan dra av finanskrisen och inflationsmålspolitiken.
Han inleder med att konstatera att alla centralbanker med inflationsmål har detta som ett flexibelt mål som också går ut på att stabilisera realekonomin.
Detta till skillnad mot en strikt inflationsmålspolitik där enbart inflationen skall stabiliseras.
Danne Nordling 25/9 2009
LEOS redogör för sin syn på varför det blev finanskris. Det hade inte mycket med penningpolitiken att göra.
Full text hos Danne med länk till Svensson
The primary objective of the ECB’s monetary policy is to maintain price stability.
The ECB aims at inflation rates of below, but close to, 2% over the medium term.
"To maintain price stability is the primary objective of the Eurosystem and of the single monetary policy for which it is responsible. This is laid down in the Treaty establishing the European Community, Article 105 (1).
"Without prejudice to the objective of price stability (kurs här)", the Eurosystem will also "support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community". These include a "high level of employment" and "sustainable and non-inflationary growth".
Read more at ECB
Asset price bubbles and Central Bank Policy - Alan Greenspan
U.S. Economy Lost 216,000 Jobs in August
after falling by a revised 276,000 in July and 463,000 in June.
Total loss of jobs since the recession began in December 2007 - 6.9 million.
(Remember, it takes 150,000 jobs per month (or so) simply to maintain
the employment rate, due to growth in the population.)
RGE Monitor 2009-09-07
It would, I believe, be an error of historic proportions if we were to repeat the mistakes of the 1930s
- when premature tightening prolonged the great depression
- or if we failed to learn the lessons from Japan’s experience of stagnation in the 1990s.
The Prime Minister Gordon Brown, speech to G20 Finance Ministers in London on 5 September 2009, ahead of the Pittsburgh Summit.
Både penningpolitiken och finanspolitiken bör vara expansiv under både 2009 och 2010.
Det sa finansminister Anders Borg vid en presskonferens på fredagen inför G20-mötet för finansministrar.
"Vad gäller ekonomin så står vi fortfarande i askan, och det är inte rätt tid att kalla tillbaka brandkåren.
Jag tycker det är rimligt att under både 2009 och 2010 behålla en expansiv penningpolitik och finanspolitik"
Anders Borg, DI 2009-09-04
Nästan alla väljer rörlig ränta
DI 2009-09-02
Fortsatt stor skillnad mellan den bundna tremånadersräntan och de längre bundna boräntorna bidrog till att 91 procent av låntagarna valde den kortaste bindningstiden i augusti. Det är den högsta andelen sedan mätningarna startade år 2000.
Det visar SBAB:s månadsstatistik över nyutlåningen till privatkunder.
How Did Economists Get It So Wrong?
“central problem of depression-prevention has been solved,” declared Robert Lucas of the University of Chicago
in his 2003 presidential address to the American Economic Association
Paul Kruman, New York Times Magazine, 2/9 2009
Betrakta kurvan härintill.
Det är inte den som brukar publiceras i samband med nyheter om tillväxten, men det är den som visar hur värdet av Sveriges varor och tjänster utvecklats i fasta priser sedan 1950.
Som synes har Sveriges välstånd ökat kraftigt.
Man kan här läsa ut att Sverige med det värsta scenariot, drygt sex procents negativ tillväxt i år,
kommer att backa till ungefär 2005 års nivå innan det vänder upp igen. Fattigare än så blir vi inte.
Anders Bolling, DN 2009-08-10
Samma förhållande gäller också andra länder eftersom den globala tillväxten varit enorm de senaste decennierna.
Den andra sidan av arbetslöshetsstatistiken är sysselsättningen. Där är vi ännu inte i närheten av krisåren på 1990-talet. Under åren 1990–1993 minskade sysselsättningen med hisnande 600 000 personer – från en nivå bra mycket lägre än den vi vant oss vid på senare år. Efter 1997 har sysselsättningen ökat kontinuerligt fram till toppåret 2008. Just nu är andelen sysselsatta vuxna nere på nivån i slutet av 2006.
Kommentar av Rolf Englund
Jaha, och jag som har läst så många gånger att det började gå utför för Sverige runt 1970......
Snacket om Eftersläpningen
Roosevelts New Deal på 30-talet gick ut på att med höjda inkomstskatter och utgiftsminskningar få balans i budgeten, som till slut uppnåddes 1938.
Då bröts uppgången och produktionen sjönk.
Först när balansmålet övergavs kunde ekonomin expandera tillräckligt mycket.
Danne Nordling, 20/2 2009
Arbetslösheten fortsätter att öka men det ekonomiska läget har blivit "ett par snäpp bättre".
Det finns därför ett visst utrymme för satsningar i höstens budget.
Anders Borg, E24 2009-08-06
Huru tänker Anders Borg?
