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Michael Hudson: America’s Deceptive 2012 Fiscal Cliff: Part I « naked capitalism

Commentary on current economic and financial news.

 

The cure for economic malaise (which they themselves have caused), is said to be less public spending, along with more tax cuts for the wealthy, who euphemize themselves as “job creators.” Demanding budget surpluses, bank lobbyists insist that austerity can enable private-sector debts to be paid.

 
Via Nicholas Ripley
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The concept of the "common good" because it has many definitons and cannot be agreed upon is being killed.  But humanity is nothing without the "common good"!  Humans need co-operation to flourish.

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Economics: Its History and Politics
Is economics the dismal science or does politics make it the dismal science.
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David M. Levy, Sandra J. Peart, The Secret History of the Dismal Science. Part I. Economics, Religion and Race in the 19th Century | Library of Economics and Liberty

David M. Levy, Sandra J. Peart, The Secret History of the Dismal Science. Part I. Economics, Religion and Race in the 19th Century | Library of Economics and Liberty | Economics: Its History and Politics | Scoop.it

My motto is: Nothing is ever as it seems!  And stis story proves that point one more time.   This story has VI parts.  All very, very very interesting.

 

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Ending Greece’s Nightmare

Ending Greece’s Nightmare | Economics: Its History and Politics | Scoop.it
Alexis Tsipras, leader of the left-wing Syriza coalition, is about to become prime minister of Greece. He will be the first European leader elected on an explicit promise to challenge the austerity policies that have prevailed since 2010. And there will, of course, be many people warning him to abandon that promise, to behave “responsibly.”

So how has that responsibility thing worked out so far?

To understand the political earthquake in Greece, it helps to look at Greece’s May 2010 “standby arrangement” with the International Monetary Fund, under which the so-called troika — the I.M.F., the European Central Bank and the European Commission — extended loans to the country in return for a combination of austerity and reform. It’s a remarkable document, in the worst way. The troika, while pretending to be hardheaded and realistic, was peddling an economic fantasy. And the Greek people have been paying the price for those elite delusions.
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Must Financial Reform Await Another Crisis?

Must Financial Reform Await Another Crisis? | Economics: Its History and Politics | Scoop.it
We have argued that if banks had much more equity, the financial system would be safer, healthier and less distorted. From society’s perspective, the benefits are large and the costs are hard to find; there are virtually no trade-offs.

The claim is often made, however, that this reform would be costly. Higher equity requirements, goes the argument, would reduce bank lending and harm the economy, which hasn’t yet recovered from the sharp downturn of 2008.
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Syriza stood up to the money men – the UK left must do the same

Syriza stood up to the money men – the UK left must do the same | Economics: Its History and Politics | Scoop.it
‘A leftwing party that cannot face down the risks raised by investors will never be credible.’ Illustration: Robert G Fresson
‘When you study the successful experiences of transformative movements,” said Pablo Iglesias of Podemos, the new party of the Spanish left, “you realise that the key to success is to achieve a connection between the reality you have diagnosed and what the majority actually feels.”
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Saturday Quiz – January 24, 2015 – answers and discussion | Bill Mitchell – billy blog

Saturday Quiz – January 24, 2015 – answers and discussion | Bill Mitchell – billy blog | Economics: Its History and Politics | Scoop.it
Here are the answers with discussion for yesterday’s quiz. The information provided should help you understand the reasoning behind the answers. If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
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Republican Governors Buck Party Line on Raising Taxes

Republican Governors Buck Party Line on Raising Taxes | Economics: Its History and Politics | Scoop.it
Republican governors across the nation are proposing tax increases — and backing off pledges to cut taxes — as they strike a decidedly un-Republican pose in the face of budget shortfalls and pent-up demands from constituents after years of budget cuts.

“My jaw dropped,” Assemblywoman Michele Fiore, a conservative Republican in Nevada, said after hearing Gov. Brian Sandoval, a Republican, propose a $1.1 billion tax increase for education this month. “Whether we kill it by five votes or 15 votes or 25 votes, we are going to kill it.”
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Is Financial Reform An Illusion?

