Pete Buttigieg and the Myth of Deficit Responsibility — Luke Darby

Stony Brook University economist Stephanie Kelton is a proponent of something called modern monetary theory (MMT), a new school of economics that argues that as long as a country is in charge of issuing its own sovereign currency, it can't "run out of money." According to MMT, if Greece were still using its own currency, the drachma, instead of the euro, then it could have printed more money to pay off its debts, especially if inflation was low to begin with. Instead, as part of the European Union, it had to turn to the European Central Bank which dictated the terms of Greece's bailout.

Kelton argues in the New York Times that the way we think and talk about deficit is entirely wrong. When governments run up deficits, it's because they're pumping money into their economy or spending it on social welfare programs. Kelton writes, "The problem is that policy makers are looking at this picture with one eye shut. They see the budget deficit, but they’re missing the matching surplus on the other side. And since many Americans are missing it, too, they end up applauding efforts to balance the budget, even though it would mean erasing the surplus in the private sector."...

GQ
Pete Buttigieg and the Myth of Deficit Responsibility

Luke Darby

Pete Buttigieg's Vow to Cut the Deficit Is Fiscally Irresponsible — Eric Levitz

“Fiscally responsible” is one of the more Orwellian phrases in American politics. Lawmakers earn that coveted title by affirming the three tenets of the Beltway’s official budgetary orthodoxy: (1) Deficits are inherently undesirable, (2) all new spending (on things that cannot be used to kill foreigners) should be fully offset by new taxes, and (3) reducing America’s existing national debt should be a top-tier policy priority.

But these premises are rooted less in economic science than popular superstition. And, over the past decade, our political class’s indulgence of the public’s mythical intuitions about the national debt has imposed gargantuan costs on our collective prosperity. In the present context, validating the electorate’s economically illiterate fears of public debt is roughly as “responsible” as affirming the anti-vaccine movement’s conspiracy theories about the CDC.

Cites MMT.

Pass along to Pete's supporters.

Intelligencer
Pete Buttigieg's Vow to Cut the Deficit Is Fiscally Irresponsible

Eric Levitz

There are no financial risks involved in increased British government spending — Bill Mitchell

On July 26, 2018, UK Guardian columnist Phillip Inman published an article – Household debt in UK ‘worse than at any time on record’ – which reported on the latest figures at the time from the Office of National Statistics (ONS). He noted that the data showed that “British households spent around £900 more on average than they received in income during 2017, pushing their finances into deficit for the first time since the credit boom of the 1980s … The figures pose a challenge to the government … Britain’s consumer credit bubble of more than £200bn was unsustainable. A dramatic rise in debt-fuelled spending since 2016” and more. While keen to tell the readers that British households were “living beyond their means”, there was not a single mention of the fiscal austerity drive being pursued by the British government over the same period. Nor was there mention of the fact that the entire British fiscal strategy since the Tories took office was predicated, as I pointed out years ago in this blog post – I don’t wanna know one thing about evil (April 29, 2011), on this debt binge continuing. A year later (July 20, 2019), the same columnist published this article – Labour and Tories both plan to borrow and spend. Is that wise? – which like its predecessor fails to present a comprehensive, linked-up, analysis for his readers and makes basis macroeconomic errors along the way. 

The latest article is attacking both the variously announced intentions of the British Labour Party and the Tory government to increase net public spending....

Bill Mitchell – billy blog
There are no financial risks involved in increased British government spending
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — The austerity attack on British local government – Part 1

On Sunday, May 12, 2019, I will be presenting a workshop in London on – Local Government Funding: Challenging the Status Quo. Basically, I will be speaking about the way in which flawed understandings of the capacities of currency-issuing governments, combined with a vicious, ideological attack on working people from a government fully invested in neoliberal transfers to the elites, have ravaged the capacity of local government in the UK to deliver essential public services. See the Events Page for more details. It is a public event and I hope people support it. To prepare for that workshop, I have been digging deeply into the data to fully acquaint myself with how the ideological austerity push has been distributed across central and local government service delivery. It is no easy task. The data is a ‘dog’s breakfast’ and coming to summary positions is quite time consuming. There are also nuances in the way local government is structured (particularly since the Thatcher years where devolution and cost-shifting was accelerated), which mean that care must be taken in making sensible comparisons. Here are some of the things I found. I have learned a lot in this process, which is a good thing. This is Part 1 of a two-part series....