Rolf Englund 2009-08-12
Regeringen har hållit hårt i pengarna under krisen.
Belöningen kan komma som sänkt skatt under valåret 2010.
SvD-ledare 11 augusti 2009
Visst är det förståeligt att kommuner och landsting önskar mer resurser, men det är näppeligen där som arbetslösheten väntas stiga mest. Tvärt om, det är snarare den sektor som klarar sig lindrigast, åtminstone enligt Arbetsförmedlingens beräkningar. Inom industrin räknar man med att strax över 60000 personer förlorar jobbet både innevarande år och nästa, inom den privata tjänstesektorn mellan 30000 och 40000 både detta och nästa år. Inom offentlig sektor handlar det om strax under 10000 personer 2009 och 15000 personer 2010.
Det finns anledning att se över tillskotten till landsting och kommuner, men skälen att satsa på skattesänkningar för det privata näringslivet torde vara större inte minst då arbetslinjen hävdas.
Teorin om automatiska stabilisatorer förutsätter att kommunerna inte skall avskeda eller höja skatten.
Därför måste staten stabilisera kommunerna.
Men detta tycks inte vara motivet för att nu ge extra pengar till kommunerna.
Man kan dela in stabiliseringspolitiken i tre kategorier: automatisk, reaktiv och proaktiv.
Danne Nordling 11/8 2009
On a visit to the London School of Economics last November, the Queen asked why no one saw the financial crisis coming.
For if people with enough authority and influence had foreseen it, some preventive action would have been taken and either the crisis would not have occurred, or it would at least have taken a different form.
Samuel Brittan, FT, August 6 2009
Hur vi en dag ska ta oss från lågränteträsket till en lite mer sund räntesättning förstår jag inte.
Det gör ingen annan heller och det börjar väl bli några av oss som undrar hur exit-strategin bland
”stora tänkare” som Ben Bernanke eller Lars E O Svensson egentligen ser ut.
Pekka Kääntä, 2 juli 2009
The efficient-markets hypothesis
Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.
Paul Krugman argued that much of the past 30 years of macroeconomics was
“spectacularly useless at best, and positively harmful at worst.”
The Economist print July 16th 2009
Anders Borgs plan för balans i EU-ekonomin
Mats Hallgren, Svde24 2009-07-07
Our economy’s lights, if not switched off in a rehash of the 1930s Depression, have certainly been dimmed in a 21st century version likely to be labelled the Great Recession.
McHouses, McHummers, and McFlatscreens, all financed with excessive amounts of McCredit created under the mistaken assumption that the asset prices securitising them could never go down.
There is a developing optimism that we can go back to the lifestyle of yesteryear.
Forecasts based on econometric models inevitably miss these secular/structural breaks in historical patterns because it is impossible to quantify human behaviour
Bill Gross, July 2009
It could be that future generations of German politicians find ingenious ways around the balanced budget law.
Or that they find a two-thirds majority to overturn it.
Or that Mr Sarkozy or his successors follow Germany into a future of austerity.
But as long as one of those three events fails to happen, Germany may discover that unilateral fiscal rigour in a monetary union could prove extremely costly.
For the sustainability of the euro, you surely do not want to get into a position where a large member state has a rational economic reason to quit.
So if Germany and France really do what they both promise, you may as well start the egg timer.
Wolfgang Münchau, Financial Times June 28 2009
Den 2/6 2009 skrev Carl-Johan Westholm under rubriken "Politiskt inkorrekt av Reinfeldt och Borg"
ett hyllningsinlägg på sin blog Stateblind.
Rolf Englund blog 22/6 2009
The recovery from the Depression is often described as slow
because America did not return to full employment until after the outbreak of the second world war. But...
Christina Romer, chairwoman of Barack Obama's Council of Economic Advisers and a scholar of the Depression,
The Economist print June 18th 2009
What gave the Great Depression its name was a brutal decline over three years.
This time the world is applying the lessons taken from that event by John Maynard Keynes and Milton Friedman, the two most influential economists of the 20th century.
The policy response suggests that the disaster will not be repeated.
Martin Wolf, Financial Times, June 16 2009
Two economic historians, Barry Eichengreen of the University of California at Berkeley and Kevin O’Rourke of Trinity College, Dublin, have provided pictures worth more than a thousand words (see charts)
The bad news is that this recession fully matches the early part of the Great Depression. The good news is that the worst can still be averted.
‘A Tale of Two Depressions’, June 2009, www.voxeu.org/index.php?q=node/3421
Two opposing dangers arise. One is that the stimulus is withdrawn too soon, as happened in the 1930s and in Japan in the late 1990s. There will then be a relapse into recession, because the private sector is still unable, or unwilling, to spend.
The other danger is that stimulus is withdrawn too late. That would lead to a loss of confidence in monetary stability worsened by concerns over the sustainability of public debt, particularly in the US, the provider of the world’s key currency.
