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Jean-Claude Trichet's "apology" and responsibilities
Yesterday, Jean-Claude Trichet apologized at a European Parliament hearing concerning the role of the “troika” of international lenders (which managed bailouts in Cyprus, Greece, etc), with his...
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CEO compensation and Worker Job Security
That CEO's are earning big money is nothing we didn't know about. Yet, the size of their paychecks is at times enough to make those who are not earning 6-figure salaries furious. In the list of the top...
View ArticleFacts we should remember
Joint post with Frances CoppolaThere are some things which are obvious to many people. There are others which need constant reminder, even though they are perhaps more significant than the more...
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What Secular Stagnation?
Note: this is probably the shortest post I've ever writtenAccording to Larry Summers, secular stagnation is supposed to be reflected in the continuous decrease of bond yields since the early 1980's...
View ArticleAssumptions in Empirical Economics
When a theorist in economics first presents a model to others, the first thing he usually presents or the first question usually asked by those who are attending his presentation concerns the...
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Health and Taxes
One of the longest-lived debates in the world is whether it is worth having a state-funded health sector or not. Those who prefer the latter (e.g. the US), believe that it does not make sense for the...
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Austerity Strikes Back
The tale of the hard-working North vs the lazy South has been cited again and again during the past couple of years, mostly from Northern politicians who saw the on-going crisis as an opportunity to...
View ArticleECB's OMT, QE and why they won't matter
The biggest news on Friday was that the German Constitutional Court had passed on the examination of whether the Outright Monetary Transaction (OMT) scheme proposed by Mario Draghi in August 2012 was...
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Incentives: Why Ukrainians have a just cause
Note: One of the very few political articles written on this blog. First of all, I have to declare that I am not in any way a political scientist and neither do I proclaim any vast knowledge on the...
View ArticleRoad Plans for Privatizations
Probably the most discussed issue in bail-out agreements is that state-owned organizations in the countries receiving the Troika money should be privatized. The issue was first presented in Greece,...
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Deflation, Inflation and Expectations
That dis-inflationary pressures have been observed in the Eurozone over the past year is nothing new. They have been so common elsewhere in the world (for example Japan or the US) that news of higher...
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European Policy at the ZLB
The zero lower bound (ZLB) has moved from a theoretical possibility in the 1980's to a modus vivendi in the 1990's Japan, the late 2000's US and the 2010's Eurozone. The ZLB does not mean that the...
View ArticlePolicy and Self-Fulfilling Prophecies
I've been raging about confidence for a while now. Since any other form of stimulus is either unproductive (e.g. monetary policy due to the ZLB) or infeasible (e.g. QE or government spending), the only...
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Banks vs SME's: Who's the economy after all?
The title of Wikipedia's article on the crisis stars with a word which sums it it all up: Financial. What this means is that unlike others mishaps of the past, this time the trouble was mainly brought...
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Real Life Effects of Deflation
Deflation is defined as the decrease in the level of prices:As economic theory dictates, the causes are a fall in the money supply, in addition to (in the short-run) a fall in wages and...
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Understanding ECB Comments: How Central Bankers (Should) Think
Central Banking should come with a warning: Anything you do, will be the cause of major criticism. When I usually see reactions on comments by ECB officials, it usually of the "they know...
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Does QE mean money printing?
Although the debate on the effects of QE on the economy and whether QE is deflationary or inflationary has (at least in my mind) been settled, there seems to exist a rather going "concern" on whether...
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The Irony behind NPLs and Lending
This post could actually be summarized in one sentence: If you want Non-Performing Loans (NPLs) to fall, then you have to increase lending. Still, I don't really hope that I will be able to convince...
View ArticleThe Myth of Barter
Admitting that a story which has been around for long is wrong is not an easy task. Yet, it is one of those stories for which the counter argument actually makes much more sense than the original. The...
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Why ELA is not Different from Bank Deposits
Truth is, when most of us hear about Emergency Liquidity Assistance (ELA), our minds go back to March 2013 when the Cyprus haircut was first announced; we think of ELA as a trouble indicator, one which...
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