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Deflationary QE

by afew 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.

Read more... (29 comments, 978 words in story)

Another modest proposal. LQD.

by melo Fri Jan 23rd, 2015 at 09:14:23 PM EST

What holes are there in this argument, oh mighty Eurotrib mages?

Beppe Grillo's Blog

"The fears relating to Quantitative Easing (QE) have turned out to be unfounded. Before Mario Draghi spoke, there were two thorny issues worrying the M5S.

THE CONSTRAINTS ON THE REAL ECONOMY
We are talking about a measure involving more than 1000 billion euro to be used for buying bonds to finance the public debt of European States. The problem is that, given that the ECB's mandate prevents it from directly financing states, all this new wave of liquidity will once more go to the banks, that are already stuffed full of State bonds. The hope is that they will reuse the money to loan more to families and to companies, in such a way that there'll be an increase in the level of inflation (- that has collapsed to a record low - far lower than the ECB's aim of of 2%), that will in turn stimulate consumption and investment.

(More below...)

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On the RhB 2: along the Inn river

by DoDo 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

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Time for the ECB Board to be sacked

by Frank Schnittger Fri Jan 16th, 2015 at 07:26:47 AM EST

With the Syriza movement led by Alexis Tsipras likely to win next weeks elections in Greece, the possibility of Greece being expelled from the Eurozone, at German insistence, raises its head. We must be clear that Greece does not stand alone in this conflict, and that the German dominated ECB also has some culpability in the continuing crisis. Unfortunately Ireland's national leaders have shown no interest in supporting Greece or any other Eurozone state in this crisis - preferring to gloat in Ireland's own relative success in exiting the bail-out and fearful of rocking the boat at the ECB.  

This cozy "national" consensus needs to be challenged. I have sent the following letter to the editors of Irish national newspapers:

Unlike the US Federal Reserve, the European Central Bank has one, and only one self imposed target by which it's performance can be judged: to keep inflation at or just below 2%.  It has failed miserably to achieve that target, with the result that those people and nations with large debts have seen their real debt burden increase.  

This suits net creditor nations like Germany, but is a disaster for almost everyone else, with deflation likely to lead to increased real indebtedness, recession and perhaps even depression in the rest of the Eurozone.

Lest anyone think this is an accident of history, it is an outcome advocated by some German economists and by many of the German dominated staff in the Frankfurt based ECB itself.  Essentially it is a case of the Eurozone being run by Germans in Germany's interest.

And yet no one calls for the resignation of the ECB Board for failing to achieve its one self-declared target, never mind achieving a broader set of economic targets including employment levels like the US Fed.  Our leaders seem to be afraid to criticize the ECB in case it might once again threaten to pull the plug on our banking system.

The ECB is the most undemocratic institution in the EU, with Ireland never even having sought representation at Executive Board level.  It is time that must change, and it is time our political leaders had the courage to hold our banking masters to account.  

The Eurozone must be run in the interests of all Eurozone members, and failing that we must consider acting in our own national interest and leave the Eurozone in concert with other Eurozone members whose economic needs are being ignored.

In further news, the ECB has refused to cooperate with the Irish Parliamentary inquiry into the Irish Banking Bail-out Fiasco which looks like costing Irish taxpayers something north of €40 Billion even if the Bank of Ireland and Allied Irish Bank end up refunding the taxpayer in full - claiming it is accountable only to the European Parliament. When was the last time the European Parliament ever exercised effective supervision over the ECB? Perhaps it is time for all of us to start lobbying our European Parliamentarians...

Comments >> (111 comments)

Intertribal Problems Stuck on Stupid

by gmoke Thu Jan 15th, 2015 at 11:17:47 PM EST

We are going into our fifth month of demonstrations and actions all over the USA about police violence and sanctioned summary judgment. Hearing, reading, seeing the news, it seems as if brutality, terror, and torture are breaking out worldwide, with beheadings and mass killings happening at, perhaps, a quickening rate. Violence meeting violence to make more violence, intertribal problems stuck on stupid, here and abroad.

Recently, I saw a DVD of "The Interrupters," (http://interrupters.kartemquin.com) on an open cart in the library and I took it home. It's a documentary about a group called Ceasefire which "interrupts" street violence between gangs and violent individuals in Chicago. CeaseFire's founder, Gary Slutkin, is an epidemiologist who believes that violence spreads like an infectious disease and uses a "medical" treatment: "go after the most infected, and stop the infection at its source," to stop it. One part of that treatment is the "Violence Interrupters" program, created by Tio Hardiman, a group of street-credible, mostly former offenders who defuse conflict before it becomes violence. They can speak from experience about consequences and how "no matter what the additional violence is not going to be helpful."