Bill Mitchell – billy blog
The austerity attack on British local government – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Lars P. Syl — Sweden as a case of MMT

Lars Syll schools Douglas Carr (The Hill op-ed) on austerity and the Swedish economy.

Lars P. Syll’s Blog
Sweden as a case of MMT
Lars P. Syll | Professor, Malmo University

Prabhat Patnaik — The Yellow Vest Movement

Balance sheet approach to economic analysis and its social political implications. How neoliberalism, controlled by finance capital, rules in the EZ owing to its self-imposed constraints and intransigence of finance capital to accommodate.

People's Democracy
The Yellow Vest Movement
Prabhat Patnaik | Indian Marxist economist and political commentator, retired from the Centre for Economic Studies and Planning in the School of Social Sciences at Jawaharlal Nehru University in New Delhi (1974-2010), and vice-chairman of the Planning Board of the Indian state of Kerala from June 2006 to May 2011

Bill Mitchell — Greek austerity – a denial of basic human rights, penalty should be imprisonment

I have just finished reading a report published by the Transnational Institute(TNI), which is an “international research and advocacy institute committed to building a just, democratic and sustainable world”. The Report (published November 19, 2018) – Democracy Not For Sale – is harrowing, to say the least. We learn that in an advanced European nation with a glorious tradition and history an increasing number of people are being denial access to basic nutrition solely as a result of economic policy changes that have been imposed on it by outside agencies (European Commission, European Central Bank and the IMF). The Report shows how the food supply has been negatively impacted by the austerity programs; how food prices have been forced up at the same time as incomes have been forced down, and how collective and cooperative arrangements have been destroyed by privatisation and deregulation impositions. The Report concludes that the Greek State and the Eurozone Member States violated the Greek people’s right to food as a result of the austerity measures required by three Memorandums of Understanding (2010, 2012 and 2015). In other words, the austerity packages imposed on Greece contravened international human rights law. Not one person has gone to prison as a result of this deliberate and calculated violation of human rights. 

Bill Mitchell – billy blog
Greek austerity – a denial of basic human rights, penalty should be imprisonment
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — The ‘fiscal contraction expansion’ lie lives on – now playing in Italy – Part 2

This is the second and final part in my discussion about the latest attempts by the IMF and notable New Keynesian macroeconomists to keep the ‘fiscal contraction expansion’ lie alive. The crisis in Italy is once again giving these characters a ‘playing field’ to rehearse their destructive ideas that rose to prominence during the worst days of the GFC, when the European Commission and the IMF (along with the OECD and other groups) touted the idea of ‘growth friendly’ austerity. Nations were told that if they savagely cut public spending their economies would grow because interest rates would be lower and private investment would more than fill the gap left by the spending cuts. History tells us that the application of this nonsense caused devastation throughout, with Greece being the showcase nation. The damage and carnage left by the application of these mainstream New Keynesian ideas are still reverberating in elevated unemployment rates, high poverty rates, broken communities and increased suicide rates, to name a few of the pathologies it engendered. In their article – The Italian Budget: A Case of Contractionary Fiscal Expansion? – Olivier Blanchard and Jeromin Zettlemeyer, from the Peter Peterson Institute for International Economics continue to argue the case for austerity in Italy as the only way to engender growth. In this second part of my analysis of their argument I show that there is little evidential basis for concluding that Italy is a special case. I argue that imposing fiscal austerity on Italy will turn out badly. The broader conclusion is that the mainstream economics profession has learned very little from the GFC. For them the story stays the same. It is one that we should reject in every circle it arises.

Bill Mitchell – billy blog
The ‘fiscal contraction expansion’ lie lives on – now playing in Italy – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — The ‘fiscal contraction expansion’ lie lives on – now playing in Italy – Part 1

Pathetic was the first word that came to mind when I read this article – The Italian Budget: A Case of Contractionary Fiscal Expansion? – written by Olivier Blanchard and Jeromin Zettlemeyer, from the Peter Peterson Institute for International Economics. Here is a former IMF chief economist and a former German economic bureaucrat continuing to rehearse the failed ‘fiscal contraction expansion’ lie that rose to prominence during the worst days of the GFC, when the European Commission and the IMF (along with the OECD and other groups) touted the idea of ‘growth friendly’ austerity. Nations were told that if they savagely cut public spending their economies would grow because interest rates would be lower and private investment would more than fill the gap left by the spending cuts. History tells us that the application of this nonsense caused devastation throughout, with Greece being the showcase nation. The damage and carnage left by the application of these mainstream New Keynesian ideas are still reverberating in elevated unemployment rates, high poverty rates, broken communities and increased suicide rates, to name a few of the pathologies it engendered. But the ‘boys are back in town’ (sorry Thin Lizzy) and Blanchard and Zettlemeyer are falling in behind the IMF and the European Commission against the current Italian government by demanding fiscal cutbacks. It will turn out badly for Italy if the government buckles under this sort of pressure. It once again shows that the mainstream economics profession has learned very little from the GFC. For them the story stays the same. It is one that we should reject in every circle it arises. This is Part 1 of a two-part analysis of the latest incarnation of this ruse my profession inflicts on societies....