Is Financial Reform An Illusion? | Economics: Its History and Politics | Scoop.it
The objectives of the planned structural reform of EU banking are ambitious: to prevent systemic risk, avoid misallocation of resources, and facilitate an orderly resolution and recovery. The original idea of the reform is to split the deposit taking and lending business of a bank from its investment banking business. However, the proposal contains many loopholes so as to not automatically split securities trading on behalf of customers, despite this having similar risks and being indistinguishable from proprietary trading.

A big threat is the illusion of financial reform: the structural reform proposal of EU banking will, in its current form, be ineffective – due to weak design and limited scope, says Suleika Reiners, financial expert at the World Future Council. She has also talked to Martin Hellwig, Director of the Max Planck Institute for Research on Collective Goods, about the issue of financial reform.
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mainly macro: Encouraging dialogue between economists and social scientists

mainly macro: Encouraging dialogue between economists and social scientists | Economics: Its History and Politics | Scoop.it
In a way this is a rather trivial post, about language and attitudes as much as anything, that follows from some of the reaction to this post and related debates. One big difference between most (not all) mainstream economists compared to their heterodox or other social science colleagues is insularity. Political scientists will talk to sociologists who in turn talk to international relations people as a matter of routine. Economists by and large talk to each other. This is not because their subject matter is narrow - economists are notorious for applying their tools way beyond economics.
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$80 Oil! No, Wait -- $200 Oil!

$80 Oil! No, Wait -- $200 Oil! | Economics: Its History and Politics | Scoop.it
With oil prices down 60 per cent since last summer, some industry insiders are trying to talk up the market by predicting wild price spikes to come, brought on by insufficient investment in oil production.

John Hofmeister, a former president of Royal Dutch Shell and head of the natural gas lobby group Citizens For Affordable Energy, is calling for $80-a-barrel oil by this summer.

But that’s peanuts compared to the predictions of Claudio Descalzi, head of the Italian energy company Eni Spa. He sees oil "maybe" hitting $200 a barrel within a few years.
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Where is the reality in economics?  How can one plan?

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Building a Caring Economy

Building a Caring Economy | Economics: Its History and Politics | Scoop.it
DAVOS – Today’s mainstream economic models are based on two fundamental assumptions: first, humans are essentially selfish actors who act rationally to advance their own utility – so-called homo economicus; but, second, as Adam Smith’s metaphor of an “invisible hand” was intended to suggest, self-regarding behavior can inadvertently advance the common good. Both assumptions are patently false.
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The Fall of the House of Samuelson

The Fall of the House of Samuelson | Economics: Its History and Politics | Scoop.it
LONDON – To read The Samuelson Sampler in the shadow of the Great Recession is to gain a glimpse into the mindset of a bygone era. The sample is of the late Paul Samuelson’s weekly columns for the magazine Newsweek from 1966-1973.
Samuelson, a Nobel laureate, was the doyen of American economists: his famous textbook, Economics went through 14 editions in its author’s lifetime, introducing future economists worldwide to the rudiments of their craft. If not the sole originator, he was the great popularizer of the “neoclassical synthesis” – the mix of neoclassical and Keynesian economics that defined the mainstream of the field for 50 years.
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Fixing the Euro Zone and Reducing Inequality, Without Fleecing the Rich

Fixing the Euro Zone and Reducing Inequality, Without Fleecing the Rich | Economics: Its History and Politics | Scoop.it
What do deflation and rising inequality have in common? The answer is that we have too much of both and they threaten the nascent global recovery. The US economy is in cyclical full-steam-ahead mode, but it’s mainly benefitting the owners of financial assets – wage growth is missing. In Europe, deflation and rising inequality are combining to make a bad situation much worse.
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How guaranteed paid sick days could boost U.S. job growth

How guaranteed paid sick days could boost U.S. job growth | Economics: Its History and Politics | Scoop.it
In his State of the Union Address, the president proposed plans to improve the lives of workers, but his renewed calls to fast track trade deals aren’t likely to help employees, says Dean Baker, co-founder of the Center for Economic and Policy Research.

