Its my Friday lay day blog and I am limping into the weekend to rest up some more. There was an interesting article in the Washington Post (July 31, 2015) – Why Italy is the most likely country to leave the euro. This accords with the view I outlined in my book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – that a large economy such as Italy should demonstrate leadership in the Eurozone and pave the way for the weaker nations to restore their own growth. We would not have witnessed the torturous brutality that was dealt out to Greece recently if the Troika were dealing with Italy. The question is whether Italy is likely to provide that leadership. On July 22, 2015, Eurostat released the latest government debt data for the Eurozone which showed that – Government debt rose to 92.9% of GDP in euro area – which, of course is well above the 60 per cent threshold allowed for by the Stability and Growth Pact (SGP). In the last 12 months “fourteen Member States registered an increase in their debt to GDP ratio at the end of the first quarter of 2015, twelve a decrease and in Estonia there was no change.” In the last quarter, fifteen states increased their debt ratios. Greece shows up as having the highest debt ratio but the largest reduction over the last year. But the interesting thing about the data is that Italy has the second-large public debt ratio (at 135.1 per cent) and is among the nations with the largest increases. On the numbers, Italy is being left behind, stuck in recession with high unemployment and a rising public debt ratio which will surely bring it into conflict with the Excessive Deficit Mechanism before too long.
Its my Friday lay day blog – and today we have a little digression in IT matters. The WWW site Naked Capitalism that has been less than hostile towards Modern Monetary Theory (MMT) perspectives over the last several years seems to have a fix against any notion that an exit by Greece from the Eurozone madness is a viable alternative. The logic evades me. Yesterday (July 23, 2015), they reproduced an article – Once Again on the IT Challenges in Converting to the Drachma – which is written from a ‘left’ perspective and the author claims to be one of the very few people who has any “inkling of the problem”. The author explicitly referred to my recent blog – A Greek exit is not rocket science – and noted that I had not referred to IT wants in my discussion. The arguments presented rely on a very old literature that was written for a different problem altogether – the introduction of the euro and the replacement of 11 separate national currencies and accounting and business systems. The challenges relating to that problem were solved and the knowledge is intact. Further, business systems have become much more homogenised and sophisticated since then. The exit of one Member State to create a new currency is a much smaller IT challenge. I wonder why Naked Capitalism chooses to lower its standard by on-publishing this sort of stuff.
Its my Friday lay day blog where I pretend to take it easy. Today I have a nice story to contrast with the shocking news we have been following over the last month or so from Europe. The economics news has been dominated by the madness and badness of the EU in recent weeks and how the miserably depressed Greece has been brought to heel by the EU bullies and will have to inflict even more austerity on its suffering people. Unemployment already above 26 per cent will rise further and more of its youth will head to other shores in search of opportunities. It is a process that is hollowing out the capacity of a nation. They do things differently in South Korea. The Korean government appears to actually care about its people. It provides a lesson for all nations who have become infected by the Recession Cult of Austerity (RCA).
Its my Friday lay day blog and I have been working on various things today. But for this little blog I am still trying to work out an impression of what is going on in Greece and the Brussels. There is little uncertainty on the Troika side although the various elements of that position are still nuanced. The sheer antagonism of the Baltic States towards Greece is a newly revealed element which is interesting. If their logic prevails then it really is a race to the bottom unless the nation is Germany. Representing the desired benchmark by massive mediocrity if not near disaster (as in Latvia, Lithuania etc) seems to be the new normal in EU debates. Spare the thought. The Baltics should be joining Greece in a solidarity pact to oppose austerity and seek fundamental changes to the EU Treaties instead of siding with the Troika’s death wish for Greece. But there is quite a bit of uncertainty in trying to guage the Greek position. One is led to the most obvious, simple and consistent interpretations of that position – that Syriza is a fractured coalition and those currently in positions of authority (Prime Minister etc) are surrender monkeys who have miscalculated dramatically. But that would tell us that they are so acting with such venality towards their people as to be almost an unbelievable narrative. Looking deeper into the plot doesn’t provide anything consistent, just dead ends and speculation. We are close to finding out though.
Its the Friday lay day blog again and I am in a rush. Under the smokescreen of all the Greek drama that has played out on the World stage over the last week the bosses of the Eurozone released their – Completing Europe’s Economic and Monetary Union – (June 22, 2015), aka the Five Presidents’ report. I read it this morning. And I am glad its Friday and I can keep to my promise of not writing much here and more elsewhere (book projects). Otherwise, the blog might have ended up full of the so-called expletives given the way these Euro Groupthink morons treat the citizens of Europe. Apparently, the euro is a big success! In the land of the fairies.