At the limit, soaring dollar prices of commodities and rising long-term interest rates on government bonds might put the US – and world economies – into a malign stagflation.
Contrary to some alarmists, I see no signs of such a panic today. But it might happen.
A significant decline in both consumption and investment will mean a recession in the US.
This conclusion is so obvious that the only question is why the markets are not forecasting it already.
Barry Eichengreen Financial Times 20/12 2004
What I hear more and more, both from bankers and from economists, is that the only way to end our financial crisis is through inflation.
Their argument is that high inflation would reduce the real level of debt, allowing indebted households and banks to deleverage faster and with less pain.
The advocates of such a strategy are not marginal and cranky academics. They include some of the most influential US economists.
Wolfgang Münchau, Financial Times, May 24 2009
Consider what would happen if the UK or US were to attempt Hungarian or Estonian style cuts.
There would be a huge outcry.
So rather than taking the axe to public spending, the British and American governments are borrowing madly,
with no sign of any credible long-term plan to balance the books.
Gideon Rachman, Financial Times, May 25 2009
Did inflation targeting fail?
Central banks have mostly escaped blame for the crisis.
How can it have gone so wrong? Also about The Taylor Rule
Martin Wolf, Financial Times, May 5 2009
MV=PQ
Okay, when you become a central banker, you are taken into a back room and they do a DNA change on you.
You are henceforth and forever genetically incapable of allowing deflation on your watch.
It becomes the first and foremost thought on your mind: deflation, we can't have it.
John Mauldin 24/4 2009
MV=PQ. This is an important equation, right up there with E=MC². M (money or the supply of money) times V (velocity -- which is how fast the money goes through the system -- if you have seven kids it goes faster than if you have one) is equal to P (the price of money in terms of inflation or deflation) times Q (roughly standing for the Quantity of production, or GDP)
So what happens is, if we increase the supply of money and velocity stays the same, and if GDP does not grow, that means we'll have inflation, because this equation always balances. But if you reduce velocity (which is happening today) and if you don't increase the supply of money, you are going to see deflation. We are watching, for reasons we'll get into in a minute, the velocity of money slow. People are getting nervous, they are not borrowing as much, either because they can't or the animal spirits that Keynes talked about are not quite there.
In the world that existed before the financial crisis, central bankers were triumphant.
They had defeated inflation and tamed the business cycle.
And they had developed a powerful intellectual consensus on how to do their job, summarised recently by David Blanchflower, a member of the Bank of England’s monetary policy committee, as “one tool, one target”.
The tool was the short-term interest rate, the target was price stability.
The Economist Apr 23rd 2009
This minimalist formula fitted the laissez-faire temper of the times. A growing array of financial markets could price risk and allocate credit efficiently. Central bankers had merely to calibrate their interest-rate tools and all other markets would automatically adjust. Central banks still cared about financial stability and full employment, but could argue these were best served by stabilising prices—without, if you please, interference from politicians.
The financial crisis has upended all that.
The business cycle was supposedly subdued, yet the world is in the deepest recession since the 1930s. Deflation has become a more dangerous enemy than inflation; with interest rates in many countries at or close to zero, central banks have had to reach for other tools.
Folkpartiets ekonomiske talesman Carl B Hamilton säger nej tack till en kraftigt expansiv politik
i ett läge utan säker internationell uppgång i sikte.
DN/TT 31/3 2009
"Att i dag gå ut hårt med ökade offentliga utgifter för att motverka krisen är som att spänna upp en brygga över ett vattendrag med okänd bredd och utan visshet om var andra stranden befinner sig", skriver han i ett pressmeddelande.
Hamilton jämför med 1970-talet då den borgerliga regeringen körde i diket med en sådan politik och han slår fast att detta inte kommer att hända igen.
Carl Bildt berättar:
I det europeiska samarbetet har under dessa decennier diskuterats vad som kunde göras för att undvika en för den ekonomiska utvecklingen skadlig turbulens på valutamarknaderna.
Det första försöket till stabilitet var den s.k. valutaormen kring den västtyska D-marken som Sverige under några år försökte att vara en del av, men som vi misslyckades att klara eftersom vi tillät kostnader att skena iväg långt mycket snabbare än i den västtyska ekonomin.
1977 tvingades vi (RE: Gösta Bohman, Carl Bildt m fl), som ett resultat av den s.k. överbryggningspolitiken under mandatperioden mellan 1973 och 1976, att ge upp det försöket.
Ur Carl Bildts veckobrev v1/2002
Anders Ferm berättar:
Jag var med när överbryggningspolitiken tog form, jag inbillar mig det i varje fall.
Det var efter valet 1973 och man sade ”vad skall vi nu göra, snart är det val igen”.
