I have noted before that when someone asks me where I come from I immediately (and innately) respond Australia. If questioned further I might tell them I grew up in Melbourne, Victoria. Sure enough, I am a Victorian (with some of the cultural attachments that that denotes) but that affiliation is weak compared to my nationality. That doesn’t make me a xenophobe or a nationalist. It just says I am culturally from that geographic area. If I ask my friends from Italy, Spain, France, the UK, Germany, Belgium, Netherlands, Finland, Norway, etc the same question, they will answer they are from those nations. They never immediately respond by saying they are European. I can get them to say they are European but that is not their innate cultural association. The point is that there is really no such thing as a European citizen. They are all citizens of their individual Member States with little shared culture and quite diverse histories (not to mention languages etc). An interesting study came out from European economics think tank Bruegel last week (February 15, 2018) – Tales from a crisis: diverging narratives of the euro area – highlights the consequences of these differences and concludes that it makes “for an extremely challenging context within which to conduct a uniform monetary policy across different countries”. I would add economic policy in general to that assessment....Bill Mitchell – billy blog
There is no European citizen – cultures and narratives diverge in the Eurozone
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
16 comments:
Here is good article that is relevant: Forced recession as a tool of social war against the 99%
"But as Schiller notes: why did the recession even start in the first place?"
Because eventually tax receipts would cause depository balances to increase and leverage ratios at the depositories to fall below threshold.. thus causing the depositories to liquidate other assets in an attempt to move the ratio back up towards the regulatory target...
This just happened the first week in February...
"But as Schiller notes: why did the recession even start in the first place?"
Better question: "why havent we had a recession since the GFC?"
What are we doing differently since then?
Answer: NOT using the depository accounts...
"Even without that fiscal capacity, we observed considered public disquiet in say Germany when it was mooted that funds would be provided to Greece to save it from insolvency."
Yeah but look at Deutsche Bank circling the toilet bowl hasnt made munnie in 3 years and is a black hole for capital as the increase in the deposits and thus reserve assets keep rising and they keep falling below the regulatory leverage targets ....
So the teutonic morons can hoard and bitch about Greece all they want its their own exports uber alles policy that is coming back around to bring down their biggest banks...
Its Warren's "10th Plague" on steroids...
"So the teutonic morons can hoard and bitch about Greece all they want its their own exports uber alles policy that is coming back around to bring down their biggest banks...
Its Warren's "10th Plague" on steroids..."
Agreed Matt. The basic problem is still a zero sum view of money, resources, etc. plus marriage to a notion that successful nations build their savings by exporting stuff. No one steps back to take the view form 30,000 feet and sees how competition for artificially scarce resources is leading to ruin.
the only thing that is keeping them from going down completely is they are increasing their leading flow of fiscal spending while (to them) they are maintaining the resultant fiscal surpluses ... in their own feeble minds they are allowing themselves to increase fiscal as long as they keep seeing the surpluses...
Greg, Its mostly lawyers running it over there under the counsel of economists... ie nobody trained correctly for your "30,000 feet" view...
Look at the Oroville Dam video below that trained and competent Youtuber who is analyzing that is actually a pilot and he will often actually get in his plane and fly over the project in his videos to get a better view... its a tip off...
Since Matt is posting here,
Sounds like Ratigan perhaps wants to run for office?
-- June 10, 2012 at 6:39 PM
Dylan Ratigan @DylanRatigan
I will be making a statement regarding a possible run for Congress in NY-21 at 12pm this Wednesday at the Mayor Frank Ratigan Bridge in Saranac Lake: http://www.harr.
