Nota Banquero sounds a lot like Notenbanker

I’m very sympathetic to the idea that the peripheral Eurozone countries should cut loose and devalue their new currencies to regain competitiveness and aid recovery. Krugman here half-recommends a quick default and devalue solution for countries running a primary surplus (that is, only borrowing money to cover the interest payments of previous loans).

The basic logic is one which I adhere to. The European Central bank has caused a debt problem to be seriously exacerbated by an aggregate demand problem, a new national central bank in control of its own currency (Esnewdo etc.) could boost demand through an adequate devaluation.

But there is no guarantee that such a devaluation would be adequate, or that a new central bank would act aggressively enough. To a degree the newly empowered Central Bank would have no choice, markets would force it to devalue, but much commentary assumes they would also force the bank into the accommodative policy, this need not be so. Many countries have voluntarily maintained too tight monetary policy for too long.

The cult of the credible central banker would stay the hand of any newly independent central bank. The logical and sensible point that a central bank must not behave recklessly or unpredictably has been become a dogma. Modern central bankers have become overly concerned that any departures from fighting inflation could lead easily to inflation expectations becoming “unanchored“, potentially leading to hyperinflation.

The political pressure to boost demand for a periphery Central Bank with its own currency would be intense. But this would only intensify the professional and institutional pressure on Central Bankers to resist these calls to retain their “credibility”; Interest rates may remain too high, or the bank may signal its hawkishness at any sign of demand picking up.

Devaluation without a change in the culture and prescriptions of central banking could lead to the worst of all worlds for the peripheral countries of Europe. Their economy could remain depressed and uncompetitive due to central bank stubborness but their external burden would have increased because their national, or at least, private debts remain denominated in much more expensive Euros.

Many countries have the option of following the Swiss and Swedish in devaluing but so far the US, UK and Japan have all refused. Britain today ignores opportunities to increase demand using monetary stimulus just as we suffered all through the 1920s because we chose to overvalue our currency. I fear much of southern Europe could find itself in the same situation.

In addition to this cult of the central banker, it may be that Steve Randy Waldman is correct and that depression is a choice. He argues that because of demographic pressures interest rates are naturally quite low, and because there are lots of old people who live off fixed income there are institutional problems to getting enough stimulus because they fear their income will be inflated away.

The low interest rates make normal monetary policy hard and the political constituency make unconventional policy too difficult to employ. Hence nations, or currency zones, “choose” depression. Demographic pressures in Southern Europe are similar to those in Japan and the elderly are much more powerful in Italy than in the UK or the US where policy also remains too tight.

The combination of political constituencies who are threatened or think they are threatened by looser monetary policy and a cult which treats loose monetary policy as a dangerous barbiturate may mean that even an independent currency may not be enough to pull the periphery of Europe out of its doldrums. The institutional constraints which have helped create the current Eurozone crisis will outlive the euro and must be considered in any rescue plan.

Filed under: Economics, Foreign Affairs, Britmouse, David Glasner, Devaluation, Euro, Eurozone, Germany, Greece, Grexit, Italy, Krugman, Portugal, Scott Sumner, Spain, Switzerland

Told you so

Still screwed.

European stocks were in the black but off earlier highs Tuesday, as investors weighed strong German growth figures against the possibility of a Greek exit from the euro… [M]arket participants pointed to the fact that Tuesday’s GDP releases merely highlight the growing disparity between Germany’s strong performance and the weakness seen in Southern European members. Italy’s economy contracted by 0.8% in the first quarter, while Spain’s economy shrank 0.3% and Portugal remained in recession. In Greece, GDP contracted by an annual rate of 6.2% in the first quarter.

We have a balance of payments crisis; the continuance of this crisis is not good news, even if Germany keeps the Eurozone from entering a “technical recession.” The periphery is still exporting too little and importing too much, Germany vice versa.

Unless the periphery of the Eurozone is given somewhere to export to they will not recover. I’m not asking for any sacrifice from the Germans aside from the psychic cost of no longer being able to tell yourself how virtuous you are. I’m asking for the Germans to consume more! They should have more stuff themselves instead of selling it to Italians, Spaniards, Portuguese, Greeks etc. for bits of paper which might end up being worthless.