Bill Mitchell – billy blog
The ‘fiscal contraction expansion’ lie lives on – now playing in Italy – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Heiner Flassbeck — The economic situation in Bulgaria and Romania – Part 2

How little the two Eastern European countries that we have focused on can be compared with Western countries can be seen very clearly in the development of unemployment (Graph 1). Following the major crisis of 2008/2009, the unemployment rate in Romania hardly rose at all. In Bulgaria it increased significantly, but despite weak economic development after 2013 it is falling at an astonishing rate, almost to the relatively low Romanian level.

For Romania, this can only mean that unemployment is not recorded as such or that the outflow of labour is so rapid that, despite significant declines in production, the labour force does not register as unemployed at home. In the case of Bulgaria, there have probably been considerable migration effects in recent years, which have ensured that official unemployment has remained within limits.…

The neoliberal solution to unemployment at the national level—emigration to other countries where employment may be available.


Heiner Flassbeck joins Dirk Ehnts in backing MMT in Germany?

flassbeck economics
The economic situation in Bulgaria and Romania – Part 2

Heiner Flassbeck

Lars P. Syll — Rethinking public budget

The balanced budget paradox is probably one of the most devastating phenomena haunting our economies. The harder politicians — usually on the advice of establishment economists — try to achieve balanced budgets for the public sector, the less likely they are to succeed in their endeavour. And the more the citizens have to pay for the concomitant austerity policies these wrong-headed politicians and economists recommend as “the sole solution.”

There are three budget views.

1. Balanced budget in every fiscal year. (Sound finance, debt phobes and deficit hawks)

2. Budget balanced over the cycle. (John Maynard Keynes, many Keynesians, deficit doves)

3. Budget determined dynamically by economic need and opportunity rather than financial rules. (Abba Lerner, functional finance, MMT, deficit owls)

Lars P. Syll’s Blog
Rethinking public budget
Lars P. Syll | Professor, Malmo University

Simon Wren-Lewis — How China beat the Global Financial Crisis

Basic macroeconomic theory says that a negative shock to GDP, caused for example by falling exports, can be completely offset by a monetary and fiscal stimulus. China is a good example of that idea in action. What about all the naysayers who predicted financial disaster if this was done? Well there was a mini-crisis in China half a dozen years later, but it is hard to connect it back to stimulus spending and it had little impact on Chinese growth. What about the huge burden on future generations that such stimulus spending would create? Thanks to that programme, China now has a high speed rail network and is a global leader in railway construction.

Now of course people will say that China is not like an advanced democracy, and it was not part of the global banking network that caused the GFC. But the US and UK stimulus programmes could and should have been larger. Those close to the action tell me that the UK was running out of things to spend more money on in 2008/9, but I cannot help think this amounts to a failure of imagination: it is not as if UK infrastructure is great, there are no flood defence projects left to do etc. Above all else China’s example tells you what a huge mistake 2010 austerity was.

Mainly Macro
How China beat the Global Financial Crisis
Simon Wren-Lewis | Emeritus Professor of Economics, Oxford University

See also

The strongest argument for the adoption of any governmental system is success and the potential for greater success in the future. This is what the history changing Chinese reformer Deng Xiaoping meant when he stated, “It doesn’t matter whether a cat is black or white, as long as it catches mice”. Deng’s adoption of Market Socialism With Chinese Characteristics looked to bring the values of his predecessors into the future by creating an industrial revolution in a primarily agrarian economy which during Deng’s initial period in power had a poverty rate of 88%.

Today, Xi Jinping Thought on Socialism With Chinese Characteristics For a New Era looks to reduce an almost all rural poverty rate of 2% to 0% over the next two years while in the next decade China looks to become a moderately prosperous society for all its citizens. Furthermore, the drive to Create in China seeks to transform the country’s economy from one aimed at efficient production to one where production is increasingly mechanised and guided by artificial intelligence while Chinese entrepreneurs are encouraged to pioneer the next great leaps forward in technological, pharmaceutical and transport innovation on Chinese soil.

