All the economic news at present is bad. Eurostat released its latest labour force data which shows that the Euro area unemployment rate has risen to 10.2 per cent in September 2011 (0.1 rise over the year) which shows how persistent the crisis is in that region and that is is slowly getting worse. The OECD has released a Special G20 Briefing Note which declares the world economic outlook to be gloomy and decisive action is needed although their policy recommendations will make things gloomier. A major financial company (MF Global) has gone bankrupt, partly as a result of their bond market exposure in Europe (haircuts?) and most disturbingly, the ILO has just released a – G20 Briefing – which was co-published by the OECD and predicts a “massive jobs shortfall among G20 members by next year” if the current slow-down in the world economy continues. There is a major demand (spending) shortfall in the advanced economies and only one sector that can do something about it – the public sector. But politicians are being pressured to spend less. I cannot understand how we have been so caught up in an ideology that caused the problem in the first place and is now being seen as the solution despite all evidence to the contrary.

The only question I have been toying with today apart from all the other ones is whether it was the big bazooka or not. The Melbourne Age article (October 28, 2011) – Euro summit fires ‘bazooka’ at debt monster – lead me to believe that the big one had come out, but then the Financial Times article (October 28, 2011) – Merkel’s mantra works without ‘big bazooka’ – suggested the bazooka was left in the rack. Perhaps the bazooka was brought into action but the big bazooka was left at home. That conclusion would reconcile things nicely. It is very confusing though isn’t it. About as confusing as trying to work out what the EMU leaders might define as leadership. The way I understand it the only bazooka that the EMU has at their disposal refused to play ball and stayed at home in Frankfurt. The result – no matter what the political spin is and no matter how much the governments pledge to put into the EFSF or claim they can get from the Chinese the situation remains – they are recursing back to insolvency. None of the member governments can ultimately stump up the euros when Italy, then France or any other member state requires bailing out. In the end, they will be picked off one by one. I guess they did bring out some sort of bazooka – but just aimed it at themselves.

I am currently quite interested in the formation of consumer expectations after being asked by a major financial institution to consider constructing a new series for them. So in developing the project I have been enmeshed in technical detail the last week or so. I am also interested in the way different polls are interpreted. In the last few days two major polls in the US have been released. They are broadly in agreement but there are some interesting differences. The other interesting aspect of the polls is that they provide further evidence against the way the mainstream of my profession thinks about the economy. They reveal that individuals are not likely to behave as Ricardian agents. The mainstream theorist claim that individuals will spend once governments cut deficits and politicians have used this assertion to justify imposing (or suggesting) harsh fiscal austerity. The reality is very different as these polls suggest.

Economists have a strange way of writing up briefing documents. There is an advanced capacity to dehumanise economic advice and ignore the most important economic and social problems (unemployment and poverty) in favour of promoting non-issues (like public debt ratios). It reminds me sometimes of how the Nazis who were brutal in the extreme in the execution of their ideology sat around getting portraits of themselves taken with their loving families etc. The training of economists creates an advanced state of separation from human issues and an absence of empathy. Such is the case in a October 21, 2011 document – Greece: Debt Sustainability Analysis – which is labelled STRICTLY CONFIDENTIAL by its authors and was intended as input to the upcoming meeting of the Eurozone leaders – which is in fact the EU/ECB/IMF – aka and hereafter referred to as the “Troika”. As I read the document – in all its luridly obscene detail – I wondered what if economists were personally liable for their advice? The jails would be full of bankrupted economists. I am sure that the Troika economists would plead “only following orders” but then we have heard that before too.