Have your cake and eat it Germans, better yet, eat a cake made by some Italians and  Spaniards and Portuguese and Greeks and Frenchmen! You’ve earned it.

Filed under: Economics, Foreign Affairs, Eurozone, Germany

The True Meaning of Francois Hollande: As Politics move in the right direction the Economy is about to fall of a cliff

Here is a great graph via David Beckworth showing Nominal GDP for the whole OECD.

Source: OECD Statistics

Looks like we are all still way below trend. The demand shock starting in 2007/8 has not been corrected and although total spending has recovered to above its precrisis levels that masks wide variation in rates of recovery. Canada’s doing great, Spain, not so much.

During the worst of the crisis the fundamentals of developing world helped to drag global growth back up. In fact the late 00s were good for large parts of the world. China, Brazil, many African countries all performed strongly through to 2012, despite a set back in 2008. In fact global GDP per capita has never been higher.

The bad news is that serious problems appear to be developing all around the world. The Eurozone is still in a permacrisis, industrial production is stagnant in India, China has been fighting deflationary pressures for some time and appears to be beginning to lose, Brazilian industrial production has turned negative. The US is facing huge budget cuts in the autumn which will be broadly contractionary through its economy.

The insane European Central Bank‘s policy rate is at 1%. That’s right, despite the Eurozone imploding the insane ECB is has steadfastly refused to ease policy despite even Germany heading towards recession. Other central banks around the world have all done good jobs avoiding anything as horrific as America’s Great Depression, but they all remain wary of using unconventional tools to expand demand.

In 1999, what Ben Bernanke argued was needed in times of great crisis is the willingness to be aggressive and experiment, to show Rooseveltian Resolve to get the economy moving again:

Needed: Rooseveltian Resolve

Franklin D. Roosevelt was elected President of the United States in 1932 with the mandate to get the country out of the Depression. In the end, the most effective actions he took were the same that Japan needs to take—-namely, rehabilitation of the banking system and devaluation of the currency to promote monetary easing. But Roosevelt’s specific policy actions were, I think, less important than his willingness to be aggressive and to experiment—-in short, to do whatever was necessary to get the country moving again. Many of his policies did not work as intended, but in the end FDR deserves great credit for having the courage to abandon failed paradigms and to do what needed to be done.

This is the real meaning of Francois Hollande. He needs to say “non!” to more or less everything Merkel and the insane ECB put forward.  Hard money and austerity have been a disaster in a benign international environment, if demand for European and American exports dries up and deflationary pressures go global we will see a recession inside a depression scarily reminiscent of the 1930s. We need a Roosevelt.

Filed under: Economics, Foreign Affairs, Politics, Ben Benanke, Brazil, China, David Beckworth, FDR, India, the insane ECB

Europe is revolting!

First Greece, then France, now Germany…

Chancellor Angela Merkel’s conservatives have suffered heavy losses in an election in Germany’s most populous state, exit polls suggest.

Support for the Christian Democrats dropped from 35% to 26% in North Rhine-Westphalia, with the Social Democrats set to return to power with the Greens.

It is almost as though the public are sick of self-defeating austerity.

Filed under: Foreign Affairs

Well, this just got interesting

After accepting a mandate to create a multi-party administration following inconclusive elections, Alexis Tsipras sent shockwaves through financial markets by announcing the pledges Athens had made to secure rescue funds from the EU and IMF were null and void.

*Gets Popcorn*

We’re all still screwed by the way, this just makes the whole process much more entertaining.

Filed under: Economics, Foreign Affairs, Austerity, Greece

Hail France!

A chance, a small chance, France and the whole of Europe might not be screwed.