Matt, talk about being ahead of the curve! ;)
Oh, and on topic (I guess):
Digital nomads are hiring and firing their governments
The nation state has survived wars, plagues, and upheaval, but it won’t survive digital nomads, not if people like Karoli Hindriks have something to say about it. Hindriks is the founder of Jobbatical, a platform that allows digital nomads to find work in other countries and helps with the logistics of getting there.
https://techcrunch.com/2018/02/17/digital-nomads-are-hiring-and-firing-their-governments/
Matt
I’m not “trained” for a 30,000 ft view either. I’m in healthcare, science background and some exposure architecture/design in college. I simply know that it’s not all about me. I knew that regardless of my training Unless you can step back and try to see as much as you can you will never have understanding regardless of training
Engineers may be good at designing systems but plenty will never look past the “US System” so they’ll miss much. Scope is a choice and most (even engineers) don’t want to look past their own noses
“ I’m in healthcare, science background”
I’m not surprised.... you’re more qualified than Greenspan trained in clarinet....
"Because eventually tax receipts would cause depository balances to increase and leverage ratios at the depositories to fall below threshold.. thus causing the depositories to liquidate other assets in an attempt to move the ratio back up towards the regulatory target..."
Are you claming that the recession and the GFC are a consequence of leverage ratio requirements?
Greece has been in crisis for decades! The leverage ratio requirement is new! It was created AFTER the GFC!
"In January 2014, the Basel Committee issued the Basel III leverage ratio framework and disclosure requirements. Implementation of the leverage ratio requirements began with bank-level reporting to national supervisors until 1 January 2015, while public disclosure started on 1 January 2015"
Basel October 2017 report, specifically about EU:
"(4) The delegated act on the leverage ratio (as modified by the Basel Committee in January 2014) was adopted in October 2014 and published in January 2015 (Official Journal of EU).
(2) The proposal for introducing a capital requirement based on the leverage ratio was adopted by the European Commission in November 2016. It is currently being considered by the legislator"
Depositories have their OWN internal regulatory measures....
EVERY BUSINESS monitors their Leverage Ratio this is taught in the College of Business...
Where do you think the Basel people got the idea?
"Greece has been in crisis for decades!"
They just had nice GDP growth:
"The Greek economy is forecast to grow by 2.1 percent in 2018 after a growth rate of 1.5 percent in 2017, boosted by strong exports growth, according to IOBE's quarterly report."
http://www.xinhuanet.com/english/2018-01/28/c_136931442.htm
"Depositories have their OWN internal regulatory measures..."
Yes, and the Basel Ratio was (and still is) the most important one. It applies a risk weight of 0% to cash and what is deemed as safe bonds.
No depositories in his own mind would interally put risk weight above 0% to cash ou safe bonds. They are doing it recently because the regulation requires it, but would never do it otherwise.
You are talking about a problem that did not exist until recently.
Leverage ratio did not bring any crisis.
*Yes, BUT the Basel Ratio was (and still is) the most important one.
*No depository in his own mind would internally put risk weights above 0% to cash or safe bonds.
The leverage ratio requirements were not introduced by banks because they supposedly employed it as an internal measure.
Instead, it was introduced by the Basel Committee after the GFC, as they were afraid that banks were gaming the Internal Ratings Based regulatory capital requirements.
"One of the underlying features of the crisis was the build-up of excessive on- and off-balance sheet leverage in the banking system. In many cases, banks built up excessive leverage while still showing strong risk based capital ratios. During the most severe part of the crisis, the banking sector was forced by the market to reduce its leverage in a manner that amplified downward pressure on asset prices, further exacerbating the positive feedback loop between losses, declines in bank capital, and contraction in credit availability.
https://www.bis.org/publ/bcbs189.pdf
“while still showing strong risk based capital ratios” means that banks were gaming the capital rules. The document employs careful language, but that is what happened. So it was decided that a 10,5% risk-sensitive requirement would be complemented by a 3% non-risk-sensitive requirement. Most banks did not like it and tried to fight it. One of the main concerns by banks was the 100% risk weight to what they believe were non-risky assets. Other alternatives were considered (including creating a minimum requirement for standard model risk weights even for banks that employ internal ratings based model) but the leverage ratio requirement was the final outcome.
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