Monday 26 November 2012

The Catalonian Elections.

or Más o Menos

Against expectations (see here), the Catalonian regional elections did not go well to Artur Mas and CiU.

Pro-business, conservative and nationalist, CiU was estimated to win between 62 and 66 seats in the 135 seats Parliament, after hurriedly mounting on Catalonian nationalism bandwagon. According to the latest information, CiU managed to get 50. (See here, in Spanish)

These are the final results:

Party      |  Seats
    CiU    |    50   
    ERC    |    21   
    PSC    |    20   
    |    19   
    ICV    |    13   
    C's    | 
    CUP    |  

CiU's poor results are attributed to several factors. The left press mentions a smear campaign, allegedly directed from the also pro-business and conservative (but anti Catalonian nationalism) PP (see here, in Spanish), linking Artur Mas to alleged corruption and tax evasion.

In a development that parallels the Greek case (see here), Spain has its own list of suspects in tax evasion. As in Greece, although the existence of the list is widely known, the media has not been released an official copy of it.

Regular readers may also remember that the Rajoy government decreed a fiscal fraud amnesty last June (see here). According to the Finance minister Cristóbal Montoro (PP), author of the fiscal fraud amnesty decree, it should have collected up to EUR 2.5 billion in regularization fees. In reality, only 50 million were collected (See here, in Spanish)

However, Mas, as the incumbent Premier (President de la Generalitat de Calunya, in Catalonian), has enacted his own and extremely grievous austerity measures, suppressing popular protests with the notoriously brutal Mossos d'Esquadra.

In any case, it appears the Catalonian people did not swallow Mas' demagoguery.


This faux step does not mean the Catalonian independentist movement is over. The second parliamentary party, Esquerra Republicana de Catalunya, while left-wing, is fiercely pro-independence and has increased its parliamentarian representation.

Additionally, the process required to secede is devilishly complicated, making future developments difficult to guess. It would require a previous constitutional reform; referenda, in Spain, are not necessarily binding and require the King's approval; an independent Catalonia would start its life outside the EU and would have to apply. (See here, in Spanish)

On top, the relations between CiU/Mas and PP/Rajoy appear to be tense, to say the least. Catalonians, feeling themselves captive to a union they rightly or wrongly consider against their interests, could push a weakened Mas to take measures he doesn't really want.

One thing seems certain, though: the ride is not over for Rajoy.

Sunday 25 November 2012

The Big Challenge!

Some weeks ago Prof. Nick Rowe issued a challenge: those (like yours truly) criticising neo classical economics on an intuitive basis should read cover-to-cover at least an intro textbook on micro and macro. (See here)

Rowe was kind enough to offer a series of links to several of them, freely available online (graciously abstaining from recommending any title in particular: "They are all fairly similar in coverage and treatment. And they are almost all good, in my opinion".), to which his regulars spontaneously added their own suggestions.

A suggestion I found particularly interesting was to contrast older and more recent books on the same subject (say older macro books vs. newer ones) to see how the material has changed over time.

That is a fair challenge, if there ever was one, and one I am willing to accept. As I see things, personal perceptions on neo classical economics and economists (and their policies), no matter how well-founded on experience one might think they are, could be unfairly mistaken.

Mind you, it's not an easy challenge for your humble scribbler (a middle-aged bloke, away from a classroom for decades, employed, if part-time, and on low incomes).

For one, the challenge involves reading the books cover-to-cover: so to speak, my mantra is "the whole enchilada and then some" (as suggested by the reading).

Additionally, my maths are not up to scratch (therefore, I need to look after this before going further into the more technically demanding literature). Judging by the contents of several popular "maths for economists" (the newest being Carl P. Simon and Lawrence Blume's "Mathematics for Economists", 1994, W.W. Norton), there are two subjects I need to cover to achieve a basic first year in economics proficiency: calculus (including lineal and non-lineal programming) and lineal algebra.

To cover micro and macro, the main economic areas, I more or less arbitrarily[*] chose four books: the more basic Jeffrey M. Perloff's "Microeconomics" (3rd edition, 2004, Pearson/Addison Wesley) and the more advanced Hal Varian's "Microeconomic Analysis" (3rd edition, 1992, international students, W.W. Norton); and Olivier Blanchard and Jeffrey Sheen's "Macroeconomics" (Australasian edition, 2004, Pearson/Prentice Hall) and Rudiger Dornbusch and Stanley Fischer's "Macroeconomics" (6th edition, 1994, McGraw-Hill).[#]

As the challenge involves reviewing fairly one side in a debate (the neo classical side), fairness involves reviewing thoroughly the other side as well (the critics of neo classical economics), and how the debate has evolved over time.