Filed under: Foreign Affairs, Politics, Hollande, Sarkozy

Its catching…

One down, eleven to go

From Matt O’Brien at The Atlantic:

Chicago Federal Reserve president Charles Evans doesn’t look the part of a heretic. But in the cozy, conservative club that is central banking, he certainly qualifies. While most of his colleagues at the Fed have recently taken an even more hawkish turn, Evans remains a champion of additional monetary stimulus. And on Tuesday he took an even bigger step: He became the first sitting Fed member to endorse nominal GDP (NGDP) level targeting.

.   .   .

A PARADIGM SHIFT?

The Fed is still a long way off, if ever, from adopting an NGDP level target. But Evans’ endorsement of the idea is a big first step in what could be a hugely important paradigm shift. Even if there isn’t a large difference between the quasi-NGDP level target that is the Evans Rule and an actual NGDP level target, it’s a fairly radical new way of framing policy. Rather than the central bank letting the economy recover faster, it puts the onus for a faster recovery on the central bank.

Most incredible is how quickly the idea is gaining acceptance. It’s true that writers like The Atlantic’s own Clive Crook have long advocated the merits of NGDP targeting. But as recently as 2009, it was mostly just a few lonely bloggers like Scott Sumner and David Beckworth who picked up the torch. Then Goldman Sachs chief economist Jan Hatzius and Paul Krugman said they were willing to give it a try. Now, a sitting Fed president is on board.

At this rate, it might not be long until we describe Evans as an orthodox central banker. Now that would be progress.

That is one of the US’s top central bankers supporting NGDP level targeting as endorsed on this blog. Hopefully a UK central banker will make the leap soon too, senior figures inthe

Filed under: Economics, Foreign Affairs, Charles Evans, NGDPLT, Scott Sumner, Vince Cable, Will Hutton

How to End this Depression!

Targeting the path of Nominal Gross Domestic Product (NGDP) is probably the most “fashionable” solution proposed for dragging the developed world’s economies out of depression. This post will refer to the UK, but lots more work has been done on the US from this perspective, particularly by Scott Sumner and David Beckworth. Britmouse has blogged about NGDP from a UK perspective.

Real GDP is a proxy for our incomes adjusted for inflation, how well off we are. Nominal GDP is the same but refers to our incomes in cash terms. This nominal measure deviating from trend has been what has driven the wild swings in employment and production the developed world has seen since 2007.

NGDP matters because wages and debt are sticky.

Wages: NGDP can decrease if all other prices decrease with it, the relative prices between them will not change and apart from updating some menus nothing will have really changed. But it is incredibly hard to cut wages, look at the clustering of wage changes around zero in the below graph (via Paul Krugman). This means a decrease in NGDP relative to wages will throw people out of work as employers become unwilling to employ them at the prevailing nominal wage.

Debt: We care about what real resources we can consume but all our contracts are written in nominal terms. If I owe someone £10,000 then at some point I have to hand over some bits of paper, or packages of electrons, to someone for that amount. But, if NGDP grows below trend the total nominal size of the economy will be smaller than expected when I took out the debt, but the size of my debt will not. The real cost of my debt will have increased and this will work to depress the economy because this dynamic will affect a number of people.

If NGDP sinks below trend there are then at least two mechanisms which can act to depress an economy. [1] Has it sunk below trend? Yes it has.

Is off trend NGDP growth associated with weak real GDP growth? Yes it is.

Are changes from trend NGDP correlated with changes in employment? Yes they are.

That might be a little difficult to make out for some. So I zoomed in and inverted the unemployment figures. Are they correlated? Yes, and closely.

Let me tell you a story with a different ending to the one you know. The year 2007 began with NGDP growing to trend, and employment decreasing against the backdrop of international inflationary pressures and financial distress. NGDP reversed course and began to decline during the second quarter of 2007 as did employment, crucially this was before the Lehmann Brother’s bankruptcy and the ohmygodwereallgoingtodie stage of the financial crisis. Unemployment had already increased by nearly 200,000 after NGDP began declining but before the financial crisis began in earnest.

This doesn’t exhonerate any bankers, they put the Bank and Treasury in this position after all. But it does imply different priority for actions. Occupy Threadneedle Street, my friends, not the London Stock Exchange.