Det var jämviktsriksdag och det höll nästan på att gå åt pipan.
En kväll satt jag hemma hos Allan Larsson, och han förklarade för mig att ”varje lågkonjunktur följs av en högkonjunktur”, och jag nickade och sade ”lysande tanke”.
Han fortsatte: ”Då gäller det, att företagen när högkonjunkturen kommer är rustade, de skall ha varulager som de kan sälja av och de skall ha produktionskapaciteten intakt”.
Jag tyckte att det var briljant, att ingen hade tänkt på det förr!
Att efter en lågkonjunktur kommer alltid en högkonjunktur, det är klart att man skall överbrygga den,
och alla grep efter det där.
Samtal med Johan Norberg
Varför blev det finanskris?
Var det girigheten som löpte amok?
Den osunda kulturen före finanskrisen hade aldrig uppstått
om det inte varit för alla politiska misslyckanden.
PJ Anders Linder, SvD 29 mars 2009
Vi befinner oss mitt i den största ekonomiska nedgången på 80 år,
för första gången i världshistorien har vi en global kris.
Följderna kan bli synnerligen stora och kostsamma,
men det verkar inte ha utlöst någon nämnvärd kreativitet bland våra ledare.
Kristina Persson, Global Utmaning 17/3 2009
Trots att EUs ekonomier sammantaget har starkare finanser än den amerikanska finns inga stora och samordnade stimulanspaket på väg. Därmed kommer inte heller den amerikanska stimulansen att få tillräckligt bett.
Sverige hör till de länder som drabbas värst. Inte för att vi har en dåligt skött ekonomi, utan därför att vi är extremt exportberoende. ändå talar vår statsminister om att vi bör försöka uppnå budgetbalans! Som om det vore möjligt och lämpligt i dagens läge.
- Most mainstream macroeconomic theoretical innovations since the 1970s
(the New Classical rational expectations revolution associated with such names as Robert E. Lucas Jr., Edward Prescott, Thomas Sargent, Robert Barro etc, and the New Keynesian theorizing of Michael Woodford and many others)
have turned out to be self-referential, inward-looking distractions at best.
Rolf Englund agreeing with Willem Buiter, blogging at Maverecon, 5/2 2009
Bush orsakade krisen genom feltajming
Destabiliserande tajming av både sänkta skatter och räntor är den triviala förklaringen.
Bush förde expansiv finanspolitik i en högkonjunktur.
Danne Nordling, 13/2 2009
Kommentar av Rolf Englund:
Observera de stora budgetunderskotten under Reagan.
Talet om Reagans skattesänkningar som "Supply-Side" är struntprat.
Reagan fick fart på ekonomin genom hederlig Keynesiansk politik.
in almost every respect it is doing significantly better than expected.
It is impressive.
Carl Bildt blog 6/12 2005
The biggest political story of 2008 is getting little coverage.
It involves the collapse of assumptions that have dominated our economic debate for three decades.
Since the Reagan years, free-market cliches have passed for sophisticated economic analysis.
E. J. Dionne Jr. Washington Post, July 11, 2008
CNN uppfinner det Kenyesianska hjulet på nytt
Saving more and cutting debt might sound like a good plan to deal with the recession.
But if everyone does that, it'll only make matters worse.
Chris Isidore, CNNMoney.com senior writer, February 12, 2009
The statement that systemic breakdowns are surprisingly rare
in the free-wheeling Anglo-Saxon model is false.
Martin Wolf February 9, 2009
This is a glorious moment to be an economist
Now we call for trillion dollar stimulus plans on the basis of little more than citing John Maynard Keynes
Benn Steil, Financial Times, February 5 2009
Finally, there is inflation.
If central banks and governments are aggressive enough, they can generate inflation, which will lower the debt burden.
But they will imperil – if not terminate – the experiment with unbacked fiat (or man-made) money that started in 1971.
Martin Wolf, Financial Times January 27 2009
The ratio of US public and private debt to gross domestic product reached 358 per cent in the third quarter of 2008. This was much the highest in US history
Nearly all of this debt is private. That reached an all-time high of 294 per cent of GDP in 2007, a rise of 105 percentage points over the previous decade.
The same thing happened to the UK, on a yet more impressive scale.
This has been a gigantic debt and credit expansion.
Once such asset bubbles burst, it becomes hard to find borrowers and lenders who are either willing or creditworthy. The over-indebted start paying down their debts, instead, as now. Desired savings also soar. Realised savings may not rise, however: incomes may collapse, instead. This is what John Maynard Keynes called “the paradox of thrift”.
The result will be a slump caused by balance sheet collapse rather than attempts to control high inflation.
Some recommend a “liquidation”. A chain of bankruptcy would indeed eliminate a debt overhang, as happened in the 1930s. But, with much of the economy enmeshed in bankruptcy and the financial sector imploding, a depression would result. To choose that option must be insane.