At a fundamental level, market socialism combines the individuated penchant for innovation in both utilitarian and luxury sectors that is associated with capitalism while regulating the inflow and outflow of capital in order to re-invest the proceeds of wealth back into the people and infrastructure of the nation. The result is a win-win internal developmental model which since 1978 has helped China to bring more people out of poverty in the shortest period of time in modern history.

Eurasia Future
China’s Win-Win Market Socialist Model Baffles Western Capitalists and Communists Alike
Adam Garrie

Bill Mitchell — The fundamental realignment of British society via fiscal austerity

In my analysis of the UK fiscal statement that George Osborne released on March 23, 2011 – I don’t wanna know one thing about evil (April 29, 2011) – I noted that the imposition of fiscal austerity in Britain meant that any hope of growth was really dependent on a combination of export growth and household consumption growth. With the former source unlikely and household income growth sluggish (and falling in real terms), households would have to run deficits, which necessitated running down savings and/or increasing borrowing. British households were already overloaded with debt at the time. The New Keynesian economic orthodoxy claimed that my concerns about a growth strategy that was ultimately reliant on increasing household indebtedness were misplaced because the debt would be accompanied by increased wealth via rising house prices. Well the most recent data available from the British Office of National Statistics and other sources (house prices) shows that my concerns were real. Real housing prices have been falling for the last few years in Britain and are now growing at their slowest pace since 2013. Further, ONS data shows that ““UK households have seen their outgoings surpass their income for the first time in nearly 30 years” and they “are borrowing more and saving less”. At the same time, households are accumulating more debt than assets and borrowing more by way of non-mortgage loans to cover the squeeze on disposable incomes. Also, it is not just mortgage debt that has been rising. The real burden of short-term household debt (credit cards etc) in Britain has risen dramatically over the last 20 years. The rising debt and household deficits are also concentrated at the lower end of the income distribution and wealth inequality is rising significantly. Then we learn that in excess of British children are living in poverty. So in the face of withering fiscal austerity that is impacting severely on the prosperity of the current generation of adults, the policy failure is also ensuring that the disadvantage will be taken into the next generation of adults and their children. Deprivation breeds deprivation. This is a fundamental realignment of British society that will take it back to C19th-type relativities.

Bill Mitchell – billy blog
The fundamental realignment of British society via fiscal austerity
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

Austerity-induced reforms, including widespread cuts to the welfare state since 2010, were an important factor behind the decision of many people to shift their political support to UKIP and, subsequently, support Leave in the EU referendum

In other words, Thatcherism was foundational for the current issues. Good work, Maggie.

The Independent
How David Cameron's welfare cuts led directly to the Brexit vote

Thiemo Fetzer

Bill Mitchell — The abdication of the Left – redux – Part 1

Former Austrian Chancellor Bruno Kreisky was quoted as saying during the 1979 Austrian election campaign that: “I am less worried about the budget deficits than by the need for the state to create jobs where private industry fails”. That is the statement of a social democrat. That is a progressive Left view. In June 1982, with French unemployment at 7.2 per cent (having risen from 2.4 per cent in 1974 after a near decade of austerity under the right-wing Prime Minister Raymond Barre), the French Minister of Economy and Finance cut 30 billion francs from government spending so that the fiscal deficit would remain below 3 per cent. In March 1983, the same Minister pressured his colleagues including President François Mitterrand, into imposing a further bout of austerity, cutting another 24 billion francs and increasing taxes by 40 billion francs. These were very deep cuts. The austerity under the so-called ‘Barre Plan’ had failed to reduce inflation. When the turn to austerity was repeated under Mitterand’s so-called Socialist government, France was already in a deep recession. Under the Socialist austerity period unemployment rose sharply to further to 9.3 per cent by 1987. By then the architect of that austerity, one Jacques Delors, was European Commission President and starting work on his next exercise in neoliberal carnage – the Eurozone. None of his behaviour during that period remotely signals a position we could call progressive or Left. Like his austerity turn (“tournant de la rigeur”), Delors had turned into just another neoliberal obsessed with fiscal surpluses, free markets (he oversaw the 1987 Single European Act), and privatisation (which he claimed was necessary to attract foreign direct investment) (Source). This is Part 1 of a two-part series on the abdication of the Left, which some still choose to deny....

Bill goes heavy on fact today. He has a firm grip on the history of the period. If you are looking for the blow by blow, here it is.