In other words, this means I should also read in more detail neo classicism's contemporary critics (like Steve Keen or John Quiggin, for instance): not just an isolated lecture or paper, but cover-to-cover. Curiously, I haven't had much luck getting their books in the second-hand market.

But there are older traditions of criticism to neo classicism that should not be left out of the contest of economic ideas: therefore, I am also reading on a cover-to-cover basis Frank Stilwell's "Political Economy" (2002, Oxford University Press) and Ernest Mandel's 1967 "An Introduction to Marxist Economic Theory".

On history of economic thought, I have almost finished William J. Barber's "A History of Economic Thought" (Pelican Books, 1967, reprinted in 1979).

There are other books I will endeavour to read (Sraffa, Kliman and Sweezy and Baran are there), but they will have to wait.

And that's precisely what I am up to.

[*] To be precise, I first compiled a list of popular/highly recommended books. Next I checked the authors' academic reputation in mainstream economics. Then, when and if second-hand, cheap in good condition printed copies became locally available, bingo.
[#] Incidentally, I also own a copy of Ben S. Bernanke, Nilss Olekalns and Robert H. Frank's "Principles of Macroeconomics" (2005, McGraw-Hill) and an assortment of antediluvian books whose sole mention here would make me blush (and give the readers a good laugh).

Monday 19 November 2012

Not Keen on Harsanyi.

Prof. Steve Keen and economics in general are having problems at the University of Western Sydney.

It's interesting how things never change...


Commemorative plaque to Mr. John Harsanyi (1920–2000) [A]
It is not very well-known that John (Janos, in Hungarian) Harsanyi, one of the 1994 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (together with John F. Nash, of "A Beautiful Mind" fame, and Reinhard Selten), lived, studied and worked in Australia.

Having arrived in Sydney in 1950, Harsanyi studies in his native Hungary were not fully recognized. Newly married, Harsanyi had to work in a factory during the day, and study towards a MA at night, at the University of Sydney.

He received a MA degree from Sydney in 1953 and in 1954 managed to get a teaching position at the University of Queensland.

In 1956, Harsanyi, who was already a published author, was awarded a Rockefeller scholarship. With that support, Harsanyi spent two years in the U.S. at Stanford University, where he wrote a dissertation on game theory, under the supervision of Kenneth Arrow (1972 Sveriges Riksbank Prize in Economic Sciences), which earned him a second PhD in Economics.

Returning to Australia, Harsanyi worked for the Australian National University, at Canberra.

However, frustrated with the lack of interest for game theory in Australia, Harsanyi moved to the U.S., where, with the support of Arrow he eventually found a permanent position at the University of California, Berkeley, until his retirement in 1990.


They were not too keen on Harsanyi, and that's how the Australian universities shot themselves in the foot once. Now, the University of Western Sydney could be making the same mistake with Steve Keen and economics.

Image Credits:
[A] Commemorative plaque to Mr. John Harsany (1920–2000). Wikipedia.

Thursday 15 November 2012

14N: Los Empecinados.

After the first ever European general strike, this is how the global share markets reacted:

London      FTSE 100   -1.11%
Amsterdam   AEX        -1.01%
Frankfurt   Dax        -0.94%
Paris       Cac 40     -0.89%
Brussels    Bel 20     -0.86%
Zurich      SMI        -0.68%
New York    Dow Jones  -1.45%
Sao Paulo   Bovespa    -2.10%

This "blood bath" (pun intended) did not surprise those following the stock markets.

What's more, the European protests, together with the usual bad economic news coming from Europe and the US politically induced fiscal cliff tragic comedy made sure the rich would be further hit today in the only thing sacred for them: their pockets.

So, this morning, this is how Macrobusiness put the day's perspectives: "As I write it is not looking good (...) but it's the close that matters today".

And the Hallowed Markets did not disappoint:

Sydney      All Ords   -0.91%
Hong Kong   Hang Seng  -1.55%
Of the big world markets, only Tokyo (Nikkei 225) ended up in black: +1.90%.

Macrobusiness is right: it is the close that matters.


