Englund

 ...and forcing Corporate America and many friendly governments into a solvency crisis that will threaten America’s own stability.  Things are far worse in the eurozone, where policymakers refused to do the obvious once Europe’s banks had failed after 2008: establish a proper federation’s foundation – a fiscal union. Instead, they let the European Central Bank do “whatever it takes” to save the euro.  Only by poisoning its own money could the ECB keep the euro show on the road. Today, the ECB owns huge quantities of Italian, Spanish, French, even Greek debt that it can no longer justify holding as a means of achieving its inflation target, but which it cannot renounce without calling the euro’s existence into question. Money has two natures. Its first nature, that of a commodity that we trade with other commodities, can never explain why money would ever acquire a negative price.  Socialism for bankers and austerity for most of the rest thwarted capitalism’s dynamism...

But with a democratic Europe in the balance, this is no time to gloat. It is never easy to wake up to the news that your country’s business model is busted. It is difficult to acknowledge the obvious: that your political leaders had either been deluded or lying to you when they assured you for decades that your hard-earned living standards were safe.  Greeks know this feeling. We experienced it in our bones in early 2010. Today, it is the Germans who are facing a wall of condescension, antipathy, and even mockery.  The claim that the German model was compatible with Europe’s monetary union is also being exposed as false. Lacking a fiscal and a political union, the EU was always going to saddle Club Med governments, banks, and corporations with unpayable debts, which eventually would force the European Central Bank to choose between letting the euro die and embarking upon a permanent bankruptcy-concealment project. Once upon a time, those of us who criticized the notion that ev...

 When Wall Street collapsed in 2008, triggering the global Great Recession, various explanations were offered: regulatory capture by financiers who had replaced industrialists in the capitalist pecking order; a cultural proclivity toward risky finance; failure by politicians and economists to distinguish between a new paradigm and a massive bubble; and other theories, too.  All were valid, but none went to the heart of the matter. So, what is really going on?  My answer: A half-century long power play, led by corporations, Wall Street, governments, and central banks, has gone badly wrong. As a result, the West’s authorities now face an impossible choice:  Push conglomerates and even states into cascading bankruptcies, or allow inflation to go unchecked. For 50 years, the US economy has sustained the net exports of Europe, Japan, South Korea, then China and other emerging economies The lion’s share of those foreigners’ profits rushed to Wall Street in search of higher...

France, whose contract to deliver 12 submarines to Australia for $A50 billion was unceremoniously ditched in the process.  Consider the ambition to create a euro-dominated payments system that allows companies and states to trade independently of the US-dominated financial system. For such a system to work, it must be liquid, which means it must be able to attract other people’s money – Japanese, Chinese, Indian, and certainly US money. This in turn requires that non-Europeans holding loads of euros have a euro-dominated safe asset in which to invest their stash for a day or for a decade.  To prevent the type of humiliation to which Trump subjected Merkel, Europe needs a eurobond. To prevent humiliations like the one Biden has inflicted upon Macron, it needs a common military.  But eurobonds and a common military require Europe’s national ruling classes (particularly those in creditor countries) to give up their own exorbitant power; and to embrace, instead, the radical i...

Vägrade. Man la fram ett argument som man verkligen hade jobbat på och säkerställt att det är logiskt konsekvent, och du möts av ansikten med tomt stirrande blick. Som om du aldrig sagt något. Man hade lika gärna kunnat sjunga den svenska nationalsången – och fått samma svar. Det fanns sympatiska personer, som IMF-chefen Christine Lagarde, men eurogruppen däremot bestod av några otrevliga typer med mycket makt som stirrade på honom och sa: "Du har rätt i vad du säger, men vi kommer krossa dig ändå". SvD 14 juli 2015 https://www.svd.se/yanis-varoufakis-basta-citat Have you wondered how two Nobel laureate economists, sometimes sharing the same year’s prize, can consider each other charlatans? This would never happen among Nobel laureate physicists or biologists.  https://englundmacro.blogspot.com/2021/02/trump-is-more-dangerous-than-mere-liar.html

Have you wondered how two Nobel laureate economists, sometimes sharing the same year’s prize, can consider each other charlatans? This would never happen among Nobel laureate physicists or biologists.  This is why neither empirical success nor failure causes an economic theory ever to be dismissed. Like conspiracy theorists and theologians, economists of different schools – Keynesians, monetarists, and Marxists, for example – can explain every possible observation within the confines of their particular paradigm.  Herein lies Trump’s opening. For decades before his election, countless disempowered people had been listening to economic experts tell them that the policies wrecking their lives survived the scientific falsification process. It was a monstrous lie that allowed Trump to weaponize their despair against the “establishment”  The new administration brims with the same experts who promoted the false prophecies that reinforced the unequal, exploitative, irrational so...

