Muscle Milk Collegiate Vs Muscle Milk

Utopia and realism in European economic policy


Sergio Cesaratto
Posted

together with a commentary in the article Guido Montani "We will do as Schroeder" by Sergio Cesaratto and a replica of the latter.

In his contribution Montani said that "Europe suffers from a serious institutional imbalance," denounced "European federalists," where "has been created only monetary pillar." Expected to be a place like Germany, but not too much, when it disappears, "the distinction between strong and weak countries" This suggests that a (reinforced) the European Parliament and the Commission to have "a budget of at least 3 5 to 4.5% of GDP. " To go to meet the "Good causes" Germany believes that it would be "to support some of the constraints of austerity ... to prevent international finance endanger the monetary union, and to sustain due to" pride "the alternative project, the progressive parties "should take" serious measures ... to reduce public debt. "Although, finally," no shared theoretical criteria for determining when a debt becomes sustainable ... these criteria are in practice and made explicit by the financial speculative attacks in countries like Spain and Ireland that also met the Maastricht criteria.

Article Montani expresses a common sense and rigorous-European broadcast on Italian and European left. While acknowledging some plot points - notably the idea of \u200b\u200ba larger European budget - do not hide a fundamental disagreement in the formulation and content.

a) First, the European institutional structure is not a random result, but arises from the idea that markets liberalized goods and labor, accompanied by a monetary policy inherited from the Bundesbank and the waiver policy tax would ensure non-inflationary growth. This model has been good for the German economic model and have accentuated imbalances in Europe, as explained many times in this magazine.

b) This structure is ideally modified, albeit in a more complex indicates Montani, this implies, in particular, the renunciation by Germany of certain features of their own economic constitution. The political realism on the German economic constitution leads us to be pessimistic in this respect [1].

c) Montani, paradoxically, seems more optimistic about the Germanization of Europe ("In fact, the German government is becoming the EU government. If in the future we will proceed in this direction is to build a German Europe ") but rejects it as not a "good solution for Europe's citizens." Indeed, if things were that simple, all European citizens accept some sacrifices in order to resemble that country! Unfortunately, however, the performance of German behavior through massive doses of deflation is a mission impossible : most efficient companies can only be achieved in a context of growth and not a progressive impoverishment of the population. Moreover, as noted sharply , the obsession in the recovery of national competitiveness as a solution to the problems of the euro, shared Merkel and the Commission shows that "are trying to push the euro area, as if it were a small island off shore.")

d) Montani seems to subscribe to the thesis that an alternative, that even require the repayment of debt for the peripheral countries (does not seem worthy of discussion of the idea that this is national pride.) The concept of sustainability is arbitrary, since Montani admitted as argued in the appeal economists in the stabilization of public debt. [2] The public debt sustainability depends of course on monetary policy adopted. If it is accommodated in the sense to minimize the burden of debt sustainability is guaranteed. The ECB has a great opportunity to do that, if European governments wanted (unfortunately, seem to allow banks to what is considered anathema to the public sector). [3] Why then impose on indebted countries deflationary fiscal policies that only worsen the national situation, the EU and the world, as alleged in the letter economists [4] measures, however, doomed to failure as Montani admitted that the Greek case.

What to do? Meanwhile, back away from the federalist utopia - which find their basis in the same ideology laissez-faire as it is directed to European aid - for a realistic view of relations between countries and the complex relationship between the distributive conflict and international economic agreements. On this basis, economic projects proposed as an alternative to the existing design is an instrument of political struggle as long as you do not believe the solution lies in what they call Keynesian idealism (although Montani sometimes seems far away yet that), remember that the rejection of Keynesianism is Article 1 of the German economic constitution. Faced with economic conflicts have deep historical roots, there are no easy solutions and the only rule is to confront this reality nacionales.Spinelli aware of the interests not, please.


[1] You can see the critical positions Carlo Panico, somehow similar to Montana, Cesaratto .

[2] that the debt of some countries of the periphery is under attack, under the Maastricht criteria do not prove anything, since in these countries is the private system that heavily indebted, with the possibility of worsening public finances.

[3] Unfortunately Montani in its wider contribution to the referring fully agrees with the current status of the ECB un "pilar sólido", argumentando que la austeridad fiscal es "necesaria para evitar una nueva crisis," una posición que está en consonancia con la "contracción fiscal expansionista" de Alesina .

