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Browsing Category
Monetary System
Buiter: Most European banks are zombies
It's Easter weekend here in Germany and I caught this interview with Willem Buiter from the Financiëele Dagblad that I get by e-mail each morning. I thought it was significant enough that I would translate it. Buiter has been fairly…
Cyprus Bailout Deal Terms
The Cyprus bailout deal has the following terms as approved by the Eurogroup:
When do we call it a solvency crisis?
This post is extracted from my newsletter sent out four weeks ago, at a time when the mood in Europe was much better than now and when there was even a sense that the crisis was in the process of being resolved. I mention this to remind…
US small and medium-sized banks hit by interest rates
According to an analysis by Reuters, small and medium-sized banks in the US have started to take on risk as the squeeze in net interest margins is beginning to hurt profitability. The goal is to boost returns despite the low-interest rate…
On claims of depositors, subordinated and creditors and central banks in bank resolutions
Regarding Cyprus, recently I heard someone claim that depositors are not creditors of a bank despite the fact that deposits are bank liabilities. This is bollocks. Depositors are indeed creditors, particularly in Europe where they are…
Brad DeLong believes deficits matter in Modern Monetary Theory
Finally, a prominent “mainstreamer” Keynesian gets MMT. Over the past couple of years, Paul Krugman has got close, but he keeps claiming that MMT believes “deficits don’t matter”. He refuses to cite any MMTer who has ever said such a silly…
Where Krugman went wrong: IS-LM economic modeling failure (part 2)
Now the bad times are back, Paul Krugman is trying resuscitate IS-LM, a model published by John Hicks in 1937 that seeks to explain the relationship between interest rates, and real output in goods and services and money markets. I argue…
Netherlands: Poor economy prompts Moody’s to change outlook on three Dutch banks to negative
Moody's released the following statement in conjunction with a ratings action it took earlier today on three Dutch banks
Krugman: IS-LM economic modeling failure (part 1)
Now the bad times are back, and Krugman is trying resuscitate IS-LM. I argue that he should leave it dead – not for the reasons that the new classicals killed it off (being inconsistent with neoclassical microeconomics is a plus in my…
The Product is the Promise: Finance and Social Values
In the first paragraph of my book A Demon of Our Own Design (Wiley, 2007) I observe that “You don't deliberately obliterate hundreds of billions of dollars of investor money. And that is at the heart of this book – it is going to happen…