When you strip away the pieties, the EU is stating that this country must accept the “ratchet clause” and swallow terms - dressed up as level-playing field clauses - that do not exist in normal trade agreements. This mechanism is intended to lock the UK into Europe’s regulatory and governing structure permanently. If the UK rejects what amounts to an ultimatum and exercises its right to trade on WTO terms, Brussels will seek to make this excruciatingly painful rather than trying to reach a neighbourly modus vivendi. Such coercive methods did succeed in snuffing out the Greek Spring of 2015 but that was because Greece had been shut out of the capital markets and had no sovereign lender-of-last-resort as a euro member. The European Central Bank gradually (and illegally) cut off Target2 liquidity for Greek commercial banks until the financial system collapsed. “The gigantic difference is that the ECB cannot shut down Barclays, RBS, Lloyds, and HSBC,” said Yanis Varoufakis, Greece’s forme...

During the worst clashes between the Greek and German governments amid the euro crisis, a German official attempted to dissuade me from insisting on debt relief for Greece with the argument that Germany may be rich, but a majority of its people are poor.  On this last point, he was right. During the last two decades, the real disposable income of the poorest 50% has been falling  The solidarity of German workers, toward whom no one shows any solidarity, has its limits – as it should. I have just described the fatal divisiveness that has been baked into Next Generation EU. As I have written elsewhere , it is almost as if the whole thing were designed by a cunning Eurosceptic. Yanis Varoufakis Project Syndicate 3 August 2020 Tyskland lyckades genomföra vad ekonomerna kallar en interndevalvering. Hur kunde då Tyskland lyckas med det som i dag framstår som omöjligt för länderna i Sydeuropa? https://englundmacro.blogspot.com/2011/12/wolodarski-och-tysklandss-framgang-med.html The H...

As always in EU politics, ideologues are pursuing their own Monnet agenda: exploiting Covid-19 to advance federalist integration by means of crisis without clear democratic consent.  “They are making the same serious category error as they did in the Greek crisis in 2010. They are treating an insolvency crisis as if it were a liquidity crisis,” said Yanis Varoufakis, the former Greek finance minister. Acting as a lender-of-last resort for the country - though vital - does not conjure away the deeper issue that Italy requires a huge devaluation and a debt restructuring to break out of the contractionary spiral and restore lost viability. “How much of Italy’s debt is the ECB going to keep buying. A quarter? Half? Three quarters? At some point the system cracks,”  Mody   said. Ambrose Evans-Pritchard, Telegraph  25 March 2020

but an earlier this week,  How to reform today’s rigged capitalism , was like Hamlet without the Prince. It followed up  on an earlier article , which focused on what he saw as the causes of rising inequality: falling productivity growth, stagnating innovation, rising debt levels and finanicization, concentrated corporate power, which in turn fosters rentierism and tax evasion. The officialdom has been shaken out of its Versailles 1788-level complacency by much-derided “populist” revolts, and more recently, 1848-like revolts, including a general strike in France. Yves Smith  10 December  2019 The End of Neoliberalism and the Rebirth of History Stiglitz September 24, 1599. In a timbered building off Moorgate Fields, not far from where Shakespeare was struggling to complete  Hamlet , a new type of company was founded. Its ownership of the new firm, called the East India Company, was sliced into tiny pieces to be bought and sold freely. Imagining ...

A harrowingly detailed tale of incompetence and intransigence in the Greek debt crisis The Last Bluff, by Viktoria Dendrinou and Eleni Varvitsioti FT 14 October 2019

‘Adults in the Room’ is a rare attempt to make artistic sense of the financial crisis FT 4 October 2019

