Wed Jan 28th, 2015 at 02:02:50 AM EST
Along with Time for the ECB Board to be sacked and Another modest proposal, here's another take on what the European Central Bank is about to do.
In an article on Pieria, Frances Coppola looks at the reasons why the Swiss National Bank abandoned its euro floor, a knock-on effect of the ECB's QE announcement. She goes on to imagine that the SNB's floor was still in place, alongside the euro pegs of a number of other European countries outside the Eurozone. The ECB is about to create more than a trillion euros. What happens?
Lets All Play QE
It would create a flow system. I've talked before about leveraging flow systems in relation to bank lending and financial crises. But this is different. It's a deflationary flow system. This is how it works.
In the centre, the ECB pumps out Euros. Some of those Euros may stay in the Eurozone (we hope), increasing economic activity there. But as the Eurozone already has a trade surplus, so is a capital exporter, most will flow out to the Eurozone's trading partners, putting upwards pressure on their currencies. Those partners that have pegs to the Euro will quickly be forced to respond with monetary easing of their own in order to hold their pegs. So as the ECB pumps out Euros, ERM II central banks (and others) mop them up. The ECB exports deflation to its currency partners: those partners export it back to the Eurozone. The only inflation to be seen anywhere will be in central bank balance sheets. This is what the Swiss, who have one of the very few privately-owned central banks, fear.
Sun Jan 25th, 2015 at 01:00:47 PM EST
Several exit polls suggest that Syriza has won a clear victory - possibly with more than 40% of the vote - and could well have a majority, with up to 155 seats. [UPDATE 26/01/2015 7:49] With more than three-quarters of the vote counted, Syriza is projected at 149 seats (out of 300).
Hope has won
Tue Jan 20th, 2015 at 03:20:45 AM EST
In this second instalment of my series on the state railway of the Swiss canton of Graubünden, the metre-gauge Rhaetian Railway (RhB), I introduce the Engadin Line, which runs along the upper valley of the Inn river (in the local Romansh language: En). Although less well-known to foreign tourists than the rest of the RhB, it runs in scenic landscape with castles, and experienced a traffic surge in recent years thanks to a tunnel that was a mega-project by narrow-gauge standards. The vegetation is rather different from the upper Rhine valley: the dominant tree is the European Larch, so I scheduled my visit there for the Golden Autumn in October. I had no luck with the Sun, though.
Receding up-valley, RhB Ge 4/4 II No. 632 "Zizers" is about to pass station Cinuos-chel-Breil with a south-bound limited-stop RegionalExpress (RE) push-pull train
Mon Jan 12th, 2015 at 12:51:23 PM EST
This from Wolfgang Münchau in the Financial Times: Eurozone must act before deflation grips (January 11, 2015)
A slightly more realistic possibility would be a combination of QE, an external stimulus from oil and a fiscal boost. The eurozone’s fiscal rules leave little room for an increase in ordinary spending, or a reduction in taxes. But the fiscal rules are sufficiently flexible to allow countries to deal with emergencies. After last week’s terror attacks in Paris, it would be both feasible and appropriate for President François Hollande of France and other European leaders to invoke exceptional circumstances for a fiscal boost related to spending on internal security — without offsetting savings or tax increases. If terrorism does not qualify, what else?
And thus the tragedy of the 1930s repeats itself as a farce.
Sun Jan 11th, 2015 at 04:34:04 AM EST
Among the seventeen victims of the three jihadists who staged kalashnikov attacks in Paris this week were a French Arab Muslim cop, killed because he was in police uniform in the street, four customers in a kosher supermarket, killed because they were Jews, a young West Indian woman who'd left Martinique for a municipal police internship, killed because she was in uniform dealing with a street accident, and a considerable number of journalists and cartoonists, killed for insisting on their right to satirise and criticise.
Public gatherings and marches have been held all over France, and a major march will take place today in Paris in the company of a large selection of heads of state and the world's high and mighty.
