Saving the World Economy: Paul Krugman and Olivier Blanchard

Saving the World Economy: Paul Krugman and Olivier Blanchard in Conversation (video above)

Two of the foremost experts on the global economy / international economy, Paul Krugman and Olivier Blanchard, engage in a discussion about recent crises around the world and how to prevent global economic collapse. Paul Krugman is a Nobel Prize-winning economist, noted New York Times columnist and author, and distinguished professor in the Ph.D. Program in Economics at the Graduate Center. Olivier Blanchard, chief economist at the International Monetary Fund (IMF) from 2008 to 2015, is a senior fellow at the Peterson Institute for International Economics and Robert M. Solow Professor of Economics emeritus at MIT. Published on Dec 21, 2015

Presented on December 7, 2015, by GC Public Programs and the Ralph Bunche Institute for International Studies.

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Scary Debate Over Secular Stagnation: Hiccup ... or Endgame?

The Scary Debate Over Secular Stagnation: Hiccup ... or Endgame?

Re: economy, economists, economics

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Ann Pettifor on Europe (video)

Ann Pettifor on Europe -

To discuss the UK and the ECB, Erin sat down with Dr. Ann Pettifor – director of Prime Economics and author of “Just Money: How Society Can Break the Despotic Power of Finance." Recently, a shortfall in tax revenue for the UK government has called the ruling coalition's deficit reduction targets into question. Ann tells us whether the British economy is strong enough to meet Chancellor Osborne's deficit targets. Ann also gives us an extended analysis on Greece’s economic turmoil and predictions on what will follow the elections.(published Jan 31)

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Felix Salmon: Why Most Financial Economics Papers May Be Wrong (audio)

Posted on Oct 24, 2014
Re: Business, Economics, Finance--

Felix Salmon, Jordan Weissmann, and Cathy O’Neil discuss non-compete clauses for sandwich-makers, why most financial economics papers may be wrong, and what the Federal Reserve knew in advance about J.P. Morgan's "London Whale." Time length: 30:05

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Antitrust, Politics, Economics

As a follow-up to my post yesterday Google Has Learned The Ways of Washington--Government Bureaucrats, Lawyers, Lobbyists, $$$, I couldn't pass up posting an excerpt from the following--

Jenkins: Al Gore Is Good at Rent-Seeking (and Microsoft Isn't) - WSJ.com: " . . . Microsoft still tries to make money by selling consumers products they want, though it has launched some stinkers in this regard . . . its latest stinker was more up Mr. Gore's alley: a multimillion-dollar investment in trying to foment a government antitrust crackdown on Google. That effort went conspicuously bust Thursday when the Federal Trade Commission let Google go with token remonstrances about its business practices. . . . As FTC chief Jon Liebowitz acknowledged this week, antitrust agencies live to bring "big cases." The FTC staff, whose revolving-door career interests would be enhanced by a Google prosecution, was an easy sell. Less so the agency's political appointees who must decide yea or nay. The media wasn't clamoring for a Google crackdown. Congress was less than enthusiastic. The Obama White House, known to be close to Google, was disturbingly mute. Antitrust is supposed to be entirely about clinical economics but never is. FDR's antitrust chief Thurman Arnold once said that antitrust was a collective squeal of resentment against businesses that annoy us with their success. Google hasn't been sufficiently annoying. Notice, by the way, that the astute Arnold went on to found Arnold & Porter, one of the great Beltway law firms . . ."

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BIS Annual Report 2011/2012 -- a "must read"

BIS Annual Report 2011/2012 --  a "must read" for anyone wanting to know about the economy--

BIS Annual Report 2011/2012: "BIS Annual Report 2011/2012 24 June 2012 The global economy has yet to overcome the legacies of the financial crisis to achieve balanced, self-sustaining growth."

Excerpts:

Chapter I: Breaking the vicious cycles 

The global economy has yet to overcome the legacies of the financial crisis to achieve balanced, self-sustaining growth. In different ways, vicious cycles are hindering the transition for both the advanced and emerging market economies. . . 

Chapter II: The year in retrospect 

In the advanced economies, the first months of 2011 seemed to offer the beginnings of a self-sustaining recovery, a promise that turned out to be a false dawn. The pattern appears to be repeating itself in 2012, with early signs of strength gradually fading. . . 

Chapter III: Rebalancing growth 

Both advanced and emerging market economies face structural challenges. Sectoral misallocations that built up during the boom, coupled with high levels of household and corporate debt, continue to hobble growth in some advanced economies. These countries must move to repair balance sheets as they facilitate the rebalancing of resources across sectors. . . 