An opposite approach is to sustain existing levels of debt, by slashing its cost to borrowers and trying to grow out of it over many years. This is what current monetary policies seek to achieve. It is a good idea, however unpleasant to creditors. But this would not generate much additional borrowing or fresh spending; it would not stop the indebted from trying to lower their debt; and it would not restore the financial sector to health.
Finally, there is inflation. If central banks and governments are aggressive enough, they can generate inflation, which will lower the debt burden. But they will imperil – if not terminate – the experiment with unbacked fiat (or man-made) money that started in 1971.
I förrgår fick Barack Obama stöd för ett stort stimulanspaket i representanthuset.
Priset för att Slösa under 2009 är att Spara under resten tiden i Vita huset.
PJ Anders Linder, SvD 30 januari 2009
Sverige har drabbats av finansiell oro och lågkonjunktur därför att kinesiska handelsöverskott och låga amerikanska räntor har underblåst en orimlig allt nu-kultur och absurda lånevanor i USA. Vad skulle LO-makt över näringslivet eller miljarder till vindkraften kunna göra åt det?
I själva verket läggs i dessa dagar grunden till många år av stram finanspolitik. Sverige upplever just nu värdet av starka statsfinanser och förhoppningsvis finns 1990-talet i tillräckligt färskt minne för att staten ska hålla i pengarna något så när även om det blir maktskifte 2010.
Och i vår omvärld kommer regeringar att tvingas hålla stenhårt i pengarna om man ska klara av den skuldsättning som nu byggs upp genom olika räddnings- och stimulanspaket. I förrgår fick Barack Obama stöd för ett stort stimulanspaket i representanthuset. Men priset för att vara president Slösa under 2009 är att vara president Spara under resten av sin tid i Vita huset.
Washington should be curbing its spending growth, not expanding it.
Larry Kudlow, 26 Jan 2009
As I wrote today, all of the proposed government spending is just a transfer of resources.
There’s no net growth impact.
Beträffande vägen ut ur krisen var den allmänna uppfattningen, såväl bland liberaler som konservativa,
att finanspolitiska stimulanser är nödvändiga, ju snabbare desto bättre.
Detta är en skarp omsvängning från gårdagens pessimism om finanspolitikens potential till dagens hopp om finanspolitiken som räddaren i nöden
Lars Jonung, Kolumn DNs ledarsida 29/1 2009
The battlelines are drawn.
On one side we have the Labour Government and the Liberal Democrats, the Bank of England, the US Federal Reserve Board and the vast majority of Keynesian economists in every country - plus Barack Obama.
On the other side, the Tory Opposition, the German Socialists, the European Central Bank, the Church of England and the vast majority of Marxist economists in every country - plus the British public.
The question, of course, is what to do about the recession.
Specifically whether the way out is “to spend, spend, spend or to save, save, save” - as David Cameron has so clearly put it.
I believe, in line with the vast majority of non-socialist economists, that Mr Cameron's campaign for savings is completely wrong
Anatole Kaletsky, The Times January 8, 2008
How to stop the recession
Too much recent commentary has treated the current recession as if it were preordained and unstoppable. Recessions are not Acts of God.
What must policy-makers now do? The answer is that they must raise the growth rate of bank deposits in the hands of genuine non-bank agents, such as companies and households
Tim Congdon and Gordon Pepper, Daily Telegraph 07 Jan 2009
We know that the current driving force behind this downturn is “deleveraging”.
Overindebted households and undercapitalised banks are adjusting their balance sheets, building up savings in the first case and restricting lending in the latter.
There is no chance of a sustained economic recovery until that process is almost complete.
Wolfgang Münchau, Financial Times, December 28 2008
We should not try to avoid 1929. We have already failed.
The best we can do now is to avoid 1930, 1931 and 1932
What about the €200bn European Union stimulus package that was agreed in a watered-down form by EU leaders on Friday?
Unfortunately, it is a public relations exercise first and foremost, designed to dupe people into believing that the EU is finally doing something.
Wolfgang Münchau, Financial Times, December 14 2008
How to prevent the Great Depression of 2009
The global financial system is undergoing a meltdown that has not been seen since the 1930s and
nobody seems to know what to do about it.
How did we get to this point and how can we move forward?
Roger E.A Farmer, Financial Times December 30, 2008
Med en inriktning på finanspolitik måste regeringen vidta ofinansierade skattesänkningar och utgiftshöjningar. Detta strider naturligtvis känslomässigt mot alla amatörekonomers sätt att göra analogier mellan ett hushålls och statens ekonomi. Utan ekonomisk utbildning tror man att staten måste agera på samma sätt som hushållen.
Det är detta fenomen som också bidrar till att man kan ställa upp en teori om "ricardiansk ekvivalens".
