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Posts tagged with "économie"

What Obama Wants - Krugman

Now, this might just be theater: Mr. Obama may be pulling an anti-Corleone, making Republicans an offer they can’t accept. The reports say that the Obama plan also involves significant new revenues, a notion that remains anathema to the Republican base. So the goal may be to paint the G.O.P. into a corner, making Republicans look like intransigent extremists — which they are.

But let’s be frank. It’s getting harder and harder to trust Mr. Obama’s motives in the budget fight, given the way his economic rhetoric has veered to the right. In fact, if all you did was listen to his speeches, you might conclude that he basically shares the G.O.P.’s diagnosis of what ails our economy and what should be done to fix it. And maybe that’s not a false impression; maybe it’s the simple truth. 

Once Greece goes…

The Indignati are not stupid, and are well aware of two salient points. First, the ‘bailouts’, as they are always called, are no such thing. Taxpayer-funded capital injections into otherwise bankrupt banks were bailouts. The Greek ‘bailouts’ are loans, pure and simple. The money will have to be repaid, and repaid at ungenerous rates of interest: 5.2 per cent for Greece, 5.8 per cent for Ireland. These short-sighted and grasping interest rates, motivated by the need to provide political cover for other governments, make an already critical problem significantly worse. The Greeks know they are being lent money just so they can work very hard for lower wages and higher taxes in order to pay it back at great cost. This arrangement is in place because of the second thing the Indignati know well, the fact that the outstanding Greek debt is mainly owned by French and German banks. This is why the Western European governments are especially keen on the ‘bailout’: it’s helping to keep their banks solvent. The Indignati do not find that a compelling reason to embrace a decade or so of abject misery. They want the Greek government to default, and the banks to accept losses for loans they shouldn’t have made in the first place.

Why Fischer’s IMF candidacy is a non-starter

The important difference of opinion with respect to organizing war production shaped up between Lt. Gen. Brehon Somervell, commander of Army Services Forces, and Simon Kuznets and his former student-turned-boss,Robert Nathan, at the civilian War Production Board.

Since 1924, the official plan if war broke out had been, first, put the military in charge of civilian production. But, as Lacey writes, “despite years of planning and having sent hundreds of senior officers to the Industrial Staff College, [the military] had absolutely no idea on the eve of the war what services would be needed to fight,” much less how to ramp up production to the astronomical levels required by a desperate war.

So in the first weeks after Pearl Harbor, President Franklin Roosevelt signed an executive order creating a civilian War Production Board, consolidating various existing agencies and charging it with coordinating all aspects of the mobilization. In charge would be Donald Nelson, a former Sears, Roebuck executive (that is, after Supreme Court Justice William O. Douglas briefly ran the show). Nelson hired Nathan for his all-important planning committee, who in turn hired Kuznets as chief statistician (as economists were often identified in those days). A few weeks later, the War Department (as today’s Defense Department was known then) restructured itself, as well, establishing three broad chains of command: air force, ground force and supply, all of them under Marshall.  In charge of supply would be Lt. General Somervell,  best remembered today for his “brainchild,” the Pentagon building.

Kept from All Thoughtful Men

The important difference of opinion with respect to organizing war production shaped up between Lt. Gen. Brehon Somervell, commander of Army Services Forces, and Simon Kuznets and his former student-turned-boss,Robert Nathan, at the civilian War Production Board.

Since 1924, the official plan if war broke out had been, first, put the military in charge of civilian production. But, as Lacey writes, “despite years of planning and having sent hundreds of senior officers to the Industrial Staff College, [the military] had absolutely no idea on the eve of the war what services would be needed to fight,” much less how to ramp up production to the astronomical levels required by a desperate war.

