The mainstream shifts to the heterodox side
RWER Blog [a] (commentator: merijnknibbe)
- In a Voxeu article [b] Danielsson, Valenzuela and Zer argue that Minsky was (and is) right.
“ This column presents the first empirical results that find a strong validation of Minsky’s hypothesis – obtained from 200 years of historical cross-sectional data – that low volatility increases the likelihood of a future financial crisis by increasing risk-taking. “
- Peter Praet, chief economist of the ECB, argues that the Euro was a disaster (he doesn’t state this, but his slides do). A significant detail: Praet uses not just the normal but also the broad concept of unemployment (which I stressed again and again on this blog and which still does not get enough attention in Europe), very encouraging. Kudo’s to the economic statisticians, which, led by the ILO, developed and measured this variable.
- Claudio Borio (chief economist of the BIS), Leonardo Gambacorta and Boris Hofmann argue that low interest rates are, net, bad for bank profits, which
adds more than a little credibility to Paul Krugman‘s recent statements that the ‘raise USA rates now’ squad is led by financial interests.
- Paul Krugman also links to a speech by Jason Furman, chairman of the council of economic advisors, which shows that it has become possible to mention the ‘accelerator’ (the idea that rising government or consumer expenditure during a crisis might induce an increase in investments) again.
- Aside: Ekhatimerini has an article which shows that the ECB can
(a) effectively rule Greek banks, which means that these should in essence be understood as owned by the Troika, and (b) even seems to be able to prevent these banks from paying their creditors. I’m not sure if this includes depositors.