Bill Mitchell – billy blog
The abdication of the Left – redux – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Ramanan — The Burden Of Adjustment And Keynes’ Solution

Argentina had a balance-of-payments crisis recently and required help. The IMF has agreed for a stand-by arrangement of $50 billion on the condition in the IMF’s own words:

“At the core of the government’s economic plan is a rebalancing of the fiscal position. We fully support this priority and welcome the authorities’ intention to accelerate the pace at which they reduce the federal government’s deficit, restoring the primary balance by 2020. This measure will ultimately lessen the government financing needs, put public debt on a downward trajectory, and as President Macri has stated, relieve a burden from Argentina’s back.

So Argentina has to agree on policies with deflationary bias to its output. John Maynard Keynes made this observation, had a completely different attitude than the IMF and proposed to change it. From The Collected Writings Of John Maynard Keynes, Volume XXV: Shaping The Post-War World: The Clearing Union, Chapter 1, The Origins Of The Clearing Union, 1940-1942, pages 27-30:

The solution that Keynes proposed was in terms of the monetary system current then. That is no longer the case, but the principle remains the same.

Of course we are past the Bretton Woods system and have a system of a mix of fixed and floating exchange rates but it hasn’t provided the market mechanism required to resolve imbalances. The adjustment is still on output and employment. Hence the need for an official mechanism to resolve imbalances. Bancor isn’t relevant now, but official intervention is.

The Case for Concerted Action
The Burden Of Adjustment And Keynes’ Solution
V. Ramanan

Bill Mitchell – ECB research provides a withering critique of mainstream macroeconomics

Although this blog post considers some very technical material its message is simple. Mainstream macroeconomic models that are used to determine policy choices by governments are deeply flawed and the evidence strongly supports a central thrust of Modern Monetary Theory (MMT) – that fiscal policy is powerful and that austerity will kill growth. In that sense, it helps us understand why various nations and blocs (such as the Eurozone) struggled after the onset of the GFC. It also explains why the deliberate attack on Greek prosperity by the Troika was so successful in demolishing any prospect of growth – an outcome that the official dogma resolutely denied as they constructed one vicious bailout after another. It also explains why New Keynesian approaches to macroeconomics are flawed and should be ignored. I was reminded this week by a research paper I had read last  year (thanks Adam for the reminder) which presents a devastating critique (though muted in central bank speak) of the mainstream approach to macroeconomic modelling. A research paper from the ECB (May 2017, No 2058) – On the sources of business cycles: implications for DSGE models – provides a categorical critique of DSGE models and a range of other stunts that mainstream economists have tried to introduce to get away from the obvious – economic cycles are demand driven.…

Q. Why do Austerians want to restrict domestic demand by limiting domestic worker incomes?

A. To decrease spending on imports while increasing exports in order to "strengthen" the trade balance and ideally achieve a permanent trade surplus, using Germany as a model for the EZ.

This is the prescription of the Troika — European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF).

This is what is happening with respect to the political kerfuffle in Italy.

Bill Mitchell – billy blog
ECB research provides a withering critique of mainstream macroeconomics
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

Italy’s establishment has just revealed its truest beliefs and priorities. The context was the two parties that received the most votes in the last election forming a coalition government. The two parties seeking to form a coalition government won a majority of the seats in both houses of Italy’s parliament in the most recent election. The New York Times reported many of the key facts, but missed the key analytics.

"All's fair in love, war" — and politics, which is war conducted by other means.

New Economic Perspectives
The New York Times Praises the Italian Establishment’s Economic Illiteracy and Assault on Democracy
William K. Black | Associate Professor of Economics and Law, UMKC

IMF Says 2018 Economic Outlook is Rosy, But Austerity is Still Needed Ben Norton interviews Mark Weisbrot

The IMF just released a positive World Economic Outlook report for 2018. Still, in order to make sure that the outlook remains good, the IMF makes recommendation that would lead to recession, says CEPR's Mark Weisbrot.…

GS: There seems to be a general perception that the IMF has changed its ways and adheres less to neoliberal economic orthodoxy than it used to.

MW: … I think the perception that they've changed is really based on mostly what comes out of the research department. There have been some significant changes there. But their policy has changed very little. And you can see that they're having their World Bank and IMF annual spring meetings here in Washington. And this is a big event where you get finance ministers from all over the world, and the press comes and reports on it generally. And so, and this is where you see their world economic outlook, which you mentioned, you know, gives their take on the world economy and what they think countries should do....

