Political Economy

I have been in meetings with Very Serious Texas Politicians where secession was earnestly discussed 15 years ago. Do I think that could happen? No. The Fed will never choose hyperinflation, and I do not think you can find 60 Senators to…

if many countries were in the cast of “The Biggest Loser,” the US would be among the fattest competitors. Thus, with this report, is the US now able to say, “See here, we are going to go work as hard as the rest of you to slim down”? Maybe…

James K. Galbraith writes that the National Committee on Fiscal Responsibility and Reform's underlying budgetary analysis is faulty because it rests on the false premise that a country can involuntarily default on a fiat currency it…

European officials must have known they were going to disappoint the market with the decision to simply postpone draining liquidity. The firewall around Greece failed. The firewall around Ireland has failed. The politicians have dropped…

Market participants are already making their bets that the ECB will "print money". Below John Brynjolfsson tells Bloomberg why he thinks the ECB will monetise the sovereign debt problem. His firm is selling core Europe and buying the…

A guest post by Matt Stoller, the former Senior Policy Advisor for Rep. Alan Grayson and progressive commentator. Follow him on twitter @matthewstoller. In a cross-post from New Deal 2.0, Stoller outlines why Libertarians, Tea Party…

The IMF total contribution to the European rescue fund is not a solid one. That is, the IMF responds to country-by-country requests for aid, not to regions. Thus, the IMF really does not have EUR250 bln set aside just for Europe.…

Politics will not get nearly as crazy or as radicalized as they did in the 1930s. There are much more robust mechanisms today for transferring and sharing adjustment costs. But it is hard to imagine that the kinds of disruptive political…

A few weeks ago, when writing about the Irish debt crisis, I finished a post saying: Eventually, people may come around to Evans-Pritchard’s view: the only way out of this is via the ECB printing money and monetizing the periphery’s…

The ECB could step into the breach but buying a large amount of sovereign bonds from the periphery. This would support the market, push down interest rates and potentially arrest the contagion. Moreover, as a large owner of peripheral…