Scott Sumner and Ben Bernanke

Looking at the third graph you can see NGDP decline, recovery and stagnation correlating closely with decline, (mild) recovery and stagnation in UK employment. The Bank of England controls the country’s printing presses and hence the nominal economy and responsibility for this depression lies with the Monetary Policy Committee for doing too little to avert it and with the Treasury for doing so little to force them to do more.

In the UK and US the last couple of decades have seen NGDP grow at about 5% a year, and this nominal growth has been split between price increases and economic growth. In 2008 NGDP collapsed and we saw deflation, disinflation, and recession. To date NGDP has not yet recovered to trend, in fact it remains over 10% below trend – and this is our main problem.

Increase NGDP and employment, incomes and taxes would increase, many intractable problems would vanish (though many would not). There are risks and there are methodological problems, but there huge gains for everyone if they right policy is adopted and I want to do my part to try and make sure the right policy is adopted.

____

[1] Data from here, I’ve used basic prices to strip out the effect of VAT jumping up and down

Filed under: Economics, Foreign Affairs, History, Politics, Society, Adam Posen, Britmouse, Market Monetarism, Mervyn King, NGDPLT, Scott Sumner, Unemploy, Unemployment

Austerity…

… is more than spending cuts. Contra Alex here discussing the spending of the US and UK state.

Government spending puts money and demand into people’s pockets; tax takes demand out. With regard to spending versus taxes, Adam Posen, for it is he, estimated that the US fiscal stance has contributed about 3 percent mroe to GDP growth compared to the UK’s fiscal stance. Posen’s techniques and figures are entirely uncontroversial.

This is in large part because the coalition decided a large VAT increase would be the best way to close the deficit despite lots of evidence on how damaging tax increases were during downturns.

Government may continue to buy boondoggles for people, if that’s how you want to look at it, but the Government has acted in an austere manner from a macroeconomic perspective.

Filed under: Economics, Foreign Affairs, Adam, Adam Posen, Alex Massie, Spending, Taxes

Living on a Dollar a Day Swindon Style.

A friend of mine has started blogging at I’m Goin’ Hungry about her attempt to feed herself on a pound a day for five days.

As part of Living Below the Line, Caroline Napier will be raising money for Christian Aid, but there are loads of other charities and NGOs supporting this campaign (see bel0w).

Caroline won’t be shitting in a mud hole, walking miles for dirty water and will know where her food is coming from. But she will be working in an office while doing this, and nobody in absolute poverty has to put up with that sort of monotony, so we’ll call it a tie with regard to the non-food budget elements of poverty.

I jest, but only because the horror of absolute poverty is so far removed from day to day life. Any steps an individual can take to bring poverty to people’s attention are a step towards eliminating it.

So give her your money, or sign up yourself and follow her blog [rss]. Also, look out for her in Swindon’s local papers and radio.

PS  Owen Barder is good on development, the IMF’s official blog is a bit dry, but covers a lot of ground and the Guardian’s Global Developmetn is a bit more case study orientated but also covers a great deal. All good places to start with some good blogrolls to browse round.

                        

Filed under: Society, Foreign Affairs, Development, Poverty, Dollar a day, Hygiene, Swindon, Caroline Napier

The Eurozone as a Country

I think this data from WolframAlpha is worth thinking about with reference to thinking about the Eurozone as a country.

1 | Luxembourg | $107000 per person per year
2 | Netherlands | $48300 per person per year
3 | Ireland | $47600 per person per year
4 | Austria | $45900 per person per year
5 | Belgium | $43800 per person per year
6 | Finland | $43700 per person per year
7 | Germany | $41500 per person per year
8 | France | $41200 per person per year
9 | Italy | $35100 per person per year
10 | Spain | $32400 per person per year
11 | Greece | $29400 per person per year
12 | Cyprus | $28300 per person per year
13 | Slovenia | $24300 per person per year
14 | Portugal | $21700 per person per year
15 | Malta | $20300 per person per year
16 | Slovakia | $18200 per person per year
17 | Estonia | $14400 per person per year

Some thoughts. The most successful currency union I can think of is the United States. The Eurozone is very different from the US is some very important ways normally the negative are emphasised, but some of these differences are positive.