The collaborationist Rajoy government and PP are suffering in the polls, as well. According to Electometro:
"According to the CIS's October barometer, the PP has lost 8.7 percentage points in vote intention in comparison to the general elections a year ago, while the PSOE's remains stagnant". (See here, my translation from Spanish)
From a less than overwhelming final result last year of 44.6% of the valid votes, PP would receive 35.9% if the elections had been held October. PSOE achieves a meager and falling 28.6%, while smaller parties have either increased or retained their votes. And that, before 14N.


If you ask me, the 1% have reasons to worry and to try to play down the whole thing. They are losing the money they stole from you. Their figureheads will keep falling.

The Portuguese and the Italians are waking up; and even the so far not so badly affected (relatively speaking) French, Germans, Belgians and other Europeans are seeing the tide rising. They know they are waiting in line for the same treatment you are currently receiving.

The opposing view was expressed today by the jewel in the crown of the House of Murdoch: the Wall Street Journal.

In today's online edition, this is what those stalwarts of "objective" journalism had to say:
"Protest fatigue, declining levels of unionization and factionalism within the labor movement have combined to take much of the bite out of strikes as tools for changing government policy, analysts said."
Well, I won't dispute what those unnamed analysts said, neither will I contrast it what other media had to say (here, here, here, here, here, here, here), but the unnamed analysts I consulted said: "The mercenary hacks paid by Big Bucks will lie and try to put a brave face, while they are shitting themselves in their pants".


Spaniards (since Juan Martín Díez, El Empecinado, hero of the war against Napoleon) have a reputation for stubbornness. I think this is a good opportunity to demonstrate it: get organized, brace yourselves for a long fight. Know that you will be the subject of slander, mockery and fake disdain by "moderate" and "realist" charlatans pundits.

The swindlers and their toadies want to deny you a future, but you have little to lose: they've already stolen all they could. It's them who have a lot to lose, not you. Make them pay.

It's not going to be easy, as the brutal beating of a 13yo boy (the one lying on the floor) and a teenage girl by the Catalonian cheap and cowardly criminals Mossos d'Esquadra shows:

Think of this pintada (graffiti, for English speakers):
"Tomorrow, perhaps I'll have to sit before my children and tell them we were defeated.
"But I could not look into their eyes and tell them they live the way they do, because I did not dare to fight back."

Tuesday 13 November 2012

14N on Video.

And a Map!

Two video calls for the international European strike.

For English speakers:

With printed material in a variety of languages:

Screen capture of Google Map at European Trade Union Confederation:

Click for a larger image.

The map shows actions in support, not necessarily strikes.

Updated to display the map, and the link to the ETCU.

14N: General Strike.

In a few hours, the workers of Spain, Italy, Cyprus and Portugal will start a peaceful and coordinated general strike. Their brothers and sisters from Greece went on one the past 6 and 7.

At least in Spain, trade unions of all ideological tendencies, from social democrats to communists and anarchists, are uniting against the austerity imposed by the Troika and brutally enforced by the Troika occupation Rajoy government. It's time to stop the swindlers from looting what is left of Spain:
"The spending cut policies are responsible for about six million unemployed workers in Spain. One in each four persons willing and able to work cannot do it, because of policies and governments that believe that money is for the banks alone and the adjustments are for the workers." (See here, PDF leaflet, in Spanish; my translation)

As Sahra Wagenknecht said:
"Events in Southern Europe show the political strike to be an indispensable tool for self-defense.  What the EU and the International Monetary Fund are demanding of states such as Greece and Portugal has nothing to do with neutral crisis management, but is rather brutal class struggle executed from above."
In Britain, Germany and Belgium trade unions, too, have called for manifestations in support of their Southern counterparts.

From Australia, I send them all my solidarity.


A Facebook page (several European languages, including English): link

Image Credit:
Cartel Web. PCE.

Monday 12 November 2012

Is Paul Krugman Going MMT?

Paul Krugman at a press conference
(Swedish Academy of Science). [A]
Paul Krugman's NYTimes blog links to a little paper ("The Simple Analytics of Invisible Bond Vigilantes", PDF) explaining, with mainstream economic tools, why a country like Greece is indeed vulnerable to the "bond vigilantes", while countries like the US are not:
  1. The US (and the UK and Australia), unlike Greece (and Italy, Portugal, Spain, Ireland), has its own national currency, issued by the American government.
  2. Unlike the EUR, the USD exchange rate fluctuates freely.
  3. The US interest rate is determined, as matter of policy, by the US Fed; the EUR interest rate is determined by the European Central Bank.
  4. The US has virtually no foreign debt denominated in foreign currency. Greece's debt is pretty much entirely denominated in EUR.
If you have mainstream economics training, you should have no difficulty following Krugman's paper: it's brief, to the point and well explained.