I don't have any commentary to offer right now. On this blog, we hugely debated many issues surrounding the publication of the caricatures of Mahomet, back in 2006. We went at it hammer and tongs, and succeeded only in ending up angry and in disagreement. Those who wish to, might like to try to establish a list of points on which we agree. Since the aim of targeted terror is to introduce a front of conflict within Western™ societies, perhaps the best we can do right now is consolidate the essentials on which we are united.
Use as a Charlie open thread.
Wed Jan 7th, 2015 at 08:07:17 AM EST
Two or perhaps three attackers armed with Kalashnikovs entered the Paris premises of French satirical weekly Charlie Hebdo this morning during the weekly conference, when all the cartoonists and writers were present. At the moment twelve people are known to have died, ten from Charlie Hebdo and two police officers.
Live blog in English at The Guardian.
Live blog in French at Libé
Use this as an open thread.
Update [2015-1-8 7:30:7 by afew][Further update 9/1/2015 7:44]: beneath the fold
Mon Jan 5th, 2015 at 08:42:46 AM EST
Thomas Piketty is in the news for having refused the French decoration of Chevalier de la Légion d'honneur. Or, in other news, for a conversation with Bill Gates.
He's also a columnist at Libération. His latest offering starts by taking a swing at Juncker for his hypocrisy on the Luxleaks scandal, and goes on:
2015 : quels chocs pour faire bouger l'Europe ? - Libération
il est temps de reconnaître que ce sont les institutions européennes elles-mêmes qui sont en cause, et que seule une refondation démocratique de l'Europe permettrait de mener des politiques de progrès social.
it's time to recognize that the European institutions themselves are the problem, and that only a democratic refoundation of Europe would enable policies of social progress.
What gets in the way? Piketty singles out Germany and France.
Fri Jan 2nd, 2015 at 05:25:39 AM EST
Even among the many magnificent metre-gauge mountain railways of Switzerland, the Rhaetian Railway (Rhätische Bahn, RhB) is a special spectacle: a network spanning the upper valleys of three major rivers, climbing passes with innumerable bridges, tunnels, spiral and horseshoe curves, instead of rack sections. No wonder that riding the RhB is the one trip everyone with access to railway employee free tickets is advised to do. I had an inkling that I might soon lose that privilege in yet another company restructuring (though I didn't think I might lose my job along with it), so I "did the RhB" this year.
In one one-week holiday each in July and October, I travelled pretty much the entire network. Now that I had time to go through my photos (a bit over 1,850 of them), I start a mini-series portraying the RhB lines, roughly in the order of increasing spectacularity. In this first part, I show the line following the Anterior Rhine.
RhB Ge 4/4 II No. 613 "Domat/Ems" with an eastbound Glacier Express is about to reach Versam-Safien station in the Rhine Canyon
Wed Dec 31st, 2014 at 07:23:09 AM EST
There's yet another "status quo in economic education is basically fine" piece penned by a fairly eminent educator:
In the interests of brevity (it's a long piece), I'll only quote the beginning and the end:
Thoughts on "Teaching Economics After the Crash" -- Medium
This is a long post on the state of economics and how it is taught to undergraduates. The world is not crying out for another such discussion, so blame Tony Yates, via whom I ended up listening to Aditya Chakrabortty's documentary "Teaching Economics After the Crash" for BBC Radio 4.
Like Tony, I viewed the programme as a hopelessly one-sided critique of the economics profession. Still, it was useful in the sense that it packed all the regular criticisms about economics into one short piece. I agree with most of what Tony wrote but I want to take a different approach because I think it's worth engaging a bit more positively with the criticisms raised.
front-paged by afew
by A swedish kind of death
Sat Dec 27th, 2014 at 01:08:57 PM EST
The new elections in Sweden which were planned for March have been cancelled. So says the radio and all the papers.
