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

20 Jan

Part B: The lure of naive models in the era of financialisation (*)

[(*) For the rationale of this four-part series of posts, as well as for Part A of the series, click here.]

Preface: Part A of this four-part series of posts began by focusing on the problematic application of the analytic-synthetic method to socio-economic interactions. It argued that the economists’ penchant for ‘analysing’ complexity (through a process of breaking it down to its ‘constituent parts’, before synthesising the knowledge of those parts into a macro theory of the whole) delivers logically incoherent insights regarding the phenomena under study. But, remarkably, because the analysis itself is so complex (from a mathematical perspective), few can see through these models and realise their inanity. And given that the economists’ models have a great deal of utility for politicians and financiers, they become established as ‘conventional wisdom’. Continue reading →

Paradigm Lost: Rethinking Economics and Politics

19 Jan

On 12th to 15th April, a conference will be organised by INET on this theme [Axica Conference Center, Berlin]. For the full program, see here. In its context, on the 13th, I shall be participating in the following session. As I am figuring out the content of my intervention, I would welcome your suggestions. Thanks

The Future of Europe

Moderator
Wolfgang Münchau, Associate Editor and European Economic Columnist, Financial Times

Speakers
Markus Brunnermeier, Edwards S. Sanford Professor, Princeton University
Vitor Louçã Rabaça Gaspar, Minister of State and Finance, Portugal
Sven Giegold, Member of Committee on Economic and Monetary Affairs, European Parliament
George Soros, Chair of Soros Fund Management
Yanis Varoufakis, Department of Economics, University of Athens

Two interviews on the futile PSI negotiations

19 Jan

 

For the second interview click here: Europe as the world’s laughing stock

Why, for Greece’s and Europe’s sake, the PSI ought to fail

17 Jan

Headlines the world over ‘agonise’, on behalf of Greece and Europe, on whether the PSI+ negotiations will come to a conclusion. The presumption is that, if they succeed, Greece will be reprieved and Europe (with France and the EFSF having recently been downgraded) will buy some much needed extra time to put, at long last, its house in order. Nonsense, I say! Continue reading →

On Sky TV discussing the PSI+ negotiations, interviewed by Jeff Randall

17 Jan

PSI talks to resume in Athens over the haircut imposed on banks by the EU in October 2011. Back then, Mrs Merkel and MR Sarkozy forced the hand of the IIF’s head, Mr Dallara, to accept the notion of a  ’voluntary’ 50% haircut on the face value of Greek government bonds (except those not owned by the ECB).  What they ‘forgot’ to settle on that fateful night was the coupon rate on the new (haircut) bonds and the maturity. Thus the negotiations between Mr Dallara and the Greek government began. Will bond holders and the Greek government reach a deal? I have already argued (see here) that these negotiations will fail even if they… succeed. Yesterday I had a chance to summarise this view on Sky TV. Click here for a snippet of the interview  with Jeff Randall. [You can also click here from my previous discussion with Jeff, on similar matters back in September 2011.]

 

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