Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.
The tag 'Jens Weidmann' is associated with 9 posts.

The New World Ordoliberalism, Part 7: To QE, or Not to QE, That is the Ominous Question

As the European Central Bank (ECB) continues to wrestle with the decision of when and how quickly to wind down its quantitative easing (QE) program while inflation remains stubbornly below the 2 percent target and likely to stay well below 2 percent for the foreseeable future, it’s worth noting that there’s a new nightmare to add to the equation: The euro has surged in value this year, a move that not only depresses exports in recovery economies like Spain and Portugal but also depresses inflation. And one of the things holding down the value of the euro is the ECB’s QE program. So if the ECB tapers off the QE too early and quickly it’s going to make an overly-strong euro even stronger while dragging inflation even lower, potentially derailing fragile recoveries in the austerity-inflicted member states. And that means not sending the wrong signals is a key goal of the ECB is things are going to go smoothly. Guess which signals are being sent.


The New World Ordoliberalism Part 6: The QE Taper Caper and the Portuguese Squeeze

In this chapter of our exploration of what’s wrong with the eurozone we’re going to take a look at the evolving nature of the European Central Bank’s (ECB’s) quantitative easing (QE) program. Specifically, how the QE program was facing a set of obstacles that was going to require some tweaking to the program and how the solution to the obstacle was to basically choose the tweaks that harmed the weak, in particular Portugal. In favor of Germany, of course. Keep in mind that Portugal recently formed a left-wing anti-austerity government and has done relatively economically well since coming into power . Also keep in mind that Portugal is one of the few eurozone nations not facing a rising far-right “populist” movement as a response to its harsh austerity program. So you might say the timing is “right” for some preferential treatment of Portugal. Preferentially bad treatment.


Krugmenistan vs the Permahawks

Lift Off! That was the announcement by the Federal Reserve this week when the world’s biggest and most influential central bank started the long awaited raising of its benchmark short-term rate a quarter point from near-zero levels, marking the first time the Fed has raised rates since 2006. It was big news, except this rate hike was telegraphed for quite a while now and virtually everyone was expecting the Fed to do exactly what it did, so it’s not as big as it could have been. If the Fed had decided not to raise rates, despite all the telegraphing, that probably would have been a bigger story. But would it have been a bad story if the Fed decided to keep rates at their current near-zero levels? There’s a big debate in the economic community over that. And it’s a debate that pits prudent economists with excellent track-records like Paul Krugman, someone who opposed the Fed’s December “lift off” decision, against the broad array of “permahawks”. But it’s not just the question with respect to Fed. The European Central Bank made a policy announcement this month too regarding its stimulus measure and it was indeed rather surprising. And as we’re also going to see in this post, it was surprising in the way that just might have done serious damage to not just the credibility of ECB President Mario Draghi but the ECB itself. Or at least credibility in the ECB’s commitment to its single mandate of keeping inflation hovering around 2 percent.

To placate permahawks (to maintain credibility) or not placate the permahawks (to maintain credibility)? That is the question. Or at least one of the questions central banks face. Unfortunately.


Greek Privatization Proceeds for Anti-Poverty Policies? Probably Not, But We’ll See

With negotiations between Greece and the troika over how to resolve the latest austerity-impasse still ongoing, Greece make an intriguing offer: Continue with the privatization of state assets that the troika demands, use the proceeds on Greece’s humanitarian crises instead of immediately paying back Greece’s creditors. And while the troika has yet to formally rule out Greece’s proposal, European Commission president Jean-Claude Juncker made an uncharacteristic offer last week of 2 billion euros to “support efforts to create growth and social cohesion in Greece”. Considering virtually all past attitudes by the troika regarding Greece’s “growth and social cohesion”. So by wrapping its humanitarian aid proposal within a privatization mandate Greece did the seemingly impossible: the troika’s position on Greece is slightly less crazy than before. That almost never happens. And still probably isn’t happening.


The New World Ordoliberalism Part 5: The TLTRO and Waiting for Godot. And Sanity.

With European Union continuing its slow steady fall into deflation, the question of “what’s to be done?” has becoming a permanent fixture for European policy-makers. But for the eurozone, with it’s shared monetary system, the question is a much more complicated “what should we all be doing together?”. The answer to that latter question, unfortunately, has consistently been “not enough”, despite prior promises.

Still, the ECB hasn’t given up entirely in its attempts to reflate the eurozone. Back in June, the ECB decided to inject another 400 billion euros into the eurozone banking system in a two-phase loan program. And as we’ll see below, in both phases the eurozone banks wanted far less than what was offered while continuing to pay back their previous loans. In other words, while the ECB has been trying the expand the monetary base in the eurozone’s financial markets that monetary base has continued to shrink. As the excerpt below puts it, it’s like ‘Waiting for Godot‘. And as we’ll see at the end, it really IS like Waiting for Godot, theatrics and all.


The New World Ordoliberalism Part 4: Meet the New Plan. Same as the Old Plan. Deregulated.

There have been quite a few developments in the eurozone recently with major possible policy changes announced in recent weeks. Things like buying bonds to shore up markets and stimulate the economy (“quantitative easing”) are now on the table. Quantitative easing is normal central bank stuff that has been effectively shoved off the table of ECB policy options by the Bundesbank’s unorthodox economic theories until now. Unfortunately, it’s looking like the quantitative easing is going to be unorthodox too. No ‘easing’ for the governments. Much ‘easing’ for the banks. And the austerity continues.


Surprise! It’s Not the EUrozone Crisis Anymore. Welcome to the EU, LLC. It’s Still a Crisis.

Well, it’s official. The ‘second pillar’ of the EU’s banking union – a 55 billion euro bail-out fund and a bunch of new rules – appears to be in place following recent negotiations. It was an all night compromise bender! Yes, lots of compromises were made, but the core principles that have emerged during the EU’s multi-year-long quest for a banking union are still intact. Uh oh.


The New World Ordoliberalism Part 2: A ‘Third Way’ to Fascism

Ordoliberalism has long been the economic philosophy guiding German policy-makers. But with the creation of the eurozone, ordoliberalism has quietly become the default policy-stance for the entire zone. This has been happening with little recognition that ordoliberal ideas have been playing such a profound role. And there’s been even less attention paid to the ordoliberal philosophy itself. Surprise! It’s kind of fascist. Updated 7/26/2013


Currency Wars: The New World Ordoliberalism

There’s been quite a bit of chatter lately about the threat of “Currency Wars” amongst global policymakers. It’s part of a larger debate over just what kind of economic policies and modes of central banking should even be philosophically allowable. The Bundesbank has some strong ideas about what governments should and should not be allowed to do with their monetary and fiscal policies. Not surprisingly, they’re also bad ideas.