Recent quotes:

Nighttime Must-Read: Simon Wren-Lewis: Eurozone Fiscal Policy - Washington Center for Equitable Growth

An additional complication… a country… too competitive relative to the rest of the Eurozone… needs to run a positive output gap… to generate the inflation that will correct that position, and vice versa. For that reason Germany needs a large positive output gap at the moment… therefore a much more expansionary fiscal policy…. So at both the aggregate and individual country level, the inappropriate bias towards fiscal contraction that caused huge losses in the Eurozone in the past continues to operate…
#Macroeconomics #Simon-Wren-Lewis #Fiscal-Policy #Eurozone - equitablegrowth.org

Evening Must-Read: Simon Wren-Lewis: Greece: A Simple Macroeconomic Guide - Washington Center for Equitable Growth

What is one supposed to do when confronted by arguments that seem to me–and to everybody else who has been right about the evolution of the North Atlantic economy since 2008–so unprofessional as this piece in Vox? Simon Wren-Lewis begins the needed labor of Hercules here: Simon Wren-Lewis: Greece: A Simple Macroeconomic gGuide: “In 2010 periphery Eurozone countries…
#Macroeconomics #Monetary-Policy #Dialogue #Simon-Wren-Lewis #Eurozone - equitablegrowth.org

Morning Must-Read: Yanis Varoufakis: No Time for Games in Europe - Washington Center for Equitable Growth

Yanis Varoufakis: No Time for Games in Europe: “The trouble with game theory… …as I used to tell my students, is that it takes for granted the players’ motives…. In the current deliberations between our European partners and Greece’s new government, the whole point is to forge new motives. To fashion a fresh mind-set that transcends national divides, dissolves the creditor-debtor distinction in favor of a pan-European perspective, and places the common European good above petty politics, dogma that proves toxic if universalized, and an us-versus-them mind-set…. I am convinced that we have one option only: to shun any temptation to treat this pivotal moment as an experiment in strategizing and, instead, to present honestly the facts concerning Greece’s social economy, table our proposals for regrowing Greece, explain why these are in Europe’s interest, and reveal the red lines beyond which logic and duty prevent us from going…
#Fiscal-Policy #Eurozone #Greece #anis-Varoufakis - equitablegrowth.org

Morning Must-Read: Matthew Klein: Michael Pettis Explains the Euro Crisis - Washington Center for Equitable Growth

Matthew Klein: Michael Pettis Explains the Euro Crisis: “This is literally the best analysis… …of the euro area’s problems we’ve ever read. You should take the time to closely read the whole thing yourself. We’ll wait. Now that you’re back, we thought we could add some value by highlighting and expanding on what we believe to be Pettis’s most important insights. First, the relevant units… aren’t countries but… sectors…. We shouldn’t forget that German workers have suffered from stagnant wages and decaying infrastructure…. Second, when it comes to big flows of capital across borders, it’s usually better to give than to receive… huge inflows of money are almost never matched by commensurate increases in the number of profitable investment projects, so a ton of money gets wasted….(Borrowing in a currency you can print is helpful but it doesn’t prevent a lot of resources getting misallocated and a lot of people ending up with excessive debt burdens.)… Third, it makes no sense to blame the recipients of the capital inflows for causing the crisis. If enough money is sloshing around willing to invest in any stupid idea, you shouldn’t be too surprised that a lot of stupid ideas get funded…. Schaeuble’s assignment of blame… prevents optimal solutions that are best for the majority of Europeans, Greek, Spanish, and German alike…. Fourth, it matters how your obligations are structured. Many smart people, most notably Daniel Davies, have argued that the headline numbers surrounding Greece’s public debt burden are irrelevant to understanding the situation in Greece…. But the focus on flows misses the impact of the structure of the debt stock on the incentives of private sector lenders and producers…. This is why Pettis thinks Varoufakis’s plan to swap existing Greek debts for obligations indexed to GDP is a good idea…. That’s very different from the current setup, where the Troika has every incentive to tie its funding to the willingness to implement austerity programmes…. That leads to the fifth point: euro area officials are running out of time…. We at Alphaville have no insight into the future of monetary policy or global liquidity here or in Europe. But we wouldn’t be surprised if it turned out that the optimal window for restructuring, even if you leave aside the political implications of persistently high unemployment, could soon close. Something for the can-kicking eurocrats to keep in mind. Finally… nothing about the euro crisis is particularly new. All of this has happened before and all of it will (probably) happen again…
#Eurozone #Matthew-Klein #Michael-Pettis #Balance-Sheet-Recession - equitablegrowth.org