Potted History: The South and the North had different institutions up to the 1960s, what with the South being very, very racist. Unsurprisingly this left the South much poorer. After much brouhaha, the North won, finally completed the South’s reconstruction and the South began to converge on the living standards of the North. The South went from about half as wealthy, they were even still picking about half their cotton by hand, to about as wealthy. There is about a three to one difference between the poorest parts of Europe and the richest (ignore Luxembourg). That convergence took basically the whole history of the United States until very recently, this does not bode well for Europe, disparities can exist for a very long time.

But, despite larger inequality with respect to income, nowhere in the Eurozone is as much of a basket case as was the US South in terms of institutions. This means that it should see faster convergence on wealthy living standards which is one thing which makes the current crisis such a tragedy. There are no fiscal transfers within the Eurozone analogous to those within the US but neither does Europe have the terrible legacy the poorer parts of the US had. So there are (limited) reasons to be cheerful.

UPDATE: As Innocent Bystander points out in the topics, I’ve just provided a list of numbers without context. As you’re all not psychic let me say they refer to Gross Domestic Product Per Capita.

Filed under: Economics, Foreign Affairs, History, Convergence, Estonia, Eurozone, Institutions, Jim Crow, Luxembourg, Racism, Slavery, US North, US South

Bad News

You know what I was saying yesterday about the Bank of England losing its nerve?

The minutes to the latest Bank of England meeting are out and the big news is that Adam Posen — a well-known dovish member of the board and frequent add advocate of more easing — does not currently support more QE.

The pound just instantly skyrocketed.

Eep. Higher pound, tighter policy. Scarily the Bank didn’t even need to change interest rates to tighten policy, somebody just stopped saying something.

Filed under: Economics, Foreign Affairs, Adam Posen, Bank of England, Inflation, We're doomed!

Good news

A former Libyan dissident who was abducted and flown to one of Muammar Gaddafi’s prisons in a so-called rendition operation mounted with the help of MI6 has started legal proceedings against Jack Straw, who was British foreign secretary at the time.

Finally!

Filed under: Politics, Foreign Affairs, Justice, Rendition, Jack Straw

Behold, Justice!

They have spent 23 hours of every one of the past 14,610 days locked in their single-occupancy 9ft-by-6ft cells. Each cell, Amnesty International records, has a toilet, a mattress, sheets, a blanket, pillow and a small bench attached to the wall. Their contact with the world outside the windowless room is limited to the occasional visit and telephone call, “exercise” three times a week in a caged concrete yard, and letters that are opened and read by prison guards.

America’s prison service, today’s worst people in the world.

In fact, most days worst people in the world. This kind of casual denial of humanity reminds me of this story from a few months ago.

Is the US the only country where more men are raped than women?

That’s the claim in this n+1 piece, which is well worth a read.

In January, prodded in part by outrage over a series of articles in the New York Review of Books, the Justice Department finally released an estimate of the prevalence of sexual abuse in penitentiaries. The reliance on filed complaints appeared to understate the problem. For 2008, for example, the government had previously tallied 935 confirmed instances of sexual abuse. After asking around, and performing some calculations, the Justice Department came up with a new number: 216,000. That’s 216,000 victims, not instances. These victims are often assaulted multiple times over the course of the year. The Justice Department now seems to be saying that prison rape accounted for the majority of all rapes committed in the US in 2008, likely making the United States the first country in the history of the world to count more rapes for men than for women.

Filed under: Foreign Affairs, Penal Reform, Prison, Prisoner's Rights, Rape

You can be a well cultured despot you know

Noah and Scott‘s argument about China’s culture is going nowhere. They’ve got bogged down talking about whether culture affects economic potential or not. Long story short, of course it does! Consider these two examples:

Chinese expats around south-east Asia seem more entrepreneurial and they sure as hell are richer than the locals in places like the Malay Peninsula and Thailand. Less fortunately, Black Africans are less trusting than other people and this is just one reason economic growth is more difficult there. Without being able to trust that someone will take your money, disappear into another room and come back with what you want there can be no Argos. And where would you be without Argos? A lot poorer. [1]

The reasons for these cultural traits are complex. I don’t know the Chinese, but Africa’s level of trust appears to still be badly effected by the long defunct institution of slavery; kidnapping was very common for 200 years or so in a way which the rest of the world hasn’t had to deal with. You can be culturally more entrepreneurial. Likewise, you can culturally more or less prone to trust strangers. Both of these have real effects for lots of things, including economics. There, cleared that one up for you.