Om hushållen faktiskt tror att statens budgetunderskott bidrar till att pensioner, a-kassa, sjukförsäkring, barnbidrag och liknande måste skaras ned eller avskaffas blir det ekonomiskt rationellt för den enskilde att drastiskt öka sitt sparande. Då blir finanspolitiska åtgärder verkningslösa eller rentav kontraproduktiva.
Anders Borg har hänvisat till denna effekt som förklaring till att han inte velat ta till kraftiga motåtgärder.
Danne Nordling 6/12 2008
Regeringen bör ge en generell garanti för bankernas verksamhet
Dessutom behövs insatser på 50-60 miljarder kronor, utöver regeringens budget
Pengarna måste användas så att man når största möjliga sysselsättningseffekt
Därför bör man skjuta till mer pengar hos kommuner och landsting
Assar Lindbeck i DN 3/12 2008
Att göra något i närheten av det Svenskt Näringsliv talar om är ju helt ansvarslöst.
Det skulle leda till att människor inte kände något förtroende för de offentliga finanserna.
Det privata sparandet skulle öka och i slutändan skulle den expansiva effekten utebli
Anders Borg i Fokus 28/11 2008, reporter Anders Jonson
Svenskt Näringsliv gör helt om, dock utan att göra en pudel
Nu behövs en aktiv statlig finanspolitik där regeringen släpper loss reformer och offentliga jobb för cirka 50 miljarder det närmaste året.
Svenskt Näringslivs verkställande direktör Urban Bäckström och chefsekonom Stefan Fölster, DN Debatt 16/11 2008
Skall Urban Bäckström och Svenskt Näringsliv tvingas göra en pudel?
Rolf Englund blog 2008-10-26
Svenskt Näringsliv: Vi anser att aktiv stabiliseringspolitik inte skall bedrivas.
Remissvar på SOU 2002:16, Stabiliseringspolitik i valutaunionen
"I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown,"
President George W. Bush, 14 Nov 2008
Rearranging the Deckchairs on the Titanic?
Silvia Wadhwa, CNBC. 6 Oct 2008
U.S. retail sales dropped by 2.8% in October -- the largest monthly drop since records began in 1992.
Sales have fallen for four straight months, a longer streak than during the 2001 recession, with declines worsening each month.
As consumers pull back, the threat rises of a deep and prolonged recession.
Wall Street Journal 15/11 2008
New figures coming out of the US economy confirms that in almost every respect it is doing significantly better than expected. It is impressive. Carl Bildt blog 6/12 2005
It is disturbing that the only time US had a near zero deficit was in 1992 and the dollar was low against the swedish krona.
Rolf Englund, maj 2001
The main object of Alistair Darling, the British chancellor, is to inject more spending power into the British economy by a mixture of tax cuts and spending increases
The most frequent objection is to ask: “Where will the money come from?”
The short answer is: the Bank of England printing works in Debden.
Samuel Brittan, Financial Times, November 20 2008
Det är stabiliseringspolitikens kris vi ser idag.
Det är förhoppningen att regeringarna har sådana kraftfulla verktyg, att om ekonomin börjar sladda skall det gå att sätta in motåtgärder så att vi slipper krascha i diket, som nu har gäckats.
Denna föreställning är fel - alla vackra teorier till trots.
Danne Nordling 18/11 2008
Den allt djupare lågkonjunkturen bör mötas med stimulanser från så många håll som möjligt.
Växande underskott i ländernas statsfinanser måste accepteras tills världsekonomin återhämtar sig.
Däremot måste varje land självt få avgöra i vilken omfattning.
DN, huvudledare 15/11 2008
Det bästa västvärlden kan göra för u-länderna är att så snabbt som möjligt få slut på recessionen
för detta krävs massiv keynesiansk efterfrågestimulans, menar David Weil.
Det är svårt att ge något annat recept i dag.
Men när krisen är över bör Keynes åter få vila och underskotten saneras.
Ragnar Roos, signerat, DNs ledarsida 15/11 2008
The Bank of England’s extraordinary 1.5 percentage point interest rate cut to 3 per cent is
scary, justified and irrelevant.
Fiscal policy is our most potent instrument
Wolfgang Münchau, Financial Times, November 9 2008
What matters to many companies is the London interbank offered rate (Libor), or the Euribor in the eurozone. Large companies often fund their short-term liquidity needs on the commercial paper market. The US Federal Reserve has cut the Fed funds rate from 5.25 per cent in September 2007 to 1 per cent recently. But 90-day commercial paper rates were a little over 5 per cent when the crisis started in August 2007 and still close to 5 per cent last month. Only recently have they fallen to 3.3 per cent, and only after the Fed started to intervene in this market directly.
Perhaps an even bigger problem than the persistence of high interest rates is the fall in credit volumes.