Promoted by DoDo
by das monde
Sat Dec 27th, 2014 at 02:42:14 AM EST
As we got a little interested in the age distribution of readers of this blog, I follow the Swedish royal suggestion to bring up a poll. Please contribute in making this survey representative.
And let's discuss, whether we should take on a mission to attract a batch of younger readers, or expand all age groups.
Let's have more respondents - afew
Sun Dec 21st, 2014 at 11:00:51 AM EST
In this first train blog in a long time, I bring two disparate stories only connected by the theme of renewal and their closeness to me.
First, after more than two decades, there is a change at the helm of international trains between Prague and Budapest. Both the old and the new loco type was noteworthy for matching or exceeding the performance of contemporary Western products.
Czech Railways (ČD) 380 020 with an EC train to Budapest runs along the Danube on its last kilometres in Slovakia
Mon Dec 15th, 2014 at 01:51:18 AM EST
Will the Oil Collapse Kill Energy Junk Bonds? (Yves Smith on Illari's post from Automatic Earth)
(The PBS News Hour Friday, December 12, noted that US oil prices dropped below $60/bbl Friday, causing the lagest drop in US stock markets in three years.)
Some context, (via Ed Harrison):
front-paged by afew
Sun Nov 30th, 2014 at 03:50:15 PM EST
I wrote a quite long comment in Migerus Diary and I thought I should extend it even more and make a diary out of it.
In the comment section melo started a discussion about the Euro, in this case Germany leaving the Euro.
I posed the question to all participation in this thread
Would you recommend leaving the Euro? And: Would you vote for a party which recommends leaving the Euro?
The answers to this question I got could be divided into two groups:
Answer a) Cyrille, Migeru, afew, (maybe melo):
We need a credible threat to leave the Euro, to change the European institutional setup. The exact nature of the changes has not been spelled out, but from our discussion on this blog it is quite clear that what would be needed is, i) changes to the 'Stability and Growth Pact', ii) The possibility for the ECB to directly finance gouvernments. iii) maybe a higher inflation target.
Migeru later specified:
Unless and until Article 123 of the Treaty on the Functioning of the European Union (Article 104 of Maastricht Treaty) is repealed, all the rest is cosmetic.
Which is basically my point ii). I completely agree that this is the most crucial point.
front-paged by afew
Sat Nov 29th, 2014 at 12:16:24 PM EST
Earlier today in the European Parliament, Jean Claude-Juncker introduced his much-touted 300bn investment plan with these words:
I often hear that we need 'fresh' money. What I believe we really need is a fresh start and fresh investment. Others say we need more debt. We do not. National budgets are already stretched. The EU operates on balanced budgets and the abundant liquidity can allow Europe to grow without creating new debt. We will not betray our children and grandchildren and write more checks that they will ultimately have to pay off. We will not betray the rules of the Stability and Growth Pact that we have agreed jointly - this is a matter of credibility.
cross-posted on The Court Astrologer
Wed Nov 26th, 2014 at 06:06:10 AM EST
Given that there's no way that we're going to get our act together and get emissions under control before we completely screw up climate for ourselves, we're going to have to think about what we can do to ameliorate things.
Bad news on that:
Prof Piers Forster of Leeds University said: "We have found that between 1.2 and 4.1 billion people could be adversely affected by changes in rainfall patterns.
"The most striking example of a downside would be the complete drying-out of the Sahel region of Africa - that would be very difficult to adapt to for those substantial populations - and that happens across all the scenarios."
Despite the risk of catastrophic side-effects from geo-engineering, the study authors believe that research should continue just in case runaway warming leaves no other options.
Prof Forster said: "If we were in a really desperate situation, trying to cool the temps for a 10-20 year time period, there could be some merit in those circumstances in introducing solar radiation management to give you a 10-20 year time period."(BBC)
And it would disrupt the Indian monsoons.
Fun, fun, fun.
