Why is Europe celebrating the 60th anniversary of the Treaty of Rome?

The tiny nation of Malta (~ 420 thousand population) and the only one of two Eurozone nations that have English as one of its official languages is now hosting the EU Presidency for 2017. This was a function that was established by the Treaty of Lisbon in 2009 and allows a nation to influence the European Union’s agenda. As the rules dictate Malta shares this function with two other nations (Netherlands and Slovakia) to form the so-called Trio Presidency. There will be a lot of talk and papers produced and a lot of flags and posters are appearing in Valletta (Malta’s fortress capital) but don’t expect much to come from it. The other thing about 2017 and the EU is that they are celebrating the 60th anniversary of the signing of the Treaty of Rome later this month (signed on March 25, 1957 and operational from January 1, 1958). The European Commission is clearly keen to give the impression that the Treaty of Rome was the first step in the succession of steps that made Europe what it is today. In one sense that is correct. But in a more important sense that claim is nonsense. The reality is that the subsequent revisions of the Treaty (Maastricht and Lisbon) represented fundamental paradigm or ideological shifts in the way Europe was to be governed. The Treaty of Rome recognised that limited economic cooperation could be beneficial to all participating nations as long as it was attenuated or managed by comprehensive system of state intervention. The subsequent treaties represent a shift from the Member States having the capacity to ensure full employment to a situation where the Member States are biased to enforcing austerity and creating persistent and elevated levels of unemployment and poverty at the behest of the ideological masters in the European Commission, who are neither elected by or accountable to the people of Europe they claim to represent. So … why are they celebrating the 60th anniversary of an approach to economic policy making and nation-building that they have now completely rejected?
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    Posted in Eurozone | 11 Comments

    US labour market improves and interest rates will rise as a consequence

    On March 10, 2017, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – February 2017 – which showed that total non-farm employment from the payroll survey rose by 235,000, which built on the 227,000 net change in January 2016. The unemployment rate fell to 4.7 per cent. The Labour Force also grew strongly as participation rose by 0.1 points. The signs are more positive than a few months ago, even if broader indicators (the U6 measure supplied by the BLS ) suggest caution. Overall, there is a large jobs deficit remaining and previous analysis has shown that the jobs that have been created in the recovery are biased towards low pay. One suspects though that the Federal Reserve Bank will take the chance offered by a stronger monthly result (February) to increase interest rates a notch when it meets this week.
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      Posted in US economy | 5 Comments

      The Weekend Quiz – March 11-12, 2017 – answers and discussion

      Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! 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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        Posted in Saturday quiz | 9 Comments

        The Weekend Quiz – March 11-12, 2017

        Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
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          Posted in Saturday quiz | 2 Comments

          US Bond Markets cannot bring down Trump

          By the time this blog is published I will be heading to Malta. I will have very little spare time in the coming days so the blogs will be shorter and perhaps non-existent or as normal as the case might be. There was an article in the ABC Opinion series (March 8, 2017) – Donald Trump’s presidency might be short-lived, because ‘something’s gotta give’ – which more or less claimed that the private US Treasury Bond markets had the capacity to bring Donald Trump’s Presidency to a halt. Apparently, if the bond markets form the view that Trump won’t deliver on his promises they can somehow end his term in office. What, by driving yields up? Not likely. And even if there was a way that higher US Treasury bond yields had some link to his political tenure, the central bank could control the yields at whatever level they wanted.
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            Posted in US economy | 7 Comments

            The failure of economics – reality and language

            Yesterday (March 7, 2017), I presented the Second Lecture in the 3rd Annual Joan Muysken Lecture at Maastricht University. Unfortunately, the recording from the First Lecture, which I delivered on Monday evening (March 6, 2017) was corrupted but I am told there was an alternative video recorded and I will make it available when I can. The first lecture was a public event and the presentation reflected that. The second lecture was delivered to academic staff and students and so the language was more pitched to an academic audience, although it should be generally accessible. There is a little noise interference at odd times, which I could not get rid of. The audio of the talk runs for 50 minutes and I have interleaved the slides from the lecture in with the sound.
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              Posted in Economics | 8 Comments

              Inflation rises in Euro Area – but don’t claim it is the ECB’s doing

              Eurostat released the latest inflation data for the Eurozone last week (March 2, 2017) for February 2017 – Euro area annual inflation up to 2.0%. As the title reveals the Euro area inflation rate rose from 1.8 per cent in January 2017 to 2 per cent in February 2017. The mainstream narrative is already emerging – ‘see we told you that all that central bank bond purchasing would (eventually) be inflationary’ – type of stories. Bloomberg (March 5, 2017) waded in early with the headline – Draghi Seen Keeping Cool on Stimulus Drive Amid Inflation Surge. I expect a bevy of mainstream economists who haven’t worked out yet they have nothing sensible to add to the public debate will chime in like those wind-up toys that children play with and argue they ‘knew it all along’ – QE would be inflationary. Well I am sorry to say that the data tells us if a significant element of the cost structure rises so will inflation – simple as that. The slight uptick in inflation in the Euro area does not support the mainstream argument that building bank reserves will flood the economy with ‘money’, which then drives inflation.
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                Posted in Central banking, Eurozone | 3 Comments

                Travelling today so enjoy the music

                I am travelling a lot today – from London to Brussels and then onto Maastricht. I have had some meetings in London and then tonight (Europe time) I will present the Third Joan Muysken Lecture at the University of Maastricht, which honours their foundation professor in macroeconomics (and one of my co-authors). The talk will outline why the Eurozone should be dissolved forthwith. I don’t expect a sympathetic crowd. Tomorrow, I am giving a talk at the University on why mainstream economics has contributed nothing to the advancement of societal well-being. Rather, it has been a blight on progress. I expect a even less than sympathetic audience. Should be fun! I will try to post audio (at least) of these events. But for now … here is some music.
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                  Posted in Admin, Music | 2 Comments

                  The Weekend Quiz – March 4-5, 201

                  Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
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                    Posted in Saturday quiz | 2 Comments

                    The Weekend Quiz – March 4-5, 2017 – answers and discussion

                    Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! 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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                      Posted in Saturday quiz | 6 Comments