Monthly Archives: July 2012

Should governments with low bond yields borrow substantially to kickstart the economy?

A well-written recent article on Slate points out that most governments today can borrow on their bond markets at incredibly low rates. The article goes on to suggest that what governments should do is to borrow substantial amounts to inject into the economy to kickstart growth. Forget about Italy, Spain and Greece, rates have never been so low for most countries, says the author. My question to people who know more about the ins and outs of the global economy would be: aren’t these low rates connected to the unsustainably high rates of major economies like Spain and Italy? Is there a message there from investors saying to other countries “if you do the same, you’ll end up like Italy and Spain”? Or is there really?

Advertisements

British austerity, a nation-wide restructuring exercise

The UK Prime Minister, David Cameron, finally tells us the truth (which was already evident to everybody anyway): austerity means a nation-wide restructuring exercise to go on for many years, and that is radically and irreversibly changing Britain into a much more (unequal) market-driven elitist society, where few will have lots of capital and other social and knowledge resources, and most will have to scramble at the margins to get by, both in terms of material security and spaces for psychological freedom and autonomy. More alienating work, less pay. Very few will be able to earn a living by pursuing what they really wanted and worked hard for. It still escapes me how this is supposed to remain one of the “freest” and most prosperous democracies on earth.

Euro crisis: no systemic solution in sight

Check out this insightful report on the Eu summit of the 9th July on the Financial Times Alphaville blog.  Despite announcements to the contrary from Europe top technobureaucrats every time they have a summit, it’s clear that we are a long way from a systemic solution to the economic and fiscal crisis in the Eurozone. European technocracy’s gradualist approach runs the danger of not being effective and quick enough if market turmoil continues, as it already happened in 2008. On the other hand, technocrats are thriving on crisis: until we live in a state of permanent economic emergency, we need them, this seems to be the gist of the argument. As long as they keep on managing the edges of financial chaos ‘just’, we won’t come out of the emergency, and any democratic process to deal with the underlying structural problems will continue to be de facto suspended, until further notice. Tough times ahead, no light at the end of the tunnel for now.