So in the first weeks after Pearl Harbor, President Franklin Roosevelt signed an executive order creating a civilian War Production Board, consolidating various existing agencies and charging it with coordinating all aspects of the mobilization. In charge would be Donald Nelson, a former Sears, Roebuck executive (that is, after Supreme Court Justice William O. Douglas briefly ran the show). Nelson hired Nathan for his all-important planning committee, who in turn hired Kuznets as chief statistician (as economists were often identified in those days). A few weeks later, the War Department (as today’s Defense Department was known then) restructured itself, as well, establishing three broad chains of command: air force, ground force and supply, all of them under Marshall.  In charge of supply would be Lt. General Somervell,  best remembered today for his “brainchild,” the Pentagon building.

Jui 9

The vanishing sovereignty of Greece

In other words, Greece’s economic sovereignty has already vanished. Unless Greece does what the Troika wants it to do to get its financial house in order, it will collapse and become Cuba by the Aegean. If the government does regain control of its finances, economic sovereignty and the national pride that goes with it will be restored.

Or maybe not, because the euro zone debt crisis has handed the EU and the ECB a golden opportunity to create a supranational government. Actually, “government” might be the wrong word, because it implies that it is democratically elected. Better to call it a supranational bureaucracy that assumes it has the power of an elected government.

Jui 6

Debtor's prison

Economic history is filled with bouts of financial euphoria followed by painful mornings after. When nations awake saddled with debts incurred to finance wars, episodes of failed speculation, or grand projects that haven’t paid off, they have two choices. Either the creditor class prevails at the expense of everyone else, or governments find way to reduce the debt burden so athat the productive power of the economy can recover.

Soft options are no longer viable options

Has this been the first policy shift since the arrest of Dominique Strauss-Kahn? A lingering dispute between the International Monetary Fund and the European Union has come out in the open. It is about the EU’s hesitance in supporting Greece all the way through next year. The IMF is saying to the EU: unless you agree to new loans for 2012, we are not going to risk our shareholders’ funds and pay the next tranche of the old loan. That tranche is due on June 29. If the stand-off is not resolved, Greece will default in July.

I understand that this was already the position when Mr Strauss-Kahn was running the IMF. But if he was still in charge today, I suspect, he would have tried, and possibly succeeded, to persuade the political leadership of the EU to accelerate the discussion about a second loan. Or he would have tried to postpone the publication of the latest IMF/EU report on progress on Greek economic reforms and debt sustainability. I would have been a touch more confident that a really damaging accident could be avoided.

The eurozone after DSK

Mr Strauss-Kahn turned out to be the right man in the right job at the right time. Initially, I had my doubts about the appointment of yet another Frenchman and a politician, at that, to run such a central international institution. I was wrong. Mr Strauss-Kahn proved to be a bold decision-maker, an effective politician and a competent economist. This combination is very rare. None of the candidates under discussion is likely to do the job as well as he did during the worst of the global and then eurozone financial crises.

Of course, it was widely expected that Mr Strauss-Kahn would shortly depart from the IMF, to run for the French presidency. But if he had won, he might have transformed the eurozone’s ability to manage its current internal crisis. Certainly, he would have brought to this task abilities the current French president, Nicolas Sarkozy, lacks: above all, intellectual weight and so credibility with policymakers in Germany, Europe’s premier power.

Mr Strauss-Kahn was among the very few senior European policymakers to whom the German leadership, particularly Angela Merkel, the chancellor, paid attention. At crucial moments, he was able to bring Europeans together. Indeed, he even seemed able to bring a divided German government together. I cannot imagine who could replace him. When there exist so many divisions within Europe and the decisions ahead are so complex and fraught, his absence will be keenly felt.

Dominique Strauss Kahn and the IMF

Dominique Strauss-Kahn tried to shake up this institution. He brought in Olivier Blanchard from MIT, one of the world’s most prominent macroeconomists, as the IMF’s chief economist. He gave Blanchard a free rein, which he quickly used to harshly criticize the orthodoxy within the IMF.

Last fall, the IMF published a study in its World Economic Outlook that showed that fiscal austerity in the wake of the economic crisis would further contract demand and raise unemployment. This reversed the institution’s historic role; the IMF officially became a voice for expansion and employment rather than contraction and austerity. (…)

If the charges against Mr. Strauss-Kahn hold up, then he will not be around to carry this effort forward. As far as for what the future holds, his interim successor, John Lipsky, was a former vice president at J.P. Morgan. This could mean that the whole world will suffer for Mr. Strauss-Kahn’s criminal conduct.

