Browsing articles tagged with " austerity"
Jul 9, 2015
boyce
Comments Off on Grexit time?

Grexit time?

It’s time for Greece to exit the euro, if not the EU, writes Simon Jenkins in the Guardian:

Sometimes the small voice of economics should rise above the shrieking hysterics of politics. The laws of bankruptcy were invented by the Victorians not to stick plaster over capitalism’s wounds. Insolvency and limited liability lay at the core of commercial enterprise. Borrower and lender alike had to accept risk for capitalism to thrive. Greece within the eurozone was allowed to borrow riskily and was lent to riskily. Any fool (except a eurofool) knew it would end in disaster.

The IMF last week admitted Greece’s debts were “unsustainable”. But such is the political arthritis now afflicting Europe’s “technocratic” rulers that they ignored the fact. They concentrate on their one concern: somehow extending Greece’s repayments so German, French and British banks could have even larger loans underpinned. It is bankers, not Greeks, who are being “bailed out”. They want Greek taxpayers to go on paying interest even if the principal is as beyond reach as a tsarist bond.

Read his piece here.

Also Eduardo Porter’s recent New York Times piece on Germany’s own debt write-down after World War II.

May 21, 2013
boyce
Comments Off on The ghost in the economy’s attic

The ghost in the economy’s attic

Econ4’s Gerald Friedman writes:

Even while scholarship has exposed the fallacy of austerity economics and this news has reached wide audiences through Twitter and the Colbert Report, the United States government is embracing austerity’s policy prescriptions… The ghost of bad austerity economics continues to haunt, and even to drive, the living.

Read his piece here.

Apr 24, 2013
boyce
Comments Off on Austerity’s emperors have no clothes

Austerity’s emperors have no clothes

Stephen Colbert skewers the Harvard economists whose flawed research underpins austerity politics:

http://www.colbertnation.com/the-colbert-report-videos/425748/april-23-2013/austerity-s-spreadsheet-error

Check out Colbert’s interview with UMass-Amherst economics graduate student Thomas Herndon, who showed that austerity’s emperors have no clothes:

http://www.colbertnation.com/the-colbert-report-videos/425749/april-23-2013/austerity-s-spreadsheet-error—thomas-herndon

Read all about it here and here.

Apr 22, 2013
boyce
Comments Off on Austerity fiasco

Austerity fiasco

The revelation by UMass-Amherst researchers that a key Harvard study used to support austerity economics was based on sloppy (mis)use of data has created a sensation in the media and the economics profession. Paul Krugman explains the selling power of junk economics:

The intellectual edifice of austerity economics rests largely on two academic papers that were seized on by policy makers, without ever having been properly vetted, because they said what the Very Serious People wanted to hear.

Read Krugman’s piece here.

Read a brief summary by UMass economists here.

See links to media coverage here.

Jan 7, 2013
boyce
Comments Off on The austerity fallacy

The austerity fallacy

Austerity policies are founded on a fallacy of composition: the mistaken notion that if something is true of the part (in this case, households), it must be true of the whole (in this case, the nation’s economy). Paul Krugman, writing in the Times, explains the difference:

An economy is not like a household. A family can decide to spend less and try to earn more. But in the economy as a whole, spending and earning go together: my spending is your income; your spending is my income. If everyone tries to slash spending at the same time, incomes will fall — and unemployment will soar….

The crisis in Greece [from 2010] was taken, wrongly, as a sign that all governments had better slash spending and deficits right away. Austerity became the order of the day, and supposed experts who should have known better cheered the process on, while the warnings of some (but not enough) economists that austerity would derail recovery were ignored. For example, the president of the European Central Bank confidently asserted that “the idea that austerity measures could trigger stagnation is incorrect.”

Well, someone was incorrect, all right.

Read his piece here.