The Bank of International Settlements published its – 84th BIS Annual Report, 2013/2014 – yesterday (June 29, 2014). Their message is that governments (particularly central banks) have been too focused on reducing short-term output and employment losses at the expense of a long-term focus on the financial cycle, the latter, which is in their view, essential to restore “sustainable and balanced growth”. I beg to disagree.
Here are the answers with discussion for yesterday’s quiz. The information provided should help you understand the reasoning behind the answers. If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days.
See how you go with the following questions. Your results are only known to you and no records are retained.
I have been doing the final edits on my euro-zone book all day today. The final stages are always a slog and I am ready to move on. But I have had some great music to keep me company. Read more if you want to swing a bit on a late Friday afternoon.
The IMF recently called on the euro-zone leaders to In its 2014 Consultation – 2014 Article IV Consultation with the Euro Area Concluding Statement of the IMF Mission – (an annual event the IMF does with each contributing member) the IMF said that the Stability and Growth Pact (SGP) in the euro-zone “has become excessively complicated with multiple objectives and targets. Compliance with fiscal targets has been poor, reflecting in part weak enforcement mechanisms. And there is a worry that the framework discourages public investment.” The IMF might have mentioned that it also discourages private investment. The failure to include that in their warning is a reflection of their continued belief that fiscal austerity is good for the private sector. The evidence is very clear – it is bad for every sector. But at least the IMF is joining the chorus in opposition to the manic rule-driven approach the euro bureaucrats have put in place.
Labour force participation rates are falling around the world signalling the slack employment growth that has accompanied the aftermath of the Global Financial Crisis. It is clear that many workers are opting to stop searching for work while there are not enough jobs to go around. As a result, national statistics offices classify these workers as not being in the labour force, which had had the effect of attenuating the official estimates of unemployment and unemployment rates. These discouraged workers are considered to be hidden unemployment. But the participation rates are also influenced by compositional shifts (changing shares) of the different demographic age groups in the working age population. In most nations, the population is shifting towards older workers who have lower participation rates. Thus some of the decline in the total participation rate could simply being an averaging issue – more workers are the average who have a lower participation rate. This blog investigates that issue for Australia as part of a project aiming to get more accurate measures of hidden unemployment.
There are several petitions circulating around the Internet at present condeming the US Supreme Court’s decision on June 17, 2014 to reject the appeal by the Argentine government against a prior US court ruling in favour of NML Capital Ltd, which effectively denies the Government access to the US banking system until it repays the outstanding liabilities that NML holds. The implication of the decision is that the Government can no longer service any liabilities is has which require payments being made via the US banks. That means the vast majority of the so-called ‘exchange’ bond holders, who took settlements in 2005 and 2010 after Argentina defaulted on its public debt obligations, cannot be paid until NML, who has a small amount of so-called ‘hold out’ Argentine government debt, is paid in full. What can the Argentine government do in this situation, given it has been fully servicing the exchange liabilities but claims it cannot meet the original liabilities held by NML? The answer is simple and doesn’t involve putting advertisements in US newspapers pleading the fairness of the situation. There is no sense of fairness involved.
Last week, the national broadcaster ABC’s Media Watch program – Up in Smoke – took aim at the Murdoch press (in particular, the Australian newspaper) for misleading reporting. The News Limited rag (it is barely that) has been running a campaign via headline claiming that Australia’s world leading laws on plain packaging of tobacco products have failed. Of-course, News Limited is just the conduit. Lying behind the headlines are rather secretive right-wing think tanks who pump out propaganda every day which aims to undermine government intervention and activity in favour of the industrial and other interests that just happen to fund the propaganda. These organisations hold themselves out as being non-partisan and independent – only offering an evidence-based viewpoint. The only problem is they clearly do jobs for bobs and manipulate ‘evidence’ to the point of absurdity.
Here are the answers with discussion for yesterday’s quiz. The information provided should help you understand the reasoning behind the answers. If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.