[4] La carta de fecha 15 de junio de 2010 fue dirigida al presidente Napolitano. Se supo que unos pocos días después de que el presidente dijo: "El tema, sin embargo, está obligando a preocupaciones centrales compartidas por una gran parte de la comunidad internacional - junto con el de la realización concreta de los objetivos adecuados de la consolidación de los presupuestos públicos - la cuestión de la recuperación del contexto de crecimiento económico. The two points are combined formulations in all of the latest documents, mainly the European Union, the second can not be neglected over the first, but the combination is controversial and difficult. It also depends on the contribution that the European recovery is still weak that will be given by some of the major EU economies, if we do not care about finances and strengthening the competitiveness of the country, and depend on a combination of positive consolidation Financial and economic growth, the specific content of the stabilization operation in countries like ours. "






Original: Economy and Politics

A Diagram Of The Parts On A Ship

We will do as Schroeder





Cesaratto Sergio - February 1, 2011

In a tough speech at a meeting held at the Lingotto, in earlier days, Walter Veltroni, facing some economic problems in worthwhile reflection.
The main focus of the proposed Veltroni is "do as Germany", or "Agenda 2020 for Italy," in imitation of the Schröder-Fischer government (1998-2002), who laid the foundation of German success to the crisis, but it seems afterwards. This model, as is known, had as a basis for wage moderation and flexibility, according to unions, for the use of the workforce. Now it was accompanied by the support of technological innovation activities. This policy has led to the revival of the German model based on internal discipline, the technological quality of export development - a challenge which involves the compression of domestic consumption.
This model, which we have elsewhere called "ordo-mercantilist " actually was helped by the simultaneous creation of the European Monetary Union (EMU). You should also be noted that Germany has reacted with perfect timing the opportunity to be served on a silver platter by their competitors to boost the export-based model that had been tarnished as a result of German reunification. [1] No doubt exists that point to a combination of reinforcement and structural weakening of the center and the periphery of Europe respectively, is the cornerstone of the current crisis in the region.
With Veltroni apparent realism argues that "entering the euro, Italy has pledged to reduce public debt and has given up forever to use the currency devaluation, as a form of rigor and discipline of our time improve the competitiveness seems to be "the only game in town" available of our country, like Germany did. Nothing new in the PD (Olivo, DS), in fact, the infamous "less than the fathers to the children" Nicola Rossi. It was very clear to the leaders of this party, that the euro has been specifically designed to import the German discipline. The challenge, however, must be collected, and not enough to criticize.
The Italian crisis is serious, and of course, exacerbated by a management policy of pure resistance, so to speak. The country stagnant for at least two decades, has collapsed with the crisis, and the persistently large current account deficit and lead us inexorably to come soon in the group countries with high external debt. This crisis is part of the European crisis. There are three ways out of it: (a) breaking the euro, (b) make such as Germany, (c) build a Keynesian Europe. Suppose we want to avoid jumping into the darkness of the first election.

The second strategy, Veltroni, is not free of illusions. First, Germany will always be better in his game, and although there is no doubt we have much to learn and emulate in this country - a society with a modicum of discipline and sense of duty is a powerful message left in Italy - is must be careful that this does not become a "social carnage," a simple game in the bottom right is to reduce and achievements, especially the workers and youth. This route also has the nature of what economists call "competitive deflation, a competition between countries on the basis of wage moderation, a surrogate of competitive devaluations, a zero-sum game.

Part of this bleak picture is disturbing Veltroni aim to reduce the public debt ratio to 80% of GDP (currently around 120%) by 2020 through, in particular, a cut in public spending growth (and, but, alternatively, through a special tax on large estates). But GDP growth is that we must rely to a reduction of that relationship, unless an unlikely massive revival of exports by strong wage deflation, reduced spending will negatively affect GDP and tax revenue that will aggravate the debt, the difficulty of Sisyphus that Greece is experiencing.


