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I don't want the central bank or financial regulator to be doing macroeconomic modelling.

In the case of Ireland and Greece, were capable macro modeling of the sort I suggested performed on the "resolutions" imposed by the ECB and IMF in those cases, it would be clear what an ineffectual disaster the policies would be and that the chief result will be gratuitous damage to the societies involved via a debt-deflation death spiral. Use of such models would only strengthen the hand of the IMF, who, interestingly, seems to have been the voice of moderation in these cases, not having banks for which it is directly responsible which might take a haircut on bonds they hold.

One of the advantages of having useless theories and models is that it facilitates an Alice in Wonderland situation in which everything means exactly what the relevant authority says it means.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Dec 4th, 2010 at 12:41:44 PM EST
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