Category Archives: Uncategorized

I will be on an Oxford Analytica conference call on the Greek crisis today from 4-5 pm BST. If a transcript can be made available, I will post one here. UPDATE 26/5/2010 No transcript available. The call went well, with expert analysis on the political situation in Greece and Spain, the economic outlook there, and […]

You might be surprised that the Great Depression (1929-33) was universal. You might also be surprised that in 1931 the title “Great Depression” was already taken. It belonged to the 1890-95 global recession. If you’d asked anyone in 1931, they’d tell you that was the Great Depression. Little did they realize they’d find a way […]

From Payback time: Padded pensions add to New York fiscal woes An online, searchable database compiled by The Times contains the names and pensions of about 3,700 public retirees in New York who receive more than $100,000 a year.  In fact, the cost of public pensions has been systemically underestimated nationwide for more than two decades, say some […]

A few more points on this topic…. eventually I’ll need to write about something else.From comments here and elsewhere I highlight the following: Greek/Club Med default will make European banks (German, French especially) insolvent.In other words, “the cure is worse than the disease”. There is an historical parallel. When Credit Anstalt imploded in Austria (May […]

In an earlier post I argued that Greece cannot grow within the EMU. It must default/ restructure and re-issue the drachma. The costs of exit are outweighed by the costs of staying on the euro. Markets have a short memory, and in fact Greece as a sovereign borrower will be more attractive post-default (because of a lighter […]

Defecting from EMU is being described as a horrible outcome — whether for Europe or for the benighted Greece et al is not always made clear. But the general tenor is that defection from EMU would constitute a shock which the world is in no condition to bear. We have been here before. In the […]

It’s amazing to me how reluctant people are to prescribe euro-exit. Eichengreen stops well short; quite the contrary, he portrays such a move as disastrous. (The technical issues (ATMs, etc) and legal issues (cross-border debt contracts) are daunting, and the political cost is even worse: second-tier status in the EU if not outright expulsion.) If I […]

We are running the ‘counterfactual’ to the Great Depression. According to modern consensus, the interwar Fed got it wrong. It stood by as banks failed. Depositors fled the banking system, crushing intermediation and hence the money supply (Friedman and Schwartz 1963). What might have been the outcome if the Fed of the interwar period could […]

The conventional narrative describing the Great Depression goes something like this. The US Stock Market crashed in October 1929. De-leveraging from the colossal debt bubble of the late 1920s, combined with falling agricultural prices, led to a bank panic. The Federal Reserve allowed banks to go under rather than jeopardize its own credit worth, the […]

Today’s crisis is the West’s first taste of a new generation of financial crisis, already known to the developing world from its 1997-98 crises. De-leveraging is the liquidation of exuberance. When fundamentals have long since belied the optimistic notions underlying exuberance, debt contraction is in store. To be sure, East Asia’s economy by 1997 had […]