Mon Nov 24th, 2014 at 05:22:27 AM EST
Via Paul Krugman, I see that Peter Schiff had this to say:
"The truth is that high levels of unemployment are historically correlated with higher inflation and low levels of unemployment with lower inflation. That is because an economy that more fully utilizes labor resources is more productive. More production brings down prices."
What??? Leave aside that pretty much everything in the Austrian worldview has been thoroughly refuted by evidence over the past 7 years -actually they will force you to leave it aside as they claim that Austrian economics is pure logic that is not refutable by evidence (handy, isn't it). Just look at the statement and... what???
Fri Nov 7th, 2014 at 01:42:54 AM EST
Tageszeitung has an interview with Joschka Fischer this [Nov 1st..Ed] weekend: ,,Der erste Schritt ist eine Vision" (the first step is a vision, 31 October 2014) on the occasion of his new book advocating a United States of Europe. To the charge that he's being unrealistic in that, he answers with
Woran die EU gegenwärtig krankt, sieht man in allen drei großen aktuellen Krisen: Sowohl in den Sicherheitskrisen in Osteuropa, im Nahen und Mittleren Osten als auch in der Finanzkrise fehlt Europa die politische Kraft, der feste politische Rahmen. Die EU als Staatenverbund reicht dafür nicht mehr aus! Und wie immer in Europa ist der erste Schritt der Realpolitik eine Vision. Wenn ich Frau Merkel etwas vorwerfen muss, ist das ihre visionslose Kleine-Schritte-Politik. Ich habe nichts gegen kleine Schritte, im Gegenteil. Aber man muss wissen, wo das Ziel ist.
We see the present sickness of the EU in all three major current crises: in the security crises in Eastern Europe and the Middle East as well as in the financial crisis, Europe lacks political power or a strong political framework. The EU as a union of states no longer suffices! And as always in Europe, the first step of Realpolitik is a vision. If I have to accuse Mrs. Merkel of something it is her visionless baby-step politics. I have nothing against baby steps, on the contrary. But you have to know what the goal is.
More below the fold
promoted by afew
Fri Oct 31st, 2014 at 09:15:10 AM EST
Anatole Kaletsky blogs on Reuters:
The takeaway from six years of economic troubles? Keynes was right.
Now that the Federal Reserve has brought its program of quantitative easing to a successful conclusion, while the French and German governments have ended their shadow-boxing over European budget "rules," macroeconomic policy all over the world is entering a period of unusual stability and predictability. Rightly or wrongly, the main advanced economies have reached a settled view on their economic policy choices and are very unlikely to change these in the year or two ahead, whether they succeed or fail. It therefore seems appropriate to consider what we can learn from all the policy experiments conducted around the world since the 2008 crisis.
The main lesson is that government decisions on taxes and public spending have turned out to be more important as drivers of economic activity than the monetary experiments with zero interest rates and quantitative easing that have dominated media and market attention. Fiscal decisions on budget deficits, taxes and public spending have mostly been debated as if they were largely political choices, with much less influence than monetary policy on macroeconomic outcomes such as inflation, growth and employment. Yet the reality has turned out to be the opposite.
Read and discuss.
Mon Oct 20th, 2014 at 08:46:21 AM EST
Color the staff at The Economist confused. Writing on the current situation in Catalonia, they note:
A three-way game of brinkmanship between Mr Rajoy, Mr Mas and the separatist Catalan Republican Left (ERC) party that props up his government in Catalonia is creating uncertainty. Mr Rajoy has used the constitutional court to block the referendum, though it may take another five months to rule definitively that it is illegal. He offers little else beyond a readiness to talk. ERC proposes civil disobedience, an illegal referendum and, eventually, a unilateral declaration of independence. If it cannot have these, it wants an election that it is likely to win.
While the results are uncertain, the probability of a snap election is increasing daily. As is the collapse of CiU dominance of the Catalan regional politics, and the emergence of a form of polarized pluralism in the region as the political center flattens out, and the fringes rise. The term postmodern 1930s certainly springs to mind. Stage set.