TRNN
IMF Says 2018 Economic Outlook is Rosy, But Austerity is Still Needed

Ben Norton interviews Mark Weisbrot, co-director of the Center for Economic and Policy Research

Bill Mitchell — The distinguished economists just embarrass themselves

People are allowed to change their opinions or assessments in the light of new evidence. Diametric changes of position are fine and one should not be pilloried for making such a shift in outlook. Quite the contrary. But when the passage of time reveals that a person just recites the same litany despite being continually at odds with the evidence, then that person’s view should be disregarded, notwithstanding the old saying that a defunct clock is correct twice in each 24 hours. The US Congressional Budget Office (CBO) released its latest – The Budget and Economic Outlook: 2018 to 2028 (April 9, 2018) – and various commentators and media outlets have gone into conniptions over it. The economists that have responded – and they come with affiliations from both sides of US politics (although it is hard to differentiate separate ‘sides’ in the US anymore such is the demise of the Democrat Party) – have significantly embarrassed themselves. Their hysteria is not matched with the facts and they have been guilty of invoking these hysterical responses year-in, year-out for many years. A crack in a record, goes click, click, click, click and repeats ad infinitum. Sort of like the nonsensical arguments about US fiscal deficits that have appeared in the US press this last week.

When this happens, it looks to me like staying on ideological message rather than genuine inquiry and analysis.

Bill Mitchell – billy blog
The distinguished economists just embarrass themselves
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Europhile reform dreamers wake up – there will be no ‘far-reaching’ reforms

I have now escaped the near-Arctic chill and back to warmer climes for a little while. While I was in Finland though, the Finnish news media was agape over the – Joint Statement – released by 8 Finance Ministers from the smaller Northern EU Member States (March 6, 2018). The statement released by the finance ministers of Finland, Denmark, Estonia, Ireland, Latvia, Lithuania, the Netherlands and Sweden aired their views on how the Eurozone (EMU) might develop. Nobody should be under any delusion that significant reforms are going to come soon. These characters are locked into the austerity mindset and any claims that a new Macron-Merkel partnership will take the EMU into more progressive territory should be viewed as blind hope rather than bedded down in any realistic understanding of what is likely or possible....

As an aside, when I was in Barcelona (March 1-3), it was repeatedly claimed by the audiences of the events I spoke at that a unified European culture would eventually emerge, which justifies the progressive Europhile position to stick with the ‘reform’ process and reject breaking up either the Eurozone, the overall EU or both.
Time horizons of around 100 to 150 years were mentioned....

Oh, good,  the Deutsche Reich has only 100-150 years to run.

Bill Mitchell – billy blog
Europhile reform dreamers wake up – there will be no ‘far-reaching’ reforms
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Raúl Ilargi Meijer — Austerity, Bloodletting and Incompetence

Punxsutawney Phil Hammond, the UK chancellor, presented his Budget yesterday and declared five more years of austerity for Britain. As was to be expected. One doesn’t even have to go into the details of the Budget to understand that it is a dead end street for both the country and for Theresa May’s Tory party.

So why the persistent focus on austerity while it becomes clearer every day that it is suffocating the British economy? There are many answers to that. Sheer incompetence is a major one, a lack of empathy with the poorer another. Conservative Britain is a class society full of people who dream of empire, and deem their class a higher form of life than those who work low-paid jobs.

When you see that the British Parliament has even voted that animals don’t feel pain or emotions, you’d be tempted to think it’s a throwback all the way back to the Middle Ages, not just the British Empire. They’re as lost in time as Bill Murray is in Groundhog Day. Only worse.

But perhaps incompetence is the big one here. The inability to understand that if your economy is not doing well, you need to stimulate it, not drain even more of what’s left out of it. The people in government don’t understand economics, and therefore rely on economic theory for guidance. And the prevailing theories of the day prescribe bloodletting as the cure, so they bloodlet (let blood?). Let it bleed.

This is not a British problem, it’s pan-European if not global. Neither is the UK Tory party the only one being killed by it, all Conservative parties share that faith. They’re just lucky that their left wing opponents have all committed hara kiri, and joined their ranks when it comes to economics. All of Europe’s poorer have lost the voices that were supposed to speak for them, to economic incompetence.

Obviously, the US democrats did their own hara kiri years ago. One might label -some of- Bernie Sanders’ views left-wing, but he’s trapped in a system that won’t let him breathe.
All of this leads me to question the following:

The Automatic Earth
Austerity, Bloodletting and Incompetence
Raúl Ilargi Meijer