But whether culture affects wealth given a certain set of economic institutions is irrelevant. What is important is whether culture can influence China’s institutions. China is still deep in the throws of catch up growth, entrepreneurship is of course very important, but not nearly as important as having institutions which allow for the full execution of whatever entrepreneurship occurs. As I said earlier:

No amount of “pragmatism” will make a self-interested elite step aside, the pragmatic thing to do is to expropriate assets and imprison your enemies: to shut down economic activity you’re not involved and to erect barricade between the population and your clients…

Until now, Chinese elites have not been threatened by creative destruction they have been able to harness it to embellish their own power, wealth and status. The true test of Chinese growth will come when China’s central planning runs out of steam and urban elites and rural poor separate from the CCP begin to erode its power, then we will see whether elites will be forced to do what is right.

The only way China’s culture will significantly influence its long run - at least until it reaches say half of rich world income per capita) – growth prospects is by influencing its institutions. An entrepreneurial culture, or pragmatic culture, is completely unrelated to whether China adopts a growth friendly political framework over the next five to ten years. What matters is whether the politically powerful can be convinced/forced to become economic losers. Look at those guys at the top. Do you think they’re culturally inclined to agree to that?

____

[1] Not sure if that translates to my non-British readers. Argos is a shop with a tiny shop front full of catalogues and a big warehouse full of stuff. You order at the front and stuff appears a few minutes later from the back. The flippancy of my reference is of course a little ruined by this extensive footnote.

Filed under: Economics, Foreign Affairs, History, Politics, China, Elites, Entrepreneurship, Noah Smith, Scott Sumner, Why Nations Fail

Its not “innovate or steal” its “innovate or repress”

Who hasn’t, I ask, been tempted to compare modern political economy to computer games? Its fun, but wrong, like most fun things, come to think of it…

Anyway, before I’m sidetracked, Noah Smith asks “Why should China innovate when it can just steal?” Good question. Its one that highlights how vital industrial espionage and intellectual property theft have been for every newly industrialised country since Germans started engraving “Made in Sheffield” on their Hamburg steel. “Stealing” technology to help drag people out of intense suffering is pretty much a Good Thing in my opinion.

What Noah doesn’t note is that successful countries always and everywhere begin innovating themselves – there is no choice between innovation and spying. None.

There are important reasons China cannot continue to steal technology forever. The first is technical. Technologies do not exist as comfortable chunks of something which are easy to steal, very often the successful operation of a technology requires tacit knowledge by those using it. You can get Ford to build you a factory, as the Soviet Union did, but without the knowledge of Ford’s workers your factory will be significantly less productive. Newer technologies require more tacit knowledge – because nobody has been able to codify and simplify it yet – and hence you cannot steal your way to prosperity, only to a certain ratio.

More fundamentally, Noah has got the trade-off completely wrong, exemplified in his penultimate [1] paragraph.

Anyone who is rooting for China’s economy should not be so worried by the innovation limitations discussed in articles like this one, unless they also believe that China’s demonstrated capacity for forced tech transfer and espionage are also diminishing.

Woah there!

A lack of innovation is not a policy choice with good consequences if you consider innovation to be natural. Let me clarify. Although many polities have repressed innovation, and despite technical progress being slow through most of human history this has been the result of political structures which have worked to either punish potential innovators or to expropriate successful ones. Even given this history of repression people have still sought to improve technology, especially where they have been allowed to keep some of the spoils from doing so. Eric Jones is very good on this – look to the efflorescence  of Song China or the slow acceleration of growth after the Glorious Revolution.

