European Employment Strategy – barely a new job in sight

Eurostat released the latest – Employment – data for July 2014 last week (September 12, 2014) and announced that total employment was up by 0.2 per cent in the euro area. For those that study the data closely you will not be confused. But for the casual observer you might have cause to puzzle. Has this been a sudden turnaround given that last quarter employment growth was firmly negative in Europe? The clue is that Eurostat publish two different measures of employment. The first (published last week) is derived from the National Accounts estimates whereas the other is derived from the Labour Force Survey. The latter doesn’t paint a very rosy picture at all. But whatever these data nuances, the European Commission is still facing a disaster and their latest policy response will do nothing much to alleviate the problem. But then why should we be surprised about that?

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Friday lay day

Its Friday and my declared lay day for blogging. I am currently working on some research analysing the shift in patterns of regional unemployment in Europe as a result of the GFC and the policy austerity that followed (it is an invited paper from one of the leading regional science journals). That is my most pressing deadline. The patterns that we are picking up are interesting already and will be analysed in more formal terms using spatial econometric tools. I will report more fully when the paper is finished around the end of the month. I am also working on the completion of our Modern Monetary Theory (MMT) textbook, and a book on the evolution of MMT (due later this year). Bit busy.

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Our poster child keeps exposing the myths

A regular occurrence is the prediction of doom for Japan. Some minor upturn in Japanese government bond yields or a movement in some other irrelevant financial statistic relating to the Japanese public sector sends the financial press into apoplexy. But the Japanese economy continues to defy all these prophecies from the neo-liberal zealots and eventually they will be dismissed by the broader public as the education process continues. The latest dramas surround the massive purchases of Japanese Government Bonds (JGBs) by the Bank of Japan. The fact is that the Bank of Japan is currently exposing the myths of the mainstream position even if it would not see it that way. Our post child just keeps giving us real life examples to substantiate the views presented in Modern Monetary Theory (MMT).

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Friday lay day

Its my Friday Lay Day blog, which means I don’t really write one. I am working on an Modern Monetary Theory (MMT) volume for my publisher, Edward Elgar, which will document, to date, the key literature that I consider to be foundational to the development of what we now call MMT. I am putting the literature together and writing an extended introduction explaining how each contribution fits into the jigsaw. I am starting with Marx (of-course)! But today, I also take a moment to briefly reflect on an article that apppeared in the German Der Spiegel (September 3, 2014) – France and Friends: Merkel Increasingly Isolated on Austerity. I will follow up on this next week in more detail. The reflection is really just a segue for one of my favourite songs …

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Neo-liberal capture of the policy making process in Europe

Mainstream macroeconomics has mounted a range of arguments over the years to argue against any discretionary involvement by governments or regulators in the economy. The claim is always that the ‘market’ will self regulate and weed out bad players and produce the best outcomes with the least resources each period of activity. Various fancy terms are introduced into textbooks that make these arguments seem to have scientific weight. In narratives, there is often claims that left-wing groups blurred as trade unions have too much influence on political processes, particularly when a non-conservative party is in power. Rarely, is there any discussion of the way governments (of all political persuasions) become captured by the financial and industrial capitalist elites and become meagre conduits for capitalist rule. The west talks a lot about democratic rights and freedoms and people dutifully wander off at appointed times and cast votes which by the end of the day usually result in a government being elected. But they rarely realise that lying behind all of that flim-flam is rule by capital. There is very little democracy in advanced nations. We might turf out one party and elect another but the domination of capital persists and the lobbyists just duchess and bully a new political machine. The European Union takes this violation of democratic rights to new heights.

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French government in tatters and the financial markets want growth

The French government is in tatters after a number of the more enlightened members of parliament resigned as a protest against the mindless austerity that Hollande is imposing on his nation, which is causing the already desperate unemployment situation to worse. Le Monde ran a story (August 25, 2014) – La dernière chance du président (The last chance for the President) and said that the political season just became explosive for the President and the Prime Minister as a result of some of his senior ministers walking out in protest over the austerity obsession that Hollande has imposed on the French government. Despite all the scaremongering that financial markets love austerity and see it is a move to stability, the ‘markets’ appear to be rejecting austerity and voting for growth. We will see.

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Eurozone has failed – a major shift in direction is needed

The central bankers of the World met at Jackson Hole, Wyoming last week for their annual gathering far from the madding crowd. And as far away from the mess they have helped to create as you could imagine. Out of sight out of mind I guess. The ECB boss felt it his purpose at the gathering, which you can guarantee is plush in all respects (catering, wines, etc), to urge politicians to introduce more “growth-friendly policies”. He claimed in his speech – Unemployment in the euro area – that the so-called “sovereign debt crisis” had disabled “in part the tools of macroeconomic stabilisation”. Which is only true if one accepts that a central bank should play no role in supporting fiscal policy and that fiscal policy should be constrained by innane rules that deliberately prevent it from having sufficient latitude to meet foreseeable crises. Which is about as inane as one could get. But then none of these central bankers are accountable for anything much. They can swan around to meetings and issue ridiculous statements about growth-friendly policies, while supporting austerity, and nothing much happens to them personally.

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Friday lay day

Friday, and its my short or no blog day day. Today, I am hosting a Workshop in Newcastle on the Eurozone crisis. We have three papers and a panel discussion. I will post video once it has been processed. But earlier this week there was a meeting in Lindau, Germany where several Nobel prize-winning economists attended along with the German Chancellor Angela Merkel. Some of the economists are starting to voice their opinions more vocally now and they are very critical of the European policy makers. One might say, what took them so long.

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Austerity does not necessarily require a cut in government spending

The Bloomberg Op Ed article (August 19, 2014) – European Austerity Is a Myth – is about as flaky as it gets. The author is intent on justifying the article title by examining changes in government spending (as a per cent of GDP). He produces what he claims is “more appropriately called the ‘graph of the decade'”, which would mean it was some graph, but in reality tells us very little and does not provide the basis for his conclusion that rising government spending since 2007 is evidence that austerity has not been imposed. Oh dear! Some points need to be made.

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Germany contracts as the French suggest defiance

According to data just published by the French National Institute of Statistics and Economic Studies (INSEE), its national statistics agency, the French economy has stalled in the second-quarter 2014. In its – Informations Rapides, Principaux indicateurs 14 août 2014 – n°186 – we learn that the “le PIB en volume est stable”, which is a cute French way of saying that real GDP growth was zero, building on the zero growth from the first-quarter, which means their terminology that it is “stable” is accurate but an understatement. The latest data from Eurostat (August 14, 2014) – GDP stable in the euro area and up by 0.2% in the EU28 – show that the three largest economies in the Eurozone (and Europe) are either in recession (Italy) or teetering on recession (France, Germany). The French Finance Minister reacted to this news by calling for a rethink of economic policy in Europe with a shift in emphasis to growth. He indicated that the French government would reduce its deficit in its own time without undermining new stimulus measures aimed at kickstarted domestic growth and reducing the unemployment rate. It is looking like 2003 all over again.]

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