Chapter IV: The limits of monetary policy 

. . . Central banks have had little choice but to maintain monetary ease because governments have failed to quickly and comprehensively address structural impediments to growth. But the need for prolonged accommodation has to be carefully weighed against the risk of generating distortions that will later produce financial and price instability. 

Chapter V: Restoring fiscal sustainability 

. . . . Restoring the supply of risk-free assets requires that governments convincingly address high deficits as well as projected increases in their long-term liabilities. Some countries need to take immediate action to significantly reform their public sectors and remove structural impediments to growth. All countries need to prevent adverse feedback loops between the financial sector and the sovereign and build up fiscal buffers in good times. 

Chapter VI: Post-crisis evolution of the banking sector 

Banks and prudential authorities still face tough challenges in securing financial stability. Banks need to further strengthen capital and liquidity positions to regain markets' confidence. To expedite this process, authorities should ensure that institutions recapitalise and recognise losses on problematic investments. . . . 

Read what others are saying about this report--
What The Mother Of All Central Banks Says About The Financial System - Forbes: "What The Mother Of All Central Banks Says About The Financial System"

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Paul Krugman's Follies?

I've given a lot of coverage to Krugman and his position that the government should spend, spend, and spend, on this blog--so here's some coverage critical of the economist's views--

Paul Krugman's Follies by Guy Sorman - City Journal: " . . . But he knows well—or should—that President Obama has already tried to rekindle growth this way. He admits that the results were not impressive, but only because public spending didn’t go far enough and wasn’t sustained. The argument is dubious. All economies are built on confidence. An increase of the public debt now, as Krugman urges, would create a crisis of confidence, not a quicker recovery. Robert Lucas, the originator of rational-expectation theory, has shown how and why consumers and entrepreneurs reject Keynesian policies: in essence, the marketplace is wiser than the government. Entrepreneurs and consumers alike understand that an increase in public demand is artificial and short-term. Consequently, public demand leads not to increased consumption or investments but to price hikes. This unintended consequence of Keynesian demand has been repeatedly demonstrated in theory and practice. Milton Friedman and the late Anna Schwartz, in their Monetary History of the United States, showed that excessive money printing, which Krugman strongly recommends, always leads to inflation, not growth. . . . "

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Punk Economics: Lesson 1 [video]

What's wrong with Merkozy's plan for the Eurozone?
David McWilliams, Irish economist, gives us our first lesson in punk economics.

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Krugman on "highly educated ignorance"

I wrote about Paul Krugman’s observation of  “highly educated ignorance”  in economics, a couple of months ago - http://www.johnmpoole.com/2011/07/highly-educated-ignorance.html.

Now, Krugman has presented a full paper of how economists failed to see the crisis coming and more - The Profession and the Crisis  - which should be required reading for everyone in government and higher education. Excerpts:

. . . We’ve entered a Dark Age of macroeconomics, in which much of the profession has lost its former knowledge, just as barbarian Europe had lost the knowledge of the Greeks and Romans. . . .  How did all this knowledge get lost? Well, being the age I am, I was able to watch the transformation of macroeconomics in real time, and I’d say that what happened was a runaway social process.

First, success in academic economics came from publishing “hard” papers — meaning papers that used rigorous and preferably difficult mathematics. This in itself biased publication toward equilibrium business cycle models, as opposed to the ad hoc modeling typical of what I consider useful macroeconomics. Graduate education, in turn, became increasingly focused on the kind of work that could get published and lead to tenure. Successive cohorts of students were trained only in the newly rigorous version of macro, which had lost touch with the field's previous intellectual achievements.

And as these cohorts became professors in their turn, they closed off both publication and promotion to anyone who questioned the dominant academic approach. Robert Lucas wrote more than 30 years ago — approvingly! — about how participants in seminars would “whisper and giggle” when someone presented a Keynesian analysis.(emphasis added)

. . . . There are also many calls for new economic thinking; there's even an institute dedicated to that project. Again, fine — but the biggest problem we had as a profession wasn't failure to keep up with a changing world, it was failure to remember what our fathers learned. (emphasis added)

What we really need is a change in the destructive social dynamics that brought us to this point. . . . .  http://www.palgrave-journals.com/eej/journal/v37/n3/full/eej20118a.html

In other words, political correctness and absence of diversity, led to “highly educated ignorance.”  The “social dynamics” that Krugman refers to is the systemic “group think” in academia, of which conservatives have complained for years. It’s a healthy sign that liberals like Krugman are finally “getting it.”

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