More Micro and less Macro please!

Gavyn Davies provides another 'analysis' (Financial Times) that is based on observing just a few datapoints, not even close enough to the data one would need to have a reasonable basis to draw conclusions that should be the basis for policy decisions. The problem is that other factors are never equal. We all would love to have a multiplier larger than 1 on a sustained basis. Life would be easy, just let the government spend and spend. But in the case of the UK for example this simplistic view leaves out the fact that at some stage the policy would hit the buffers - when foreigners no longer support this policy. The Greeks can tell a story. A bit of deflation in the UK would be more than welcome, some factors of production would have to find better uses, people who are paid to sit at home or are surplus in certain sectors (some MP's?) would have to lower their wage demands, this would increase the buying power of the rest of the population and a virtuous circle of wealth creation would start. Less 'Macro' and more 'Micro' in policy making! Unfortunately the media, think tanks and the commentariat in the financial industry love the former and spend little or no time on the latter.

IMF: Expensive Plagiarism

A complicit media again gives headlines to the latest insights concocted by the bureaucrats of the IMF. With the best of intentions these cannot be called original research. Any first-year economics student could put together the reports as nothing more than a diligent reading of the economic research produced by the national agencies and research institutes is required. The sad thing is that the electorates in all member states are forced to pay for generous terms of employment while the belt tightening in many countries is accelerated. We would also love to hear if any staff member ever has been fired - apart from the hapless Dominique Strauss-Kahn (who fell victim to the weakness of his flesh and the bloodhounds in the NYPD and his political enemies in France).