För att få en skymt av inblick i "det djupa EU" rekommenderar jag en krävande bok: "Adults in the Room" av Yanis Varoufakis, som under en kort tid var Greklands finansminister.  Dess knappt 500 sidor borde vara obligatorisk läsning, icke minst för alla oss som gillar EU-tanken. Rolf Gustavsson Ambrose https://www.telegraph.co.uk/news/2017/04/28/yanis-varoufakis-brexit-advice-theresa-may-avoid-negotiating/?li_source=LI&li_medium=li-recommendation-widget Amazon https://www.amazon.com/Adults-Room-Battle-Europes-Establishment-ebook/dp/B01ICK4IWK/ref=sr_1_1?keywords=Adults+in+the+Room&qid=1564807119&s=amazon-devices&sr=8-1

First, it must balance employers’ demand for waged labor with the available labor supply. Second, it must equalize savings and investment. If the prevailing real interest rate fails to balance the labor market, we end up with unemployment, precariousness, wasted human potential, and poverty. If it fails to bring investment up to the level of savings, deflation sets in and feeds back into even lower investment. It takes a heroic disposition to assume that this magic number exists or that, even if it does, our collective endeavors will result in an actual real interest rate close to it. How do free marketeers convince themselves that there exists a single real interest rate (say, 2%) that would inspire investors to funnel all existing savings into productive investments and spur employers to hire everyone who wishes to work at the prevailing wage? Yanis Varoufakis Project Syndicate 19 March 2019  Grundbultsfrågan: Hur blir S = I ??? Savings and investment, being differ...

Just over three years ago, when I was negotiating on behalf of Greece with the German government to end the combination of unsustainable loans and hyper-austerity that are still crushing my country, I warned my interlocutors at a Eurogroup meeting of eurozone finance ministers: “If you insist on policies that condemn whole populations to a combination of permanent stagnation and humiliation, you will soon have to deal not with Europeanist leftists like us but, instead, with anti-Europeanist xenophobes who see it as their vocation to disintegrate the European Union.” YANIS VAROUFAKIS Project Syndicate  May 29, 2018  

The 2008 financial crisis was our generation’s 1929 It’s time to explain how the bloc, and the euro, could be run differently, democratically and sustainably Yanis Varoufakis New Statesman op-ed, 6 June 2018

Europe’s establishment is luxuriating in two recent announcements that would have been momentous even if they were only partly accurate:  The end of Greece’s debt crisis, and a Franco-German accord to redesign the eurozone.  Unfortunately, both reports offer fresh proof of the European Union establishment’s remarkable talent for never missing an opportunity to miss an opportunity. Yanis Varoufakis Project Syndicate 28 June 2018 

If you are really pro-euro, my advice is to stop treating the euro as an article of faith but fight for its sustainability.  Wolfgang Münchau FT 3 June 2018 I wanted to keep Greece in the eurozone sustainably and was clashing with Germany’s leaders in favor of the debt restructuring that would make this possible .   By crushing our Europeanist government in the summer of 2015, Germany sowed the seeds of today’s bitter harvest:  a majority in Italy’s parliament that dreams of exiting the euro. Yanis Varoufakis Project Syndicate 29 May 2018

För att få en skymt av inblick i "det djupa EU" rekommenderar jag en krävande bok: "Adults in the Room" av Yanis Varoufakis, som under en kort tid var Greklands finansminister.  Dess knappt 500 sidor borde vara obligatorisk läsning, icke minst för alla oss som gillar EU-tanken. Den allra viktigaste lärdomen är att EU:s helt avgörande maktcentrum ligger i Berlin. Varoufakis redogör för sina samtal och förhandlingar med Schäuble. De båda var överens på en bestämd punkt; att Grekland var statsfinansiellt bankrutt. Varoufakis sökte förgäves räddningen i en skuldavskrivning. Schäuble ville rädda tyska och franska banker undan kreditförluster och undvika spridningseffekter till andra länder. SvD 10 februari 2018 - Den stora risken var att Grekland skulle utlösa en kris i italienska, franska och tyska banker.  Nu finns i praktiken en EU-garanti för de utestående grekiska statsobligationerna. Anders Borg, TT, SvD papper 22 februari 2012

This is one of the interesting revelations in Varoufakis’s fascinating account of his tenure as finance minister.  “You are probably the one [in the Eurogroup] who understands that the eurozone is unsustainable,” Varoufakis quotes Schäuble as telling him. “The eurozone is constructed wrongly. We should have a political union, there is no doubt about it.” But there is also an alternative, much less ambitious view, according to which neither fiscal nor political union is needed.  What needs to be done instead is to de-link private finance from public finance, insulating each from the malfeasance of the other. Dani Rodrik, Project Syndicate 11 December 2017