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.

More Collateralized “Death” Obligations

“Par­ticipo” alerts us to an arti­cle from The New York Post updat­ing the mor­tal­i­ty rate in the finan­cial indus­try. These deaths are occur­ring as numer­ous inves­ti­ga­tions are under­way into var­i­ous kinds of malfea­sance in the glob­al finan­cial sec­tor, manip­u­la­tion of the for­eign exchange rate, in par­tic­u­lar.

FTR #772 Body Count II: (Collateralized “Death” Obligations)

One of the sur­re­al, almost hal­lu­ci­na­to­ry finan­cial instru­ments that were at the cen­ter of the 2008 finan­cial col­lapse were CDO’s–collateralized debt oblig­a­tions. As a num­ber of legal inves­ti­ga­tions into mis­chief appar­ent­ly com­mit­ted by major finan­cial insti­tu­tions on a num­ber of fronts have gained momen­tum, there has been a rash of sui­cides linked to the busi­ness­es under inves­ti­ga­tion. In addi­tion, a Wall Street Jour­nal reporter dis­ap­peared and an Argen­tine bank repository–supposedly fireproof–burned down. Are we look­ing at col­lat­er­al­ized “death” oblig­a­tions?

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.