During the recent “Debt Ceiling” debacle, many warned that the failure to lift the debt ceiling would lead to a “first ever” US default and to numerous financial catastrophes, including the demise of the U.S. dollar as the world’s reserve currency. “First Ever Default?” Think again. Forty years ago this month, on August 15, 1971, […]
Subjects Archives: Political Economy
Looking Back for Insights into a New Paradigm
It is becoming widely acknowledged that the leading ideas of some of the most prestigious late-20th-century economists (such as Alan Greenspan and Lawrence Summers in the American government) are outmoded and that a new paradigm of economics is needed. Part I of this essay will focus on two issues which we think it has to […]
Venezuela and Iran to Raise Levels of Coordination at OPEC in View of Financial Crisis
Communiqué The president of the Bolivarian Republic of Venezuela, Comandante Hugo Chávez, communicated by telephone with the president of the Islamic Republic of Iran, Mahmoud Ahmadinejad, in the afternoon of the 15th of August, 2011. President Ahmadinejad said to President Chávez that, in this sacred month of Ramadan, he and millions of Iranians are praying […]
Listening to What Iranians Say about Their Nuclear Program Instead of Relying on “Intelligence” and Agenda-driven “Analysis”
As part of the current and ongoing effort to demonize further the Islamic Republic, there has been an uptick in media stories, drawing on conveniently leaked Western intelligence assessments, highlighting Tehran’s allegedly looming acquisition of nuclear weapons. One of these stories, from the Associated Press, seems particularly emblematic, so we want to look at it […]
Health Economics
Terry Everton is a cartoonist. Visit his blog Working Stiff Review at . Cf. “State of Working America Preview: A Staggering Rise in Health Insurance Costs” (Economic Policy Institute, 15 December 2010); Don Trementozzi and Steve Early, “Romney, Obama Health Care Reforms Offer No Relief for Unions” (Labor Notes, 22 June 2011). | Print
Unraveling the Unemployment Insurance Lifeline: Responding to Insolvency, States Begin Reducing Benefits and Restricting Eligibility in 2011
Excerpt: State lawmakers enacted a range of policies in 2011 to amend their unemployment insurance (UI) programs, most of them motivated by insolvent state trust funds. Most notably, six states passed unprecedented cuts in the duration of benefits, for the first time reducing benefit weeks to less than the decades-long accepted standard of 26 […]
Weak Consumption and Shrinking Government Slow GDP in Second Quarter
Consumption grew at just a 0.1 percent annual rate in the second quarter, while government spending shrank at a 1.1 percent rate, holding GDP growth to 1.3 percent in the quarter. This report also revised down first-quarter GDP growth to just 0.4 percent from a previously reported 1.9 percent. Together, these numbers indicate that the […]
Workers’ Assemblies: A Way to Regroup the Left?
Herman Rosenfeld is a member of the Canadian Socialist Project and the Greater Toronto Workers’ Assembly, a new initiative aiming to reinvigorate working class and radical politics in the city. He spoke to Tom Denning about the methods and activities of GTWA and the challenges it faces. Who initiated the GTWA, and with what […]
From Lender of Last Resort to Global Currency?Sterling Lessons for the US Dollar
Financial crises are bad news for the status of the currency in which the turmoil is denominated, right? So the US-made financial crisis must be bad for the dollar, right? And especially so because of the expansive dollar monetary policy that has ensued, right? Ambiguity on What “Strong Currency” Means Several economists appear to […]
Sense and Nonsense in the Balanced Budget Debate: A Socialist Response
The Republicans have successfully changed the main emphasis of the economic debate from job creation to deficit control. Why the urgency for balanced budgets? After all, this anemic “recovery” has set itself apart from all previous post-war turnarounds precisely by its manifest failure to generate jobs. Economic growth needs to considerably exceed 3% per […]
The Debt Ceiling: A Guide for the Bewildered
It is very difficult to explain American politics to those who are not Americans and/or have not lived here long enough. Add to that the confusion over basic economic principles, and it becomes almost impossible to explain the debt-ceiling debate to rational people. As noted by James Galbraith, this is not a fiscal crisis, […]
Jamaica Remains Buried Under a Mountain of Debt, Despite Restructuring
As the eurozone authorities move closer to accepting the inevitable Greek debt default/restructuring, there are some who have pointed to the Jamaican debt restructuring of last year as a model. It’s hard to imagine a worse disaster for Greece. It is worth a closer look at what has been done to Jamaica, not only as […]
Credit Rating Agencies
Rating Agency: “Don’t take it wrong, but some companies are paying me to come here to tell you that you have no future.” Juan Ramón Mora is a cartoonist in Barcelona. This cartoon was first published in his blog on 14 July 2011 under a Creative Commons license. Translation by Yoshie Furuhashi (@yoshiefuruhashi | […]
Price Formation in Financialized Commodity Markets: The Role of Information
Excerpt: The mid-2000s marked the start of a trend of steeply rising commodity prices, accompanied by increasing volatility. The prices of a wide range of commodities reached historic highs in nominal terms in 2008 before falling sharply in the wake of the financial and economic crisis. Since mid-2009, and especially since the summer of […]
Global Oil Prices
There was a time when global oil prices reflected changes in the real demand and supply of crude petroleum. Of course, as with many other primary commodities, the changes in the market could be volatile, and so prices also fluctuated, sometimes sharply. More than anything else, the global oil market was seen to reflect not […]
C Is for Capitalism
A is for Airstrike; B is for Barack Obama; C is for Capitalism.
On Using the Chained CPI for Social Security Cost of Living Adjustments
There has been considerable discussion of basing the Social Security cost of living adjustment (COLA) on the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) as a “painless” way of generating large budget savings. This view reflects serious confusion about what the switch to the C-CPI-U involves. (The switch would also lead to higher […]
Triplet Crises and the Ghost of the New Drachma
Much of the discussion surrounding the Greek crisis revolves around the probability and implications of a sovereign default and on whether the introduction of a national currency (which, for simplicity, we could call the new drachma) would help pull the Greek economy out of recession (see for example Manasse 2011 on this site). Less […]
The Myths of Capitalism
There is a pervasive view that growth under capitalism, though it may worsen poverty, even absolute poverty, to start with, eventually leads to a lowering of poverty. The experience of the English Industrial Revolution is invoked in this context. There has been a huge debate among economic historians about the impact of the Industrial Revolution […]
The Greek Crisis: Uttering the Other “D Word”
Default is not the dirty word that nobody wants to say. Almost everybody now accepts that Greece will default. Several people will prefer to use the euphemism of “re-profiling debts,” but we all know what it means. The interesting thing is that at least some authors, like Martin Wolf in a recent Financial Times […]