Dominique Strauss-Kahn: Lost Authority, Lost Order

From the rubble and fear of World War II, the West built a collective fantasy. We would be safe. This time, we would no longer need to rely on the kindness of princes or generals. Institutions would do their work instead. Organization Men could protect our economies, maintain a new currency, and keep the peace.

If true, Dominique Strauss-Kahn’s actions in a $3,000 Manhattan hotel suite are despicable and tragic. More lurid details will tumble out soon enough. It will be a fitting moment for our times: The IMF on TMZ.

The eurozone’s journey to defaults - Martin Wolf

In short, Greece is in a Catch 22: creditors know it lacks the credibility to borrow at rates of interest it can afford. It will remain dependent on ever greater quantities of official financing. However that creates an even deeper trap.

Assume, for example, that half of Greek debt were to be held by senior creditors, such as the International Monetary Fund and the European stability mechanism, which is to replace the current European financial stabilisation mechanism in 2013. Suppose, too, that the reduction in debt needed to secure lending from private markets, on bearable terms, were to be 50 per cent of face value. Then private creditors would be wiped out. Under such a dire threat, no sane lender would consider offering money on bearable terms. A take-over of Greek debt by official funders makes return to private finance even more unlikely.

Robert Reich: The Battle for the Soul of the GOP

robertreich:

The Tea Partiers don’t care about the debt ceiling. To them, it’s a giant bargaining chit to shrink government. Nor do they worry about credit markets. If the full faith and credit of the U.S. government is no longer honored, so much the better.

You see, Tea Partiers hate government more than they hate the national debt. They refuse to reduce that debt with tax increases, even with tax increases on the wealthy, because a tax increase doesn’t reduce the size of government. The Tea Partiers’ real aim is to shrink the government.

But the Street and big business dislike the national debt more than they dislike government. And they wouldn’t even mind a small tax increase on wealthy people like themselves in order to cinch a deal on raising the national debt. They have so much money they’d scarcely notice. 

mai 8

Geithner Blocked IMF Deal to Haircut Irish Debt

On November 16th, European finance ministers urged [finance minister Brian] Lenihan to accept a bailout to stop the panic spreading to Spain and Portugal, but he refused, arguing that the Irish government was funded until the following summer. Although attacked by the Irish media for this seemingly delusional behaviour, Lenihan, for once, was doing precisely the right thing. Behind Lenihan’s refusal lay the thinly veiled threat that, unless given suitably generous terms, Ireland could hold happily its breath for long enough that Spain and Portugal, who needed to borrow every month, would drown….

Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.

mai 6

Greece Considers Exit from Euro Zone

The debt crisis in Greece has taken on a dramatic new twist. Sources with information about the government’s actions have informed SPIEGEL ONLINE that Athens is considering withdrawing from the euro zone. The common currency area’s finance ministers and representatives of the European Commission are holding a secret crisis meeting in Luxembourg on Friday night.

mai 4

Managing the eurozone’s fragility - Martin Wolf

If there were doubts about the UK government’s liquidity, creditors would sell bonds in return for sterling deposits. They might then sell those sterling deposits for foreign currency. The pound would depreciate. But new holders of sterling deposits would need to buy sterling assets, probably including bonds. If the worst came to the worst, the Bank of England could tide the government over until fiscal stringency worked. The depreciation of sterling would also stimulate net exports, raising confidence in fiscal prospects. Thus, the UK cannot face a liquidity crisis in its sterling debt and any doubts about solvency are likely to lead to helpful adjustments.

For Spain, however, doubts about liquidity can readily arise. These risk creating self-fulfilling expectations, as rates of interest rise and money leaves the country. The result would be illiquidity in both the market for public debt and the banking system. The country has, in effect, become like a developing country that has borrowed in foreign currency, except to the extent that the ECB finances the banking system. Yet that makes the latter very like the IMF: it is determined to get its money back.