To shift resources from innovation to spying requires a repression of innovation akin to the suppression of the printing press in the Ottoman empire, or Elizabeth I’s successful attempt to stamp out Lee’s stocking weaving innovation in the British textile industry (!). You cannot make that trade-off as costlessly as Noah imagines.

In fact, I would argue that there is no trade-off between spying and innovation at all: spying is a military expense and innovation is a political expense. You pay spies out of taxes or corporate profits, you pay for innovations by suffering the economic and political losers of creative destruction. They operate at completely different margins.

China’s primary challenge is not to choose between innovation and spying, because that is not a choice. The Chinese needs to decide whether they want to deal with the political and economic instability but dynamism of creative destruction or not – if they do they can have a little more espionage and a little more innovation, if not then they’ll have little of either. If this decision is left to their elites only, then China will likely fail, if left to the people there is a decent chance China will continue to prosper.

This is in part the basis for Michael Pettis and Free Exchange‘s bet on whether China will achieve even 3% growth in the coming decade. Can China shift from a centralisedish investment boom to diffuse growth through innovation? States either embrace creative destruction or seek to repress it. Both innovation and spying are sources of creative destruction but only successful states with inclusive political and economic institutions can successfully cope creative destruction.

______

[1] I hope you’ll be as interested as I was to learn that penultimate refers to the song prior to the ultimate (i.e. last) song in an opera. Neat huh?

UPDATE: I realise now, having woken up a little that my first paragraph stands alone a little. Noah refered to “a game called Master of Orion II” which inspired, or was used as a hook, for his post. I meant to refer to it but didn’t. That sort of sloppy writing is probably one reason I wasn’t shortlisted for the Orwell Prize by central party lickspittle my pal Hopi Sen.

UPDATE II: Repetition of “a little” above would annoy me in someone else’s writing.

Filed under: Economics, Foreign Affairs, China, Exclusive, Ford, Glorious Revolution, Inclusive, Noah Smith, USSR

Fiscal Policy and Growth In Europe

Interesting Graph pointed to by Brad and Paul but without a lot of context or information. More data please people! But it shows the normal centre-left story: Austerity – not a good idea.

A little left out here though… thoughts below the fold.

Filed under: Economics, Foreign Affairs, ECB, Europe, gdp, Greece, Keynesian, Poland, UK

Lets buy off the Falkland Islanders

The Heresiarch suggests we just give the Falkland Islands to the Argentines. They’re expensive, pointless things to own so I’ll sign up to this plan. But, I think it would be fairer to pay off the islanders than to just abandon them.

£750,000 will buy you this farm in Scotland: the weathers shit and the company’s miserable so they should fit right in. £1,000,000 a family should do it and would only cost £1 billion pounds. Let put that in context; it cost £260 million  to just shell and bomb Libya and they’re basically on our doorstep. A billion on the Falklands is an investment that would pay off in no time and we may even be able to raise some or all of the money from the Argentines themselves!

I’ve heard that it is worthwhile keeping the islands because there might be oil there. Bullshit I say. I pay whatever the international going rate for energy is. Sure, lets use the navy to secure natural resources and superprofits for firms-registered-in-but-barely-operating-in-Britain, but don’t tell it is something in my interests.

Get rid of rocks in the middle of the Atlantic, they are invariable poor investments (apart from Saint Helena).

Filed under: Foreign Affairs

Hubris is Fun: Recovery Winter Edition

I’m sure people holding set squares and bottles of quinine felt the same down on the Congo Basin.

The pretense of knowledge is a lot less pretense-full when you have a 1 Terabyte portable Hard Drive and GIS mapping software.

In all seriousness, Karl has a point. While we should always be sceptical of how much we really know, we should always do our best with what we do know.

When it comes to macroeconomics, in the US, all signs point to free lunches sitting everywhere if only for a little more nominal expenditure, and hopefully Karl can elaborate on this soon.

Filed under: Blogging, Economics, Foreign Affairs

Blogging may be slow, but I still bring you quality programming

Filed under: Foreign Affairs