On the true causes behind France’s downgrade

14 Jan

“[T]he financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the eurozone’s core and the so-called “periphery.” As such, we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers’ rising concerns about job security and disposable incomes, eroding national tax revenues.”  

S&P, extract from its rationale for downgrading France et al, 13th January 2012

  • That S&P have been part and parcel of the fraud-ridden financialisation game which led us to this Crisis, is beyond doubt.
  • That S&P have, previously, downgraded both the United States and Japan, failing to appreciate that their large debts are perfectly sustainable under the present circumstances (which was confirmed by the observation that their downgrade had no appreciable effect on these two countries’ bond yields), is equally on the record.
  • That S&P’s rationale, see above, for downgrading France is precisely right, there is no smidgen of a misgiving Continue reading →

A brief note on Tobin’s Tax and Merkozy’s naked cynicism

12 Jan

Tobin’s financial transactions’ tax was a simple, down-to-earth, logical proposal for dealing with the ridiculous volatility that became the norm in the era of the Global Minotaur (my metaphor for the way in which the combination of US trade deficits and capital flows into Wall Street kept the global economy going between the early 1970s and 2008). Continue reading →

Greece’s PSI is Dead on Arrival: An error in search of a rationale but also a failure that may prove a harbinger for the Modest Proposal

11 Jan

A brief history of Greece’s PSI

In the beginning there was Wholesale Denial. Continue reading →

Complexity Fetishism, the Euro Crisis and a worthy challenge for 2012: Part A

8 Jan

Preface: Before 2012 once again embroils us fully into the ongoing saga of the eurozone’s Crisis and its global ramifications, I thought it might be a good idea to start the year on a reflective mood. The topic I chose is complexity and the inadequate responses to it that have landed us in a mire of our own making; a Crisis that could have been defeated during 2011, and that it is still possible to stop on its tracks in 2012. Yet a Crisis which will probably be allowed to run its terrible course, with hideous consequences for Europe and the world, as a result of a motivated flight from rational responses to a complex, yet not insoluble, problem.

Introduction: Complexity is the stuff of existence and its proper acknowledgment a prerequisite for a successful life. Our problematic relation with complexity has been a cause of many a calamity, the Crash of 2008 and its aftermath (especially here in the eurozone) being a case in point.

Wherever we look, and the Earth’s environment is not a bad place to start, humanity has struggled to come to terms with complex systems. Economies, the archetypal human artifact, are even more notorious than ecologies for evolving in ways that humans cannot grasp by means of our run-of-the-mill, pacifying, oversimplifying models. And when our actions, policies and choices, based as they tend to be on such models, give rise to meltdowns, crises and stubborn failures, we have a tendency to move to the other extreme; the one I like to label Complexity Fetishism’. It seems to me that the great challenge for 2012 is to find ways of plotting a course that avoids the pitfalls of both Complexity Denial and Complexity Fetishism.

This four-part series of posts will comprise the following installments.

Part A: The analytic-synthetic approach to socio-economic systems as a form of Complexity Denial

Part B: The political lure of naive models in the era of financialisation

Part C: Crisis and the temptation of Complexity Fetishism: The eurozone case

Part D: A challenge for 2012: How to transcend the sterile confrontation of Hayekians, Keynesians and Marxists

Today we begin with Part A. Parts B,C and D will be added in regular intervals within January.

Part A – The analytic-synthetic approach to socio-economic systems as a form of Complexity Denial Continue reading →

Ending 2011 with a fable for our times

23 Dec

As 2011 is drawing to a close, with the ECB only having managed to paper over the deepening cracks of the eurozone, it is time to allow ourselves to abandon the barricades for ten days or so. If the soldiers in the Great War’s killing fields could maintain a humane ceasefire, tend to the wounded, and bury their dead,  we too can afford to put a cap for a while on our hectic rythm. Anyhow, the Crisis will be back with hideous vengeance soon after the New Year.  So, time to switch off our gadgets, look after those whom we have neglected, and reflect on a truly awful year. For my part, I am flying soon to Sydney to be with my daughter. I wish you all a happy holiday and a New Year worthy of the many good people who suffered needlessly during 2011. 

Lastly, since 2011 was the year of ‘my’ Minotaur, I leave you with this fable (which sums up in few words my book’s gist):

Continue reading →

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