After President Obama’s State of the Union Address Tuesday night, today’s discussion has largely focused on his tax proposals. While these are important measures, two other areas he addressed raise issues that will have at least as many consequences.
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That $1 Billion TransferWise Deal Is Exactly Why Mark Carney Worries About 'An Uber-Type Situation In Financial Services'

That $1 Billion TransferWise Deal Is Exactly Why Mark Carney Worries About 'An Uber-Type Situation In Financial Services' | Economics: Its History and Politics | Scoop.it
Bank of England Governor Mark Carney worries that technology will disrupt the banking and financial services industry in just the same way that it has torn apart newspapers, radio and the postal service. His chief concern is that governments will fail to regulate it until it's too late — "an Uber-type situation," as he put it at the World Economic Forum in Davos last week.
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The Greek Stand-By Arrangement

The Greek Stand-By Arrangement | Economics: Its History and Politics | Scoop.it
For tomorrow’s column I went back to the original, May 2010 stand-by arrangement for Greece, to see what the troika was demanding and predicting at the beginning of the austerity push, and how it compares with what actually happened.
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Davos is starting to get it – inequality is the root cause of stagnation

Davos is starting to get it – inequality is the root cause of stagnation | Economics: Its History and Politics | Scoop.it
The World Economic Forum has never been good at crystal-ball gazing. In early 2007, it was smug and complacent even as the financial storm clouds gathered. Last year, there was a strong sense that the crisis was over, an optimism swiftly dashed by a combination of Ukraine, Islamic State and renewed stagnation in the eurozone.
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Saturday Quiz – January 24, 2015 | Bill Mitchell – billy blog

Saturday Quiz – January 24, 2015 | Bill Mitchell – billy blog | Economics: Its History and Politics | Scoop.it
Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
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If you don’t understand how people fall into poverty, you’re probably a sociopath

If you don’t understand how people fall into poverty, you’re probably a sociopath | Economics: Its History and Politics | Scoop.it
Politicians are apparently completely baffled by Poor People’s propensity to do harmful things to themselves. Photograph: Matt Cardy/Getty Images
Last week, I took part in a comedy night to raise money for the charity Refuge, which supports women and children who have experienced domestic violence. It was a great night: partly because it raised several thousands of pounds for the cause; partly because it was sponsored by Benefit cosmetics, and the idea of a benefit being sponsored by Benefit pleased me greatly; and partly because standup comedian Bridget Christie finished her act with a plea for all laydeez to stop waxing, spraying, deodorising, strimming and surgically trimming their – well, let’s call it “that part of ourselves historically judged to be the seat of all our femininity and womanly powers” – and instead celebrate our individuality by thinking of those parts as “unique, special – like snowflakes. Made of gammon”, which was both a new thought and a new image, neither of which has left my mind since.

Less uplifting, however, was the number of times I heard, when I mentioned Refuge to people, some variant of: “But what I don’t understand is – why don’t these women just leave?”
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The Politics of Economic Stupidity

The Politics of Economic Stupidity | Economics: Its History and Politics | Scoop.it
NEW YORK – In 2014, the world economy remained stuck in the same rut that it has been in since emerging from the 2008 global financial crisis. Despite seemingly strong government action in Europe and the United States, both economies suffered deep and prolonged downturns. The gap between where they are and where they most likely would have been had the crisis not erupted is huge. In Europe, it increased over the course of the year.
Developing countries fared better, but even there the news was grim. The most successful of these economies, having based their growth on exports, continued to expand in the wake of the financial crisis, even as their export markets struggled. But their performance, too, began to diminish significantly in 2014.
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Fiscal austerity drives continuing pessimism as oil prices fall | Bill Mitchell – billy blog