Banks have been cutting down on all types of loans, for mortgages, consumer credit and businesses.
Interest rate cuts have no short-term effect on volumes.
As Stephen Cecchetti, chief economist of the Bank for International Settlements, once reminded us,
good fiscal stimuli are timely, targeted, and temporary.
Another important element is their size. They have to be sufficiently large for impact, but not large enough to risk deterioration in a country’s solvency.
Fiscal policy, more than monetary policy, will determine how and when this crisis will be resolved.
More by Wolfgang Munchau at IntCom
Det var inte bara Wall Streets finansföretag som byggde ekonomiska korthus med hjälp av högbelåning under de år då likviditeten flödade och räntorna var låga.
även de amerikanska hushållen konsumerade som om det inte fanns någon morgondag genom att låna på villan och med ständigt kontokortskrediter trots att reallönerna knappast ökade alls.
Det var då, det.
Lars-Georg Bergkvist, SvD 9/11 2008
Kina presenterade på söndagen ett enormt stimulanspaket för att dämpa effekterna av finanskrisen
Det kinesiska stimulanspaket är värt omkring 4 650 miljarder kronor fram till 2010.
SvD E24 2008-11-09
Svenskt Näringsliv: Vi anser att aktiv stabiliseringspolitik inte skall bedrivas.
Skall Urban Bäckström och Svenskt Näringsliv tvingas göra en pudel?
Rolf Englund blog 2008-10-26
How can the next administration reconcile its longer-term goals for the economy with the imperatives of the economic crisis?
Getting this right will not be easy, but is the key to success or failure in Mr Obama’s presidency.
Clive Crook, Financial Times, November 9 2008
Mr Obama will most likely keep his promise to cut most households’ taxes (relative to what current law provides, plus some extra relief for the working poor). This is helpful for the economy in the short term and he will regard it as a political necessity in any case. Yet the fact remains that this will undermine the long-term fiscal position. Care must be taken not to let the rest of any stimulus compound the problem.
With this in mind, the next fiscal plan should lean heavily on temporary spending. More generous unemployment assistance scores highest. This mostly feeds through to consumption, and automatically does so at the right time. It helps the people who most need help. Later, when unemployment falls, the demands on the public purse fall with it.
Assuming this recession may be prolonged, infrastructure spending also scores well. It directly supports low-wage employment in the hard-hit construction industry. So long as the projects are desirable on their merits, they are valuable as public investments. And once you have built a bridge (preferably to somewhere), you do not have to keep building it. Turning off the tap is relatively easy.
Svenskt Näringsliv: Vi anser att aktiv stabiliseringspolitik inte skall bedrivas.
Skall Urban Bäckström och Svenskt Näringsliv tvingas göra en pudel?
Rolf Englund blog 2008-10-26
The big difference in diagnosis is between those who still think in terms of a conventional business cycle with output fluctuating in familiar snakelike fashion around a stable trend given by “supply side” factors, and those who believe that something more apocalyptic has happened.
Samuel Brittan, Financial Times, November 6 2008
Higlhly recommended
USA:s ekonomi befinner sig i en brydsam situation.
Frågan är nu vad som skulle ha kunnat göras annorlunda vid 1930-talskrisen och som Obama därför borde satsa på idag.
Danne Nordling 6/11 2008
The U.S. economy is spiraling downward into recession and gargantuan budget deficits.
The Humpty Dumpty of the housing and consumer bubbles cannot be put back together, no matter how many Wall Street bailouts, liquidity injections or tax rebates are put in place.
A country that sustains zero or negative household saving rates for years and borrows heavily from abroad is bound to pay a heavy price, and that time has come for the United States.
Jeffrey Sachs, November 5, 2008
More pressing than discretionary fiscal action is getting the banks to lend.
This is why they have been helped, in the first place.
Unfortunately, their marginal cost of funds, plus required margins, is above rates they are expected to charge.
This is why sharp cuts in official intervention rates are vital.
Martin Wolf, Financial Times 30/10 2008
The best recipe for avoiding a global recession
Before our political leaders get too fancy remaking capitalism
they should co-ordinate macroeconomic policies to stop a steep global downturn
Jeffrey Sachs, Financial Times, October 27 2008
Stabiliseringspolitiken sköts i huvudsak av Riksbanken via prisstabilitetsmålet.
Finanspolitiken bidrar till makroekonomisk stabilitet genom de automatiska stabilisatorerna och
genom att skapa trovärdighet för att de offentliga finanserna är långsiktigt hållbara.
Prop. 2007/08:100, sidan 69
Jobbpolitik, räntepolitik och finanspolitik verkar vara de tre metoder som finns för att påverka den reala ekonomin vid en begynnande lågkonjunktur.
Räntesänkningar kan dock leda till stora obalanser på sikt. Och finanspolitiken kan leda till kontroversiella budgetunderskott.
