Some thoughts on secular stagnation

Via Paul Krugman, I saw that Larry Summers had given a presentation on the topic of secular stagnation at the IMF conference (admittedly, I wasn't invited this year, well, the letter must have been lost in the post ;-) ). If you'd rather read than watch, Krugman's summary is a nicely written one, and adds a few comments which can be interesting in themselves.

Well, I have not usually been inclined of late to say nice things about Larry Summers, although that was probably more about Summers the political persona. His academic research deserves more credit. So, much of it is interesting, although some of the conclusions he derives (and here Summers the neoliberal may be showing, for instance when he suggests that proper financial regulation may be a bad thing in the context of stagnation, which is bonkers) appear to either be there purely for provocation sake, or to be pre-conclusions looking for a justification. Still, I would have a few things to add, and I believe that the conclusions fall short in a couple of ways.

A graph that says it all

This is a simple graph (via Paul Krugman) plotting industrial production in the Eurozone since the beginning of the crisis, and in the 30s, from the start of the great Depression.

Actually, Excel graphics make it look better than it really is: in the 30s we only had one point a year, and Excel will plot that in the middle of the interval -which is why the 30s curve does not start from the origin.
In other words, it is lagging by 6 months. So to really get a comparable point to now, you'd need to add 6 months of rebound from the 30s. We are actually much lower, not slightly lower, than at the same point 80 years ago, and of course the momentum is taking us further apart.

Amazing. And the Austerians are congratulating themselves. Hard to argue against that fitting the definition of sociopathy.

The real sovereignty breach

As so often, George Monbiot is a very welcome voice in sounding the alarm.

As we have come to know, the case for free trade agreements had been hyped, and even the honest assessments overstated -Paul Krugman is a notable case of a major enonomist observing that the outcome had been less positive than he had envisaged, in great part because very little if anything was done to address the distributional effects, and also because free movement of workers is mostly an illusion.

But at least you could make a case for it and put it forward as a policy option.

This is not the case of adding to the free trade agreement the creation of secretive (debates are not revealed to the public!) courts, where judges are corporate lawyers, that have power to supersede governments' decisions with no possibility of appeal.
This is pure Corporatist transfer of power slipped in a bill that was sold as facilitating transactions -ie, stealthily renouncing sovereignty. Democracy is becoming Corporatism without the people having a say.

Not what we need. And, I must admit from reading the example that George Monbiot exhibits, the consequences are even worse than I would have thought (for instance, a mine is by essence local. Forcing exploitation has nothing to do with free trade, it is a completely different thing from having deliberately restricted standards to prevent sales of foreign products).

Despite all the posturing about the EU (and it has, indeed, created huge problems in the way the Eurozone was created, but that's not what you hear from the UK press, for instance, since they are not in the Euro), the sovereignty threat is not so much between national and supra-national, but in this establishing a Corporate power that is becoming stronger than the States'.

Sarcasm makes clear

Economics and public policies can seem dry subject sometimes, and there is sufficient disinformation being produced to make even some apparently simple points very confusing at times.

So it may be that using the age-old tradition of British irony could make the point more clearly. It does, at any rate, make it entertaining. Here it is for your enjoyment.

A rare piece of sanity about Greece

It is not by me, but it deserves to be read by as many people as possible.
Indeed, entire generations are currently being sacrificed at the altar of ensuring Merkel a smoother election.

This is by George Stathakis, a professor of economics at the University of Crete. The original article, The Greek Issue and the Imagination of German Politicians, is actually in Greek so you may or may not want to follow the link. Here is a translation (thanks to talos at the European Tribune) of the main points.

I would just add that point 4 is true when the said economy is in depression. An economy with a debt problem but in a boom can address it. An economy in depression, with or without a debt problem, needs deficits. Depressingly, we've known that for 80 years at least, but Germany demands that you forget it.
Oh, and please remember points 1 and 3 next time you hear that Germans are sick of picking the tab. Germany has not paid a single euro, on the contrary, they greatly gained (€10 billions already in 2012, estimated to reach around 67 billions from the crisis episode -and that is with the optimistic scenarios in terms of duration of the crisis, that have consistently been met with disappointment when confronted to reality) from the lowering of their interest payments.

At Ronnie Scott's

It was our tenth anniversary last week (not wedding anniversary, there still is some time before that, but relationship anniversary), and so we went to Ronnie Scott's jazz club for the first time.

It having been the first time makes it difficult to form a general opinion, I do realise that they will not have Ron Carter with the Golden Striker Trio on stage every night, but I would struggle to come up with the appropriate adjectives.
Actually, there will be some things that will be there every night: the place itself, which was very nice. The cocktails were good, at least for this gentleman who rarely drinks cocktail (but when it's your anniversary and one is called "Ma Chérie", and you are French to boot, it would seem impolite to have anything else). And then, since we had decided to have dinner, the food was very pleasant. By the way, if that's a requirement of yours, there was a vegetarian option, in fact it's what I had, and will probably have every time as it was brilliant.

As for the music, I had already liked the supporting act (there was a late night show afterwards, but we had to go home), and then Ron Carter arrived, which sent you out of this world. There had been a double bass in the supporting act, but the sound was immediately very different. Part of it of course came from the amplification choices, but it was still remarkable to hear how different it sounded (the piano too -although it was the same piano of course). Initially I was a little surprised by the sound engineering, but quickly it was clear that it was just what was needed for this band, which blended wonderfully well. And while all three musicians had their shares of solos, they really played as a band, with incredibly good balance and understanding.

If that was a typical night, then I would say that if you like jazz, go to Ronnie Scott's, you'll greatly enjoy it. And if you don't like Jazz, go to Ronnie Scott's, and then you will.

Tuscany

I – a keen cook and keener eater- have long held the view that there is a considerable contextual element to taste. By that I do not merely mean that the table can be well dressed in a pleasant place and the food set in an attractive way, although this is nice (and something that I tend to be relatively poor at). My point is with the time and place where food is eaten.

Many people surely have experienced the delights of a local specialty that, once brought back home, simply does not have the same appeal. Examples abound –Ouzo is not the same away from the Aegean Sea, mulled beer must be had in wintery Poland, hibiscus tea feels out of place in Europe and, while whisky will be enjoyed at home, it will taste very different in a remote pub at the end of a windy trek in the Highlands.