listen to ‘Joseph Stiglitz: "The prospects of Europe recovering through austerity are nil" - The World at One, BBC Radio 4’ on Audioboo
"The prospects of Europe recovering through austerity are nil"
"I remember 10 years ago... [they were saying that] with the Euro by 2010 we would have full employment"
100 billion is being put up for the Spanish banking system. 20% has to come from Italy. The Italian banks lend money to Spanish banks at 3% interest, but they have to borrow it from the markets at 7%. Genius! [Paraphrase].
"We the undersigned call for an independent, judicial public enquiry into fraud, wrongdoing and ethics of British banks, their management and their staff, and the role of the British Bankers Association. The terms of reference of this inquiry should also include the manipulation of interest rates on about £225 trillion of assets. The inquiry must have full powers to compel witnesses to appear on oath, and to obtain all forms of evidence."
"The government's new housing policy will collapse sooner or later like a fraudulent investment strategy"
Yesterday the government unveiled its housing strategy to "get the housing market moving again". The centrepiece was a mortgage indemnity scheme to help first-time buyers to get on the property ladder. But this policy is a disastrous waste of taxpayers' money that will satisfy nobody.
"The UK has fallen back into recession as the economy shrank by 0.2% between January and March.
A sharp fall in construction output was behind the surprise contraction, the Office for National Statistics said.
The Chancellor, George Osborne, said the figures were "disappointing" and blamed both the European crisis and Britain's spending in the 'good years'." -- BBC Interview.
What do these names all have in common?
Dean Baker, Wynne Godley, Michael Hudson, Steve Keen, Paul Krugman,
Jakob Brøchner Madsen, Ann Pettifor, Kurt Richebächer, Nouriel Roubini,
Robert Shiller, George Soros, Joseph Stiglitz.
“Our conclusion is that UK residential property appears unattractive as an investment. Prices appear to have been bid up by investors seeking ‘safe havens’ to preserve their wealth given record low interest rates. However, the UK residential property market is far from risk-free.” --Coutts [The Queen's Bank]. via HousePriceCrash.There's a fundamental problem when investors are buying houses to rent out, but in doing so the force the prices of houses up. This makes housing less affordable, forcing more people to rent. Since prices are high, rents are high. But prices are only high because of speculators... and so on.
At the recent pace of debt reduction, we calculate that the ratio of UK household debt to disposable income would not return to its pre-bubble trend for up to a decade. Overall, the United Kingdom needs to steer a difficult course: reduce government deficits and encourage household debt reduction—without limiting GDP growth. The United Kingdom will need renewed investment by nonfinancial businesses to achieve this. (p.6)The report is based on a study of a number of historical events comparing "deleveraging" events - where leverage is the ratio of debt to assets.
"Human beings were alone in the universe, they must free themselves of all forms of political and religious control and live their lives guided by their selfish desires. If they did this they would become heroic figures."In her own words
"If man want to live on earth his highest purpose is the achievement of his own happiness. He must not force other people, not accept their right to force him. Each man must live as an end in himself and follow his own rational self interest."
"David Cameron has denied the UK is in a 1930s-style slump, but said more will be done to get the economy moving."The question is, why is Cameron being such a Pollyanna? It may be that he is worried about confidence levels as the country palpably fails to come out of "recession" five years down the track, and Europe teeters on the brink.
"Frankly Britain needs to roll up its sleeves and do everything we can to get our economy moving."
"According to the U.S. National Bureau of Economic Research, the “Great Recession”is now two years behind us, but the recovery that normally follows a recession has not occurred. While growth did rise for a while, it has been anaemic compared to the norm after a recession, and it is already trending down..."
"The only sure road to recovery is debt abolition—but that will require defeating the political power of the finance sector, and ending the influence of neoclassical economists on economic policy. That day is still a long way off."
"We need to say to banks in no uncertain terms: you may lend for productive purpose, but you may not lend for speculative purposes. You can't lend to a gambler, but you can lend to someone who's going to do something [in the real economy and create value, such as making goods & services"
But Mr Barroso mounted a strong defence of the EU's handling of the crisis so far.220% of GDP they're in the same position as us. The private sector is over-stuffed with debt, and giving banks more money is a joke. The Spanish banks will more or less have to do what our British banks are doing: sit on the money, or lend tiny amounts at exorbitant interest rates. And pay big executive salaries and bonuses.
"Frankly, we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy," he told reporters.
Mr Barroso said the global crisis had not originated in Europe.
"This crisis was originated in North America, and many of our financial sectors were contaminated by, how can I put it, unorthodox practices from some sectors of the financial market."
"Fiscal profligacy did not cause the sovereign-debt crisis engulfing Europe, and fiscal austerity will not solve it. On the contrary, such austerity has aggravated the crisis and now threatens to bring down the euro and throw the global economy into another tailspin.Laura Tyson
In 2007, Spain and Ireland were models of fiscal rectitude, with far lower debt-to-GDP ratios than Germany had. Investors were not worried about default risk on Spanish or Irish sovereign debt, or about Italy's chronically large sovereign debt. Indeed, Italy boasted the lowest deficit-to-GDP ratio in the eurozone, and the Italian government had no problem refinancing at attractive interest rates. Even Greece, despite its rapidly eroding competitiveness and increasingly unsustainable fiscal path, could attract the capital that it needed.
Deluded by the convergence of bond yields that followed the euro's launch, investors fed a decade-long private-sector credit boom in Europe's less-developed periphery countries, and failed to recognise real-estate bubbles in Spain and Ireland, and Greece's slide into insolvency. When growth slowed sharply and credit flows collapsed in the wake of the Great Recession, budget revenues plummeted, governments were forced to socialise private-sector liabilities, and fiscal deficits and debt soared."
"Europe should learn from history. But it needs to learn fast. There might be no recovery unless debts are reduced to manageable proportions. That is what ended the Great Depression in Europe in the 1930s, and that is what in all likelihood is needed again. Professor Sinn is right to resolutely ask for action on this, even if his take on the Marshall Plan is wrong."
Albrecht Ritschl. The Economist 15.6.2012