Monday, May 21, 2012

Matias Vernengo on newspeak in the EZ

The German representative on the board of the European Central Bank (ECB), Jörg Asmussen, says that the debate on growth versus austerity is the "wrong debate" since "we [who?] need both." Of course what he means by growth measures is labor market reforms, meaning more flexibility to fire workers (yes with more than 20% of unemployment in Greece and Spain, and double digits for the eurozone it seems that firing workers is really hard in the old continent). That would supposedly reduce the cost of workers, i.e. lower wages, and, as a result firms will hire more workers, even if nobody is buying their goods. And you wonder why things are the way they are in Europe?
Read it at Naked Keynesianism
Newspeak, Europe and economics
by Matias Vernengo | Associate Professor of Economics at the University of Utah

This is a test of who is going to blink first, the neoliberal masters or the oppressed serfs, whom the masters are determined to wage discipline.


Leverage said...

Related to EZ/EMU, I've read this comment on NC, very interesting:

I have alaways thought that the two most important rates for a free country were its rate of exchange and the primary rate of its central bank. When it looses those two essential tools of economic policy, hell might well brake loose. This is what happened to the club med nations. Now France is joining this club at a fast rate.
The euro is a flawed construction and is doomed to fail. By the way, has anyone among the readers of NC heard of a little book called “L’heure des choix”, 1991 in French? In this book it was stated that a common currency needed transfers at a level of 12,5% of the GDP from the rich nations to the poorest one to be sustainable. The authors? François Hollande (new President of France) and Pierre Moscovici (new Finance Minister of France). Hilarious, don’t you think?
Now, the only question is: will the euro’s destruction be organized in a orderly fashion or will the break up be chaotic and disastrous for the people?
Germany (your #3) benefited enormously from the euro. Usually, when one party makes a killing, another takes a bummer. It is high time that the euro disappears and that European nations get back what they should never had abandonned: the two rates mentioned above.

I don't think a big part of the elites don't get it, specially those in charge of financial aspects, I think they perfectly know how it works.

But they can be blinded by idealism and stubbornness (recognizing they are wrong, would be admitting self defeat), this would also fit the definition of a moron.

Let's see how facts get in way of idealism and force the situation. Everybody in the market wants 'money printing', will eurocrats be able to resist this assault from 'the market'.

Tom Hickey said...

NIce find on Hollande and Moscovici, Lev.

Anonymous said...

I'm beginning to wonder whether the lies about "running out of money" were simply a warm up for the main act of imposing supply side degradations upon the workers.

David Cameron was at the forefront, claiming the UK had "run out of money" (his phrase), and that bond markets would force up gilt yields if the government didn't immediately start cutting spending. Then he claimed that the subsequent historically low bond yields were due to the markets' confidence in the government's spending cuts program (despite the fact that they were pushed down by the BoE's QE program - of course he always failed to mention this).

Now that he and his cronies have put the UK back into recession, he's started claiming that the only way for the UK to grow is for supply side shite to be forced down the worker's throats. This week his party started pushing the idea of no-fault immediate dismissal, making it possible for bosses to sack long-term employees on the spot for no reason whatsoever, just because they feel like it.

Tom Hickey said...

Just keep repeating, "Economic neoliberalism is about wage suppression," and you have the answer to just about all the BS they come up with.