Its my Friday lay day blog, which is sort of a dodge that allows me to be less focused. I have been holding my pen about Greece in abeyance lately until more details became clearer about what is going on in the so-called ‘negotiations’, which seems to be a euphemism so ugly given the reality that perhaps a new descriptor should be introduced. As the specific details emerge more clearly, the situation remains much the same as it was in January when the new Greek government was resoundingly elected to end austerity. Either the Greek government has to abandon its electoral mandate and capitulate and become just another ‘left-wing’ government overseeing the punishing austerity inflicted by the neo-liberal ideologues or it has to show leadership and take the nation out of the dysfunctional Eurozone and pursue its own path to more prosperous, if uncertain, times. Part of that leadership has to be to educate the public as to what the options are in a balanced rather than hysterical way. I have heard Syriza politicians claim that leaving the union would be catastrophic, which is not only false but just reinforces the public fear of exit. Further, all the nominations in February from Syriza politicians that the ‘negotiations’ to that date had been “successful” (Source), which any reasonable interpretation would have led to the conclusion that austerity was about to end in Greece, the reality now, is that the Greek government appears to be slowly capitulating to the venal demands of the Troika and the future for Greece is likely to be one of interminable economic stagnation, increasing poverty and rising social instability. But, hey, that is what success seems to mean now in this dark-age of Eurozone realities. If there weren’t real people involved in this tragedy, this could be a top selling farce.
Its my Friday lay day blog. So a rather short blog but with a research trail that can occupy the reader for hours if they pursue all the links. It seems that the mainstream American is rather progressive. Who would have thought given that public opinion is being continually drowned out by the deafening shrieking from the conservative think tanks and their media bully boys. In March 2013, a research paper from Northwestern and Princeton academics – Democracy and the Policy Preferences of Wealthy Americans – demonstrated the vastly different policy preferences held by high income Americans (in this case the top 1 per cent of the income distribution) relative to the general public. The research was motivated by the observation that the “wealthy exert more political influence than the less affluent do” and so if their preferences were not representative of American society in general then that would be “troubling for democratic policy making”. The authors find that the high income earners in the US are not only very active politically but hold ultra conservative views “concerning taxation, economic regulation, and especially social welfare programs” that are not remotely shared by the general public. The results might surprise people.
Its my Friday lay day blog and today a brief discussion about property price bubbles and how the Reserve Bank of Australia (our central bank) has fallen out with the Australian government. This week, the simmering tension between the Governor of the RBA and the Conservative Australian government more or less came out into the open when the Governor told the nation that the fiscal strategy of the Government was failing and a higher deficit was required given the circumstances. The RBA Governor has also come clean on the issue of house prices in Australia which he said he was “acutely concerned” about and called them “crazy” again, a direct contradiction of the claims by the Government that there is no problem and people should just “get a better paying job” if they wanted to buy a home. It is rare for a central banker to be so pointed about the failure of Government policy.
Its my Friday lay day blog but no rest for the wicked today. The Fair Work Commission, the Federal body entrusted with the task of determining Australia’s minimum wage handed down its – 2014-15 decision – on June 2, 2014. Here is my annual review of that decision plus some. The decision meant that more than 1.86 million of our lowest paid workers (out of some 11.6 million) received an extra $16.00 per week from July 1. This amounted to an increase of 2.5 per cent (down from last year’s rise of 3 per cent). The Federal Minimum Wage (FMW) is now $656.90 per week or $17.29 per hour. For the low-paid workers in the retail sector, personal care services, hospitality, cleaning services and unskilled labouring sectors there was no cause for celebration. They already earn a pittance and endure poor working conditions. The pay rise will at best maintain the current real minimum wage but denies this cohort access to the fairly robust national productivity growth that has occurred over the last two years. The decision also maintains the gap between the low paid workers and other wage and salary recipients, who themselves are suffering a major wages squeeze as corporate profits rise. The real story though is that today’s minimum wage outcome is another casualty of the fiscal austerity that the Federal Government has imposed on the nation which is destroying jobs and impacting disproportionately on low-paid workers.
Its the Friday lay day blog, which means very little as it turns out. Today, though it means a short insight into the latest data from the Australian Bureau of Statistics – Private New Capital Expenditure and Expected Expenditure – data for the March-quarter yesterday, which showed that Australia is heading for recession-level private capital formation rates. The data also suggests that the Australian government’s fiscal strategy outlined earlier in May is based on deeply flawed forecasts of private spending and if the investment plans signalled in this data release are realised then the economy will slow substantially over the next 12 months. The fiscal stance in the most recent statement is towards contraction (austerity). In the light of the latest investment expectations revealed in the ABS data release, the Government should abandon their fiscal strategy immediately and announce a significant stimulus package. Unemployment is already rising and will rise further under the current trends. This is another case of neo-liberal austerity white-anting the capacity of the economy to deliver prosperity for all.