Summers regurgitates tired old macro cliches

Guessing what the 'correct' or 'true' natural interest rate is may be a worthwhile passe temps for tenured university professors like Larry Summers but it is of little use to explain/solve the pressing economic problems of our time. Such as Unemployment or Inequality. Both have little to do with macro economic mumbo jumbo but a lot with poorly designed policies and laws. Note the circular congratulations to Stanley Fischer etal - the world of 'celebrity' economists is a small one, but maybe a larger talent pool would not be such a bad thing, given the unhealthy trends in the world economy.

Economics for simple Minds - Unions are bad for Growth (Stelzer)

Economics is not an exact science, if it is a science at all. For that reason ideological prejudices are often hidden in simple statements such as this one: 'A Union revival that will hurt Growth' (Irwin Stelzer, The Weekly Standard). 
Unions may well have created all sort of economic and political havoc but before one makes the statement one should first check the facts: was economic growth really slower when union 'power' was higher? And what about the distribution of the growth? What is growth worth if only a very small minority benefits - today's equivalent of the Robber Barons and their hangers-on?

Growth at any Price no longer sustainable

The Economic and Media Commentariat is still wedded to the 'Growth at any Price' model. But there should be realisation that population growth as the major force behind GDP growth should be discounted and we should prepare for (at best) a static world population and realistically a drop in population. Naturally, the corporate world does not want this to happen, basically it operates on the principle 'apres nous le deluge', the investment community cheers it on on the chase for ever-higher sales, profits (and bonuses for the top dogs). I am far from being an enemy of the free markete/capitalist model but sometime the penny has to drop. Maybe focus should be more on making the model work in a more efficient way with the spoils distributed in a fairer way. Better schools and health care for all do not have to burden the environment.

Quantitative Easing: Smart, Smart, Stupid

Advocacy of Quantitative Easing is the bankruptcy declaration of Economics as we know (or knew) it, however large the crowd of 'respected' or 'celebrity' economists and market pundits. "It takes very smart people to think it up but that doesn't mean it isn't stupid" (Hunter Lewis, Mises Daily)

Letta's demeaning trip to Berlin

The absurd reality of the Euro-Zone is revealed by the report that the new head of Italy's government is hurrying to make a trip to Berlin (to have his plans approved by Merkel?). Mussolini in his declining years was reduced to a similar humiliation. In the meantime German industry kills off the competition that is locked into the Euro straight-jacket.

Euro-Bonds, Sinn and Soros - the overlooked danger

Always interesting when some heavyweights are fighting it out. My main answer to the problems with the Euro is simple: one should never have embarked on this half-baked - and undemocratic - experiment. But to advocate Euro-Bonds as the solution is overlooking one important risk: what would happen if one of the member countries would want to leave the Eurozone after a large volume of these bonds has been created? Would we see the equivalent of the American Civil War in order to bring a recalcitrant nation to heel if the citizens are unwilling to continue to shoulder the burden created by profligate states?

Bank of England clueless - 'QE does not create asset bubble'

One has to wonder where else all the freshly printed money has disappeared to. It does not seem to go into more bank lending, so where has it gone? Would be interesting to know what level property and share prices - not to mention interest rates - would be without this unprecedented flood of money. May God protect us from civil service economists at the Central Banks - and the international bodies such as the OECD and the IMF.

Stock Buy-backs - Poison for the Economy?

There were times and places where companies were not allowed to buy their own shares. This was principally meant to prevent share price manipulation. But 'Modern' Financial Theory has induced company managements, investors and their hired guns in banks to make buy-backs an enormous (and largely unsupervised) activity. One is even left with the impression that share price manipulation has become the main focus of the top echelon of company managements. This should be no surprise as this narrow 'elite' benefits directly from a rising share price. Compensation schemes are also designed to make share speculation a one-way bet for these executives. Any drop in share prices is quickly 'compensated' by a fresh shower of (free) share options and re-priced 'long-term' incentive plans (strictly to the few at the top of course). No wonder that economic commentators wonder why companies do not invest and contribute to economic growth (let alone benefit the other 99.9 percent of the population). Apart from the economic and societal negative effect of unchecked share price manipulation these buy-backs not-too-rarely lead to outright value destruction as many transactions are conducted at price levels that later turn out to have been much too expensive (maybe even due to the fact that the market was expecting managements to perform the role of the 'greater fool', the sucker who buys at the top of the market).

Can we borrow from the Future?

When respected commentators (Satyajit Das, Marketwatch) claim that "Debt allows society to borrow from the future" one has to wonder about the standard of economic discourse. There is no way that 'society' can borrow from the future. All borrowing is a transfer of purchasing power from one person to another. That is true even if no money changes hands. If, for example, a carpenter agrees to help someone building a house and be paid for his efforts on a future date this does not mean that anything is 'borrowed from the future'. All that has happened is that the recipient has now to service a debt that he incurred vis-a-vis the carpenter. Rising debt levels - on a national or international basis - therefore mean that some people (or countries) do have rising debts which correspond to rising assets (claims) that other groups of the population have. Some individuals therefore have a claim on others that will have to be serviced in the future (or written off). Rising debt levels always lead to rising inequality - an aspect that gets more and more attention as a consequence of the credit crisis. 

Inflation: Chicken or Egg?

The argument that "there is no subtler, no surer means of overturning the existing basis of society than to debauch the currency" (J M Keynes, 1921) may well be true. But it still makes one wonder what comes first: the dysfunction of society or the destruction of money. These days one could argue that in a lot of countries it is a mal-functioning political system that leads to desperate measures like Quantitative Easing as cooked up by the Frankenstein economists running the Fed, Bank of England, ECB and Bank of Japan. See also Dylan Grice

Nominal GDP Targeting - Witches Brew

The absurdity of this 'policy' that is the latest mantra propagated by the political and economic policy establishment should be clear at first sight: if an economy is dead in the water all that will happen if any nominal level of GDP is targeted is that the level of inflation is pumped up. No one seems to be interested in explaining why this should have any meaningful - or permanent - influence on real economic activity