A series of doses of the third strategy appear to be necessary. This seems, however, also unrealistic, just Germany is opposed to being a dominant economy, the locomotive, a role that has always rejected as an infringement of its own model (which is going to tow the Keynesianism of the others).
The fact is that without a context of European enlargement - which is the opposite of "competitive disinflation" - is difficult to introduce in Italy, not so much the model of Schroeder (say it does not matter), but to win a set of rules, rights and prosperity.
is recognized that the crisis in Europe did to Germany swallowing measures were unthinkable a year ago (the ECB to purchase bonds to support the government securities of countries in virtual default of payment, the progressive Europeanization of its debt), although the timing of German politics continues to aggravate the debt situation of these countries. That steps be more decisive progress anticipated in Germany it is doubtful, given that its Constitutional Court has ruled unconstitutional government European Public Prosecutor.

The political battle in Europe, however, is not given by persuasion or worse, by the European rhetoric. Tremonti has done well to speak out against the Germans by saying that what Europe is trying to save not only indebted countries, but the German creditor banks. So do not think Veltroni unit needed a motion of Parliament, because the ECB would not dare raise interest rates in response to a resurgence of inflation?
Or believe violates the independence of the European Central Bank (ie, its role as watchdog of the fact that German wages should grow in order to balance the competitiveness Europe?). Debt proposals Veltroni seem to give a hand to the hard line that the Germans want to impose on the European periphery (see in relation to the Charter of economists ). Instead, do we want to say out loud that enough is enough?


Original: Economy and Politics

Relationship Counter Generator

Report of the Commission of Inquiry into the Financial Crisis: derivatives Minimizing



By Matías Vernengo




The Commission of Inquiry into the Financial Crisis (FCIC) issued its report last week and concluded that the crisis was predictable and preventable. The FCIC claims that the authorities were lax and that ". The first example [Permissive] is the fundamental failure of the Federal Reserve to stem the flow of toxic mortgages that could be done by establishing conservative mortgage lending standards "The report is right to emphasize the failures of regulation and monitoring were critical to the eventual collapse, which incidentally is an installation charge Geithner, Bernanke and several other policy makers, even in key positions.
The central idea of \u200b\u200bthe FCIC report concludes that excessive leverage and lack of transparency were in the middle of the crisis. He also argues that the counter (OTC) derivatives contributed to the crisis, and that the decision not to regulate the derivatives market was a mistake. Finally, the report suggests "a kind of default swaps credit derivatives (CDS) of fuel pipe mortgage securitization." When housing prices collapsed, then the derivatives are fundamental to the crisis. The main conclusions of the report are not new or particularly controversial.

As Yogi Berra said: "You can observe a lot just watching" The problem with the report not so much that is stating the obvious, but actually misses the point of why derivatives were central to the crisis. The FCIC maintains that "the availability of capital and excess liquidity, the role of Fannie Mae and Freddie Mac (the GSEs), and the government's housing policy "were the three main causes of the crisis. In this view, derivatives are relevant only because they allow excessive expansion credit.
In fact, the limited set of recommendations in the final section of the report suggests that regulation is necessary to avoid excessive credit creation, and government housing policies should be changed. This obviously satisfies the supporting the current limited set of rules and prefer to avoid blame. As said Frank Partnoy, this is not a Pecora Commission (1).

The problem is that derivatives were central to the crisis by not only allow excessive borrowing in the period before the collapse of the housing bubble. It was the excessive speculation in the financial sector, not excessive household debt to buy houses, which led to the crisis. In fact, the vast majority of OTC derivatives in June 2008, on the verge of crisis, were (and remain) the interest rate swaps, not directly related to subprime loans, according to the Bank for International Settlements (BIS). It is assumed that trade in these instruments reduce exposure to risk, but it is difficult to defend this idea after the collapse of Lehman.

is important to note that the huge notional value of derivative contracts outstanding more than $ 580 billion in June 2010 reflects the fact that banks are still basically in the business of proprietary trading, ie speculative investment. This figure is incredible, more than 10 times world GDP, represents what was learned in previous crises such as debt. As noted by Jane D'Arista, Jerry Epstein, and other economists Experts for Stable, Accountable, Fair and Efficient Financial Reform (SAFER), speculation a much greater contribution to the bank's income (and losses) of bankers and the press have suggested, and their ability to do that is what should be severely restricted.

The European crisis is not disconnected from the fact that a large amount of collateralized debt obligations (CDOs) had been sold to European institutions, and that the holders of these bonds in many cases became insolvent. In Europe, of course, other problems associated with the structure of the common currency, but the outstanding debt (a typical problem in all of the debt crisis) is certainly important. And the debt burden means that the mechanisms that led to the earlier crisis remain. The fact that commodity prices are still influenced by the strong presence of speculators, As noted in the United Nations Conference on Development (UNCTAD) Trade and Development Report on Trade and Development, implies that the recovery in the periphery is also at risk.

