Tuesday, September 6, 2016

Felipe Rezende — Minsky Meets Brazil Part III

This part of the series (see Part I and II, here and here) will focus on macroeconomic and microeconomic aspects to financial fragility and provision for liquidity. Minsky’s framework not only sheds light on how to detect unsustainable financial practices, but the position adopted in this paper is that the current Brazilian crisis does fit with Minsky’s instability theory. This is a Minsky’s crisis in which during economic expansions market participants show greater tolerance for risk and forget the lessons of past crises so economic units gradually move from safe financial positions to riskier positions and declining cushions of safety.…
New Economic Perspectives
Minsky Meets Brazil Part III
Felipe Rezende, UMKC


Matt Franko said...

So all the efforts of the oil field workers in the non-monopoly sector in the US and Canada to increase non-monopoly sector oil production by 6 Mbpd don't matter?

Matt Franko said...

So the actions of 100s of thousands of oil workers in the non-monopoly sector don't matter it is rather the "stability" that created Brazil's "instability"?

The cause is never human action? But rather the preceding "stability" itself?

Ignacio said...

In the grand scheme those 6 Mbpd are negligible, compared to whole production and consumption. Also, those are not even covering operating costs at all, the scheme can only work over a limited period of time.

Those rigs cannot function without higher prices, and with higher prices the economy is rekt. Welcome to the era where extraction meets real energy limits (entropy at work), so it's either 'too cheap, leave in the ground' or 'too expensive, mah economy is hurtin!'.

Hurry up with substitution or see chaos take over (increasing entropy which cannot be countered by energy flows outside of the system).