Så vad göra?
Danne Nordling 3/11 2008
är jobbpolitik en adekvat åtgärd i en lågkonjunktur?
Att frågan ens kan ställas visar hur oklar den stabiliseringspolitiska teoribildningen blivit under de senaste åren.
Det borde vara ganska klart att en politik som ökar arbetsutbudet inte kan ha någon praktisk verkan i ett läge när problemet är för liten efterfrågan på arbetskraft.
Till skillnad från i de flesta andra länder förekommer i Sverige knappast några olika ekonomisk-politiska skolor utan det finns en stark - och skadlig - tendens att orientera sig mot samma åsikter.
På sjuttiotalet var alla keynesianer. Efter några års debatt svängde i stort sett hela ekonomkåren - och tongivande politiker och journalister - till att förorda en icke-ackomodationspolitik utan undantag ens i exceptionella krissituationer.
Lars Calmfors DN Debatt 26/11 1992
Och då sade jag till Göran Persson...
Till skillnad från keynesianerna satsar monetaristerna på en stabil politik - i stället för att gasa och bromsa vill man i onda och goda tider öka penningmängden i en lagom takt.
Enligt monetaristerna kan penningmängden öka både för fort och for långsamt.
Rolf Englund vid Nationalekonomiska föreningen den 18 januari 1995
The current crisis reminds us that, in a free economy, the price of the greatly improved long-term performance that only free economies can provide is an ineradicable economic cycle.
As John Maynard Keynes pointed out in the 1930s, the cause of the cycle is alternating moods of optimism and pessimism, and
its motor is credit, which enables optimism to determine economic activity.
Nigel Lawson. Time Magazine, October. 01, 2008
This basic error, born of folly, ignorance and greed, is the biggest cause of the mess we are now in. It was compounded by other factors. A system of remunerating bankers with fat bonuses based on the volume of business done, irrespective of the quality and future profitability of that business, did not help. A variation of Gresham's Law was also at play, with imprudent lending driving out prudent lending. This tends to occur as responsible institutions see their market share fall while those of irresponsible institutions rise, and decide to emulate the reckless practices they previously eschewed
Central bankers cannot escape censure, either. In his memoirs Alan Greenspan, former chairman of the U.S. Federal Reserve, writes: "I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk, and that subsidized home-ownership initiatives distort market outcomes. But I believed then, as now, that the benefits of broadened home ownership are worth the risk."
For those of us who believe in free markets, these interventions are unpleasant.
Wall Street Journal editorial OCTOBER 15, 2008
Nyliberalerna tysta så det dånar
Det intellektuella civilkuraget hos den stora kader nyliberala ekonomer, som under årtionden hyllat USA:s ansvarslösa marknadsekonomi, imponerar inte.
Bo Rothstein, SvD Brännpunkt, 27 september 2008
Under den tid som den nu snarast helgonförklarade Kjell-Olof Feldt var finansminister grundlades den djupa kris för den svenska ekonomin som ännu inte är övervunnen. Tillsammans med sin rådgivare Klas Eklund och dåvarande riksbankschefen Bengt Dennis, blåste han, liksom sin brittiske kollega Nigel Lawson, på den inhemska ekonomin och tryggade därmed återvalet för sina regeringschefer Carlsson och Thatcher, varefter de avgick från sina finansministerposter och skrev uppmärksammade memoarer.
Rolf Englund, För Sunt Förnuft 1994-12-12
Om staten drar ned BNP med säg en procent, för att "spara pengar", så
kan staten inte i en lågkonjunktur öka BNP med en procent genom att
pytsa ut pengar i ekonomin.
Nils-Eric Sandberg 1/2 2007
Den främsta drivkraften bakom vår höga tillväxt är nedskrivningen av kronans värde.
Denna depreciering blev följden när valutaspekulanterna tvingade Riksbanken att överge den fasta kronkursen i november 1992.
Krisen skapade gigantiska budgetunderskott på 90-talet, en automatisk och önskvärd följd av de dåliga tiderna.
Lars Jonung, signerat, DN 7/9 2006
De automatiska stabilisatorerna har sina poänger.
En konjunkturkänslig budget kan göra att produktion och sysselsättning i ekonomin svänger mindre
Lars Heikensten och Klas Eklund, DN Debatt 4/7 2007
Lars Jonung har tillsammans med Klas Fregert skrivit en lärobok i Makroekonomi (Studentlitteratur)
som nyligen utkommit i en ny upplaga. Den är välmatad och pedagogisk och den fyller ett behov efter alla år när ekonomer glömt bort att utbud och efterfrågan – inte bara utbud – alltid utgjort basen för den nationalekonomiska vetenskapen.
Rolf Englund om SNS-boken Bank- och fastighetskrisen 1990-1993