Spontaneous Optimism is needed says Paul Ormerod

Interesting article (CityAM) but where is the 'spontaneous optimism' supposed to come from this time? And where has it sprung from in 1933?? All very well if Mr. Ormerod is "currently researching complexity, complex systems, nonlinear feedback, the boom and bust cycle of business and economic competition" but then we would expect that he could tell us the answer to this riddle.

Speculators attacking the Euro?

Most sensible observers - apart from the europhile 'Elite' behind the Brussels-Consensus - would agree that the way the Euro was constructed was - apart from being anti-democratic - deeply flawed from the onset. But we are where we are and cannot argue over spilt milk. That the governance of the Euro zone will have to be changed in a major way becomes clearer by the day.
But the discourse in the media - and above all in the blogosphere - is not really focusing at the relatively simple way the crisis can be ended. Too many commentators have a vested interest in seeing the demise of the Euro, be it for ideological reasons, be it out of a sense of 'Schadenfreude' or pure sensationalism (only bad news is news seems to be the motive, just read Zerohedge where is is difficult to find ANY constructive criticism). We do not even want to consider all those great thinkers that have positioned themselves for a collapse of the Euro or some of its member states and want to make hay out of any subsequent turmoil in the markets. Worst of all are 'investment' banks that play all sides - as speculators, doomsayers and 'advisors' to governments and banks that are victim of speculative attacks.
Because speculation is a key contributor to the growing crisis in the Euro zone. Not just in the guise of a hard-nosed hedge fund manager or prop trader but also in the shape of all major investment institutions. They may not be short-term oriented and probably have no axe to grind regarding the survival of the Euro but nevertheless they are knowingly or unknowingly contributing to the destabilisation of country after country by simply taking steps that are beneficial to their own self-interest.
Countries such as the USA and Britain have only survived with an intact (?) financial system because their Central Banks pumped money into the economy at rates that would have been called lunatic before the onset of the Credit Crisis. There is no such tool to stem bank runs on countries that are members of the Euro zone. Greece may have an economy that has been managed abysmally but no one in his right mind can expect a country to survive when speculation pushes interest rates to astronomical levels. A similar mechanism was at the heart of the credit crisis 2008-09 when speculation in relatively illiquid derivatives (mostly linked to ABS and MBS products) created a 'death spiral' in the credit markets that was largely divorced from the underlying reality in these markets.
Stopping the rot at the core of the Euro Crisis would require only the full commitment of the European Central Bank to an all-out effort to push interest rates in ALL member countries to acceptable levels and fulfil its role as lender of last resort to all banks that are threatened by a bank run.

OECD bureaucrats clueless

Reading that the bureaucrats in their cushy offices in Paris are 'pushing' for an increased 'firewall' to protect the Euro from disintegrating and help the Eurozone to return to economic growth one is reminded how clueless these 'experts' really are. They refuse to realise that the introduction of the Euro currency in its present form was a catastrophic error and think that throwing money at the economy is all that needs to be done to correct the cumulative results of 40 years of creeping socialism.

John Stuart Mill on the stationary state of the economy

Everything is still in thrall of the 'growth at any cost' philosophy. The astronomical salaries paid to 'Celebrities' and CEO's are counted as positive contributions to GDP and the qualitative aspects of Growth (better schools, better health care, better treatment of the environment) are neglected. Time to re-read Mill's prediction.

Panic in the markets - a gift for Greece

The massive gift that taxpayers and investors in many countries are forced to hand to the Greek citizens is unprecedented in recent history. While many commentators argue that the accumulated debt of the Greek state simply was too high a burden and had to be reduced we think that the origins of this crisis lie in the panic that gripped the bond markets during the past two years. For a long time the interest rate that Greece had to pay on its bond issues was artificially depressed due to carelessness by the investor and banking community. Starting in late 2009 the markets switched from overoptimism to pessimism. Increasingly a debt load that could have been restructured became unsustainable as market rates on Greek debt reached astronomical and unaffordable levels. Therefore one could say that Mister Bondmarket has made it possible for Greece to have its debt load cut by substantial amounts - with more to come in the future. Or does anyone really think that Greece would have gotten away with such a blatant renunciation of its obligations if interest rates on its bonds would have remained at, say, 4 or even 5 percent? For a more amusing take on this watch Panos the Greek

Population growth is number one economic issue says Paul Farrell (Marketwatch) and we fully agree.

The problem with 'star' economists

Thanks to the weekly feature 'Lunch with the FT' we now know that Esther Duflo is 'petite' and about to become an American citizen (why is she renouncing her heritage?). God be thanked that the real 'stars' of economics never had to submit to the hagiographic treatment in a FT lunch session. The irony is that the 'star' professors that the 'elite' universities keep are beneficiaries of protectionism as they sit in a tenured position that protects them from the ravages of the economy that they purport to 'study'. Similarily, the 'elite' universities in the USA are part of the 1 per cent system where the rich donate to the same few universities that host their pampered and privileged offspring - thus aggravating and perpetuating a system that favors the few over the many. Maybe this 'star' economist should study this abuse and not wether or not the poor should pay for their mosquito nets or not.