At the other hand, if you know something about MMT, you'll find that the 4 points above are all made by MMT.

Pretty please, Australian journalists refer to my friend Heteconomist (here) for a fuller and better discussion than anything I could offer here.

Congratulations, Prof. Krugman.

Image Credits:
[A] Paul Krugman, Laureate of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 at a press conference at the Swedish Academy of Science in Stockholm. Wikipedia.

Friday 9 November 2012

The Balkanization of Europe.

About a month ago, I and others (see here) commented in another blog against the Catalonian move to secede from Spain. The readers might be aware the regional Catalonian elections are due to take place next November, 25.

The Catalonian parliament has 135 seats. According to a recent poll (La Vanguardia, October 28), Artur Mas' nationalist/centre right CiU could win between 65 and 66 seats; the PSC (local PSOE branch) and PP are disputing the second place (18 and 17 seats, respectively). The left wing Esquerra could become the fourth parliamentarian party, with 16 seats. (See here, Spanish)

Out of the 4 main parliamentarian parties, only PP has spoken openly against the independence.

Mas has promised a referendum over the issue of secession, even though such a move is unconstitutional and members of the armed forces have threatened with violence.

In the recent Basque regional elections, the nationalist parties from all over the political spectrum, won by a landslide. (See here)


But Spain is not the only European country affected by this outbreak of regional nationalism and separatism. (See here)

In my comment, I mentioned the German-speaking South Tyrol province, which could try to break away from Italy and perhaps join Austria. Others mentioned Padania (northern Italy, more generally) with the nationalist Lega Nord.

Recently, the extreme right Bart de Wever, of the New Flemish Alliance, popular among segments of ethnic Dutch Belgians, won the local elections for Antwerp on an anti-Wallonian platform.


What could be the consequences of this?

If you believe The Financial Times' Tony Barber (see here), there is little to fear in this process. For Barber, only a South Tyrolese independence and union to Austria could have serious consequences.

I fear Barber's view is almost panglossian, because it assumes the only consequence to fear is open military conflict. In my opinion, he also underestimates the likelihood of such an outcome.

Furthermore, he ignores the possibility that garden-variety nationalism could morph into outright racism and xenophobia. And experience shows that is far from a remote possibility.

For good or ill, we could be witnessing the beginning of the end for European nation-states. So far, the examples of Yugoslavia and the Caucasus seem far from auspicious.

Wednesday 7 November 2012

The Lagarde List Affair.

After Greek journalist Kostas Vaxevanis published (October 28) a list containing the names of 2,059 alleged high-profile tax evaders, the Troika occupation Greek government ordered his arrest and trial. The BBC covered the whole affair, day by day. Here is a timeline of the affair, in headlines:

Sunday, October 28 (last updated at 16:28 GMT)
Greece arrests journalist over 'Lagarde List' banks leak
Monday, October 29 (last updated at 23:23 GMT)
Greece bank leak reporter Costas Vaxevanis sent to trial
"The prosecutor issued a warrant for Vaxevanis's arrest because he published a list of names without special permission and violated the law on personal data".
Thursday, November 1 (last updated at 16:39 GMT)
Greek journalist Costas Vaxevanis on trial over bank list
"French authorities gave the names to their Greek counterparts two years ago, but documents were never investigated".
Thursday, November 1 (last updated at 20:15 GMT)
Greek bank list editor Costas Vaxevanis acquitted
"Lawyers for Mr Vaxevanis, 46, (...) said no-one on the list had actually complained of a breach of privacy.
"After a one-day trial, a court in Athens found Mr Vaxevanis innocent.
"The BBC's Mark Lowen in Athens says the swift ruling will be an embarrassment to the Greek government".
If you ask me, to call this an embarrassment is an understatement.


