Political Economy

I want to talk a little about the political economy. A few months ago I added the topic tag “nationalism” to the topics this blog covers because I believe this is an issue which becomes relevant during global economic crises.

It was not immediately clear to many when the current crisis began that it was going to be this kind of event. The G7 and IMF understand how the cash register works and have vast experience in tweaking the cash register from time to time.…

As I see it, we cannot continue with the existing currency arrangement. Countries like Spain (I am reverting to my habit of calling all the deficit countries “Spain” and all the surplus countries “Germany”) simply will not adjust quickly…

If you believed the Republican leaders, you would say this is reckless monetary policy aimed specifically at supporting President Obama, a Democrat. You saw the last post I wrote, with the court scene from “A Few Good Men” tacked on.…

The Fed is not just doing QE via Operation Twist, it is also throwing in some mortgage-backeds to up the ante a little bit.

"The larger the haircut that bondholders accept, the better the outlook for the Greek sovereign from a credit quality perspective after the default," said Tony Stringer, a country debt analyst with Fitch.

He is a remarkable man, full of energy and optimism. He said something about himself that I found wonderfully humble

Countries like Slovenia have their own problems. As the euro zone economy worsens, their willingness to support bailouts decreases. And the European institutional principle of unanimity will almost certainly mean that bailout fatigue leads…

I want to highlight three things here from Wolfgang Munchau on the euro zone because he reaches conclusions I have reached. Below are excerpts of what Munchau writes about a Greek default, Italian solvency and euro zone dissolution.

In a post mirroring the policy prescription that German economist Hans-Werner Sinn recently gave, Nouriel Roubini advises Greece to default and exit the euro zone. Where Sinn is concerned about German taxpayers paying the bill left for…