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, explain how saying neoliberal pressure caused governments to borrow more is,

That isn't in doubt. But he also claimed that borrowing more gives markets or perhaps bond markets power. Power not to influence bond prices or yields but policy. And that this power is a new power and didn't exist prior to the turn to neoliberalism.

My argument, resting on empirical and historical evidence, is that the power of the "markets" is vastly overestimated. If governments are depended on bond markets, investors are dependent on public bonds.

Is e. g. the US federal government dependent on bond markets? A government that borrows 10% of gdp in a year obviously is. And what did "Mr. Market" or the "bond market vigilantes" do with this awesome power?

Accept more and more laughable yields.

One reason is the mutual dependence. Say insurers don't have much choice.    

The other perhaps more important reason is that there is no "market" "mister market" "vigilantes". Market participants want

  1. security

  2. yields

And the end yields beat security in 9 out of ten cases.

Now, as individuals these investors and their agents are rabid neolibs, if not austrians or whatnot. But as market participants one basis point beats that all.  

by IM on Mon Aug 25th, 2014 at 06:26:22 AM EST
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