Fiscal austerity drives continuing pessimism as oil prices fall | Bill Mitchell – billy blog | Economics: Its History and Politics | Scoop.it
The UK Guardian article (January 20, 2015) – Davos 2015: sliding oil price makes chief executives less upbeat than last year – reported that the top-end-of-town are in “a less bullish mood than a year ago” and that “the boost from lower oil prices is being outweighed by a host of negative factors”. The increasing pessimism is being reflected in the growth downgrades by the IMF in its most recent forecasts. A significant proportion of the financial commentators and business interests are now putting their hopes on the ECB to save the world with quantitative easing (QE). That, in itself, is a testament to how lacking in comprehension the majority of people are about monetary economics. QE will not save the Eurozone. But I was interested in this pessimism in the context of falling oil prices given that with costs falling significantly for oil-using sectors (transport, plastics etc) and disposable income rising for consumers (less petrol costs), the falling oil prices should be a stimulating factor. I recall in the 1970s when the two OPEC oil price hikes were the cause of stagflation. So why should the opposite dynamic cause ‘stag-deflation’ (a word I just invented)? There is a common element – fiscal austerity – which explains both situations.
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Can Insecure Workers Be Confident Consumers?

Can Insecure Workers Be Confident Consumers? | Economics: Its History and Politics | Scoop.it
A paradox that lies at the heart of capitalism is that economies need consumers to be confident spenders of money on the one hand, while on the other workers’ must accept insecurity and flexibility in their main supply of money: employment income. Professor Colin Crouch considers the implications of this, and looks at the ways it might be resolved.
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#Economics: The next supermodel

#Economics: The next supermodel | Economics: Its History and Politics | Scoop.it
SMALLISH countries are often in the vanguard when it comes to reforming government. In the 1980s Britain was out in the lead, thanks to Thatcherism and privatisation. Tiny Singapore has long been a role model for many reformers. Now the Nordic countries are likely to assume a similar role.

That is partly because the four main Nordics—Sweden, Denmark, Norway and Finland—are doing rather well. If you had to be reborn anywhere in the world as a person with average talents and income, you would want to be a Viking. The Nordics cluster at the top of league tables of everything from economic competitiveness to social health to happiness. They have avoided both southern Europe’s economic sclerosis and America’s extreme inequality. Development theorists have taken to calling successful modernisation “getting to Denmark”. Meanwhile a region that was once synonymous with do-it-yourself furniture and Abba has even become a cultural haven, home to “The Killing”, Noma and “Angry Birds”.
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Why wealthy Americans’ delusions about the poor are so dangerous

Why wealthy Americans’ delusions about the poor are so dangerous | Economics: Its History and Politics | Scoop.it
Regressive state and local tax policies don’t just harm the working class -- they can ruin entire economies

Via Jocelyn Stoller
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Oil and the dollar will complicate the U.S. revival | Jim O‘Neill at Bruegel.org

Oil and the dollar will complicate the U.S. revival | Jim O‘Neill at Bruegel.org | Economics: Its History and Politics | Scoop.it
it's quite likely - contrary to some short-term forecasts - that the combination of cheap oil and a strong dollar will be more helpful to Japan and the euro area than to the United States.
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While US Middle Class Falters, Global Middle Class is Growing | The Big Picture

While US Middle Class Falters, Global Middle Class is Growing | The Big Picture | Economics: Its History and Politics | Scoop.it
Source: Know More

Via David Hall, Jocelyn Stoller
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Target CEO Got As Much Severance As All Canadian Workers Combined

Target CEO Got As Much Severance As All Canadian Workers Combined | Economics: Its History and Politics | Scoop.it
An interesting talking point has seized the interwebs today: The amount of money Target has set aside to pay its Canadian staff is slightly less than the money it paid out to one former employee: Its CEO.

Gregg Steinhafel took a total of $61 million U.S. from Target when he left the company last spring, according to Fortune's calculations. Meanwhile, the fund Target set up to pay employees as it winds down operations over the next four months is set at $56 million U.S. (That’s $70 million Canadian, at current exchange rates.)
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