Consider prominent PASOK politician George Papaconstantinou:
"Then Greek Finance minister, George Papaconstantinou, said precisely last Wednesday in the Greek Parliament that he did not know what happened to the [then French Finance minister Christine] Lagarde list's original version". (See here, in Spanish, my translation)
Aussie readers might remember Papaconstantinou's words when he spoke last May 12, in SBS TV Insight show:
"So nobody is outside this, nobody is innocent to the crime. Of course politicians bear the biggest burden, and of course they will be punished for this, as they are being punished (...)."
For a man so ready to re-distribute responsibilities for the Greek fiasco, Papaconstantinou seems strangely uninterested on determining who should "bear the biggest burden".

Just like the current Greek government, that appears more interested in harassing (very clumsily and ineffectively, at that) the whistle-blower than in punishing those who should "bear the biggest burden":

That's a bit more than an "embarrassment".

Sunday 4 November 2012

Toxic Rembrandt.

Rembrandt as Zeuxis,
c. 1662. [A]
Over a year ago a number of Australian city councils initiated a class action against RBS (ABN AMRO before 2010), S&P and Local Government Financial Services for losses suffered with the Rembrandt CPDO. (See here)

Today Michael West (Fairfax Media) informs us that "The Federal Court's Justice Jayne Jagot has accepted the evidence from 12 NSW councils - who claimed they had been duped into buying a toxic financial product - that the ratings agency Standard & Poor's was little more than a lap dog for slick merchant bankers".

Rembrandt CPDO had been rated AAA by S&P, in spite of being a highly leveraged and risky financial product, which lost 90% of its value a few months after the councils purchased it.

The court ordered the 3 financial agencies to pay AUD30 million, plus interests, to the plaintiffs; S&P claims it intends to appeal.

This decision, together with rulings against Lehman Brothers a few weeks ago, could have international implications:
"It remains to be seen whether the Court's finding that S&P engaged in misleading and deceptive conduct in assigning its coveted-AAA rating to the CPDO will open the flood gates for actions against credit rating agencies in relation to other structured products such as CDOs. Logically, CDOs are also in the gun. Most enjoyed the top rating, most blew up."

Image Credits:
[A] Self Portrait as Zeuxis, c. 1662. Wikipedia.

The Ironies of Monopoly.

An extraordinary article by Christopher Ketcham, from Harper's Magazine, on the history of the popular board game Monopoly (h/t Occasional Links & Commentary), which I highly recommend.

Henry George (1839-1897) at 26,
American political economist. [A]
It turns out that the game was invented in 1903 by a largely forgotten Maryland actress, by the name of Lizzie Magie, as a device to teach the thought of Henry George, the once popular American reformist socialist who intended to bring about his own brand of socialism by taxing landowners, while abolishing all other taxes.

Although Magie conceived the basic idea, by the time her version of the game (called the Landlord's Game) began to be commercialized, gamers had spread and further developed the game, until its putative inventor, Charles Darrow, finally learned of it and marketed his own homemade sets, sought and received patent and sold the rights to game publisher Parker Brothers:
"Sometime in 1932, Darrow copied the layout of the board, the rules of play, the property names, the deed values, and the Chance cards, and made his own version of the game. His only innovation seems to have been to claim the mantle of sole inventor. He would soon be assumed into the pantheon of American heroes of commerce."
Apart from the irony in this ending, the narrative is enriched by a wealth of fascinating details: some magnificent quotations (Andrew Carnegie: "The greatest astonishment of my life was the discovery that the man who does the work is not the man who gets rich"), anecdotes and descriptions from a Monopoly tournament, a fascinating footnote on the work of Michael Hudson. There are also passing references to Mark Twain, Leo Tolstoy and Marx.


There were Marxists among George's followers. Some of them wrote enthusiastically to Marx, praising George and his writings.

Marx was not impressed, however:
"All these 'socialists' (...) have this much in common that they leave wage labour and therefore capitalist production in existence and try to bamboozle themselves or the world into believing that if ground rent were transformed into a state tax all the evils of capitalist production would disappear of themselves".
Considering how the article describes the end of the movement, he might have had a point:
"By the time of his death in 1897, when 100,000 New Yorkers lined up to view his body in state, George's 'great idea' was already, as Tolstoy would lament in 1908, on the long road to being forgotten".
But Marx considered that not all the effort was wasted:
"On the other hand George's book, like the sensation it has made with you, is significant because it is a first, if unsuccessful, attempt at emancipation from the orthodox political economy".
I'd add that George's followers, while misguided, meant well. Their efforts and creativity, if ultimately fruitless, deserved better and are to be commended.

Image Credits:
[A] Henry George (1839-1897) at 26, American political economist. Wikipedia.