The report misses the opportunity to promote further reform of the financial sector. Keynes believed, correctly, that those who disagreed with him that "... ranging from the belief that [he was] very wrong and a belief that [he was] saying anything new." And so will the readers of this report.

1 Pecora investigation was an investigation initiated on March 4, 1932 by the United States Senate Banking and Currency Committee to investigate the causes of the Wall Street crash of 1929. The name refers to the final, and the fourth chief counsel for the investigation, Ferdinand Pecora. NT.

Text of "The Financial Crisis Inquiry Report"

Original: Triple Crisis

How Ong For Gastritis To Go Away

Dilma and dilemmas

Eduardo Crespo *

At the end of Lula's first term, with the entry of Guido Mantega the Ministry of Finance who replaced Antonio Palocci, a man linked to economic power, the Brazilian government's economic policy began to shift toward a more heterodox and friendly to growth. But the regime inflation targeting Orthodox stamp that implements the Central Bank remained unchanged. This regime is the core of Brazilian monetary policy is one of the central pillars for any policy change that points to growth.

With the advent of Dilma Rousseff to power, Palocci returned to the government but now as chief minister of the Casa Civil, Dilma position he held since 2005 - and the first steps do not seem very encouraging for the growth. The central bank raised the Selic rate from 10.75 to 11.25 basis points in response to a rise of 5.9 percent in 2010 the index recorded inflation, which exceeded the target of 4.5 percent , time seemed to accelerate in recent months driven by commodity prices. This regulates the trend rate of long-term rates and is not a minor detail that today Brazil is paying the highest base rate in the world. This has driven the real's appreciation against the dollar because capital entering Brazil arbitrating between charges. When Lula came to power in January 2003, changed 3.5 reais per dollar. Today the dollar real 1.7 round.

The high base rate of Brazil has an impact on two fronts. On the one hand, the real appreciation reduces the competitiveness of production, especially manufacturing and services added value, affecting the external accounts, which have a current account deficit even though Brazil was favored by extraordinarily favorable terms of trade and has grown at modest rates compared to other countries in the region. For another, as the majority of Brazilian public debt is linked to base rate, its rise leads to an increase in government spending multiplier effects close to zero over the rest of the economy. Thus, the required rate hikes to curb social spending and infrastructure to maintain the primary surplus used to pay interest. In this context, the President announced a sizable fiscal adjustment. It is evaluating the possibility of promoting a reduction in public spending between 30 and 40 billion reais. It was announced that the minimum wage, an enormous impact on the overall Brazilian economy in 2011 should not go above the 540 reais. Mantega

reached to consider the possibility of excluding the Central Bank rate as the base for setting inflation targets food, whose prices depend on the price of international commodities. The reason, he argues, is that local demand, and consequently interest rates charged in Brazil, have no direct influence on those prices. Thus, the increase rate interest has negative effects on domestic demand, public expenditure and the exchange rate even if the price hike is not a result of internal conditions.

However, beyond the real causes of inflation in Brazil, we must recognize that the target regime has been quite successful in controlling inflation. What has been your secret? We understand the impact that high rates have on the Brazilian exchange rate appreciation has been the main factor that kept inflation in check. The cheap dollar has a favorable effect on rates and prices of tradable indexed while having a beneficial effect on wages cushioning distributional conflicts. There is the "paradox" that increase the profitability of the financial sector and wages at the same time. The cheap dollar is not an unwanted side effect of a policy to control demand. By contrast, in Brazil is much more clear correlation between the exchange rate and inflation between the latter and aggregate demand.

Today the region seems to face a dilemma. Some countries, like Argentina, have low base rates, high exchange rates but tended to the assessment because they experience high levels of inflation. But others, such as Brazil, require high basic interest rates, exchange rates appreciated and lower levels of inflation. Either way, the reputation of the major developmental cabinet members Dilma augurs not a complete change in direction hinted incipient heterodox Lula's second term. Brazilian reserves are around 300 billion dollars and would allow it to continue to stimulate domestic demand without any serious risk of devaluation and runaway inflation.

* Professor at the Federal University of Rio de Janeiro, Brazil.