About the same time, a friend wrote me about a radio interview (http://www.ttbook.org/book/reforming-lapd) with Constance Rice, a civil rights attorney and cousin to the former Secretary of State, who has trained 50 LA police officers over the last five years in "public trust policing" at Nickerson Gardens, an LA public housing project.

I picked up "The Interrupters" because I was wondering why we didn't hear about this group in relation to what has been happening with the deaths of Michael Brown, Eric Garner, Tamar Rice and others. I listened to the interview with Constance Rice for the same reason. Why haven't I seen Ms Rice, Gary Slutkin, or Tio Hardiman on my TV screen and all over "social media"? They are doing some things which have proven to work in their own communities. How much of what they've done in Chicago and LA can apply to NYC and Boston and other places all around the world? Can they teach us all how to interrupt our own violence and to build a system of public trust policing? As Tio Hardiman says in the DVD: "We've been taught violence. Violence is learned behavior." Can these people and the others like them teach us how to unlearn our violent behavior?

We'll never know unless their voices are part of the conversation.

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Piketty: Amnesia, Selfishness

by afew 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.

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Reality According to the OBR

by rifek Mon Jan 5th, 2015 at 04:13:22 AM EST

I have finally gotten around to reading the Autumn Statement from the UK's Office of Budget Responsibility.  You can download the whole smash here, but for brevity's sake, I'll stick to the Overview and Executive Summary.  I'll say up front that the Statement is a tour de force of alternately covering and kissing butt, but I believe the real importance of the Statement is the insight it provides to the "reality" the OBR is expected to manufacture to support the Coalition Government's policies.

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On the Rhaetian Railway 1: along the Anterior Rhine

by DoDo 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

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Oil Market: A Picture Tells A Thousand Words

by ChrisCook Thu Jan 1st, 2015 at 07:56:52 PM EST

I recently posted the second of two stories in 'Tehran Times' on the subject of the recent collapse in oil market prices, which I have been publicly forecasting consistently for over three years, initially at a major conference in Tehran in late 2011, and most recently on November 2nd when the oil price was still over $80/barrel.

Since it seems to have disappeared, I thought I might republish it at European Tribune.

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Exit strategies

by melo Wed Dec 31st, 2014 at 08:04:33 AM EST

There is some technical stuff here beyond my parsing ability, so I offer this LQD as food for discussion.

Happy New Economic Year to everyone, maybe this coming year we can get the Euro to play nice in the face of so many voters who have lost faith in the whole European Project because of continuing bad faith exhibited by the Austerity-merchants of Death aka the ECB and the Banksters.

Beppe Grillo's Blog



After a third failed attempt to elect a new State President, Greece is now required to hold a general election on 25 January. The Greek share market responded by dropping 20% of its value in the past two weeks and the yield of their ten-year public bonds shot up to 10%, the highest level seen in the past two years.

Media terrorism
What better occasion for our regime media to serve up some terrorism "a la matriciana" against Italy's exit from the Euro. After all, we too have to elect a new State President under conditions that are anything but simple.

More below...

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So economics teaching isn't the problem?

by Metatone 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:

Beginning:

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

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LQD: New election in Greece

by rz Mon Dec 29th, 2014 at 06:15:18 AM EST

I have not much to say here. But just now the election of the new president of Greece in the Greek parliament failed for the third time. This means there will be a snap election.

From Reuters

Greek lawmakers failed to elect a new president in a final round of voting on Monday, leaving the country facing an early election that could derail the international bailout program it needs to keep paying its bills.

Can Syzra win? Should it win?

I do not want to bore people again with stuff about the ECB, but I found this quite weird (from an article in the Telegraph from shortly before the vote in the parliament)

Gikas Hardouvelis, the Greek finance minister, warned on Sunday that the election of an anti-austerity party could lead to punitive European Central Bank economic sanctions against Greece.

"The ECB holds the key," he told Greece's To Vima newspaper. "This key can easily and abruptly turn off bank funding and strangle the Greek economy in a split second."

Has it come to this? It is basically matter of fact that the ECB can impose its political will?

Comments >> (56 comments)

No new elections in Sweden

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

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How old are we?

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

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Renewals

by DoDo 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

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The dirty f**king progressive hippies were right about the Wall Street suit and tie generation

by Democrats Ramshield Sat Dec 20th, 2014 at 07:13:37 PM EST

(Cross posted by author from the Daily Kos.)

(Written by an American expat living in the European Union)

Here's the answer that the American corporatist oligarchs in your face wealth machine wants to provide entertainment services for desperate, poor working class people to injure themselves by throwing themselves at their glass ceiling in futile attempts to shatter their glass and take the loot home which is they know impossible. So what winds up happening is these poor desperate people throwing themselves against their glass ceiling winds up creating advertising revenue along with entertainment for  the corporatist banksters looking to profit from more audacious human misery and desperation. In any case they're absolutely going to be insured for any losses.  

The bottom line is their business risks are socialized, and their profits are privatized. A third of all homes in America are in under water mortgages to the point of $1.2 trillion, and we have a student loan bubble building of approx another $1.2 trillion. So you see the Wall Street bankster suit and tie generation have put us in deep trouble. And now working class people when using public transport are being taunted by millions of dollars in a bullet proof impregnable glass case on public display.

So here are people who use public transport, not all but many of whom can't afford a car. At least some of whom are homeless and in pain, because they can't afford medical care. You know what the Wall Street corporatist suit and tie generation pigs who in 2008 nearly collapsed the American economy and therewith the world economy, because they stole more money than in all of the bank robberies in the history of the United States put together and now put millions of dollars of (guess what) your money in glass cases, taunting desperate people to smash up against it. So as to provide them with advertising, infotainment for their product. The reason I say it's your money and not their money they're putting on display is because they stole it from you in the oligarch's wage slave economy and if too much of it gets stolen as they're too big to fail, they're going to force you through the best government money can buy to bail them out yet once again. They expect to shove it down our throats again whether we like it or not. They don't care how many families they will destroy in the process, because they don't respect our humanity. To them we're just useful fools without human dignity.

Youtube link (The hippies were right)

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Solar Microgrids and Water Biomonitoring for Christmas

by gmoke Wed Dec 17th, 2014 at 11:34:19 PM EST

Solar Microgrids in Tanzania:
Maasai Stoves & Solar Project
International Collaborative
81 Kirkland Street, Unit 2, Cambridge, MA 02138

https://www.facebook.com/maasaistovesandsolarproject
http://internationalcollaborative.org/

Water biomonitoring in Costa Rica:
ANAI, Inc.,
1120 Meadows Road, Franklin, North Carolina 28734

http://www.anaicr.org

More about these programs below.

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Electricity prices in Europe

by ReGiNuss Wed Dec 17th, 2014 at 03:22:30 PM EST

Europe's energy sector is in the midst of a major transformation. Its gas and electricity sectors are moving from public monopolies into competitive private companies in liberalised markets and electricity generation is being decarbonised, with strong growth of wind and solar power in particular. The cost of energy is rising, creating concern about the effect on vulnerable households, and prompting calls for government intervention. As energy prices increase across the European Union (EU), consumers in some member states are paying considerably more for their energy than UK customers, according to a European Commission study. Statistic 2014: Electricity prices by type of user Europe cannot be treated as a single entity, for there are massive differences between individual countries in what households pay for their power. Government taxes and subsidies have attracted controversy for driving up electricity and gas bills, in the UK and elsewhere in Europe.

Comments >> (2 comments)

Germany eliminated tuition, while Americans are drowning in $1.2 trillion student loan debt (Update)

by Democrats Ramshield Tue Dec 16th, 2014 at 06:34:12 AM EST

(Cross posted by author from the Daily Kos)

Written by an American MBA expat living in Germany.
I was privileged with the support of the Daily Kos community to have ordinarily publish this diary which went onto viral status, having received over 30,000 Facebook shares and 588 Tweets.

I have since received from members of the Daily Kos community large substantial numbers of requests to update and republish the diary at DKOS as the original diary can no longer be commented on and participated in. Therefore I republished this diary yesterday where in response to requests from readers for updated material, I unpublished this diary and am republishing it today substantially in rewritten form as a service to the community.  

I am therefore impressed this is an important discussion that deserves our attention for a serious subject matter. Therefore as my reader, I would like to invite you to give this indepth report in the matter of this diary a close read. I'd also like to thank Meteor Blades and all of the original recommenders of that diary who are too numerous to repeat here. The recent events in Ferguson, MO and other such senseless tragedies perpetrated by the racist American police state have brought the crisis of our democracy into the international media spotlight.  

Read more... (8 comments, 6318 words in story)

Oil Prices Drop as Market Collapses

by ARGeezer 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

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News and Views

 29 January 2015

by dvx - Jan 28, 48 comments

Your take on today's news media

 28 January 2015

by afew - Jan 27, 46 comments

Your take on today's news media

 The Week's Open Thread

by afew - Jan 26, 15 comments

26 Jan - 1 Feb

 This Week - Open Thread

by afew - Jan 19, 46 comments

19-25 January

Occasional Series
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Top Diaries

Deflationary QE

by afew - Jan 28
29 comments

Another modest proposal. LQD.

by melo - Jan 23
4 comments

On the RhB 2: along the Inn river

by DoDo - Jan 20
4 comments

Piketty: Amnesia, Selfishness

by afew - Jan 5
48 comments