Mark Blyth

One of the downsides of being a triple-crisis blogger is that you are always on the lookout for crises. It’s not a role I particularly enjoy, but it is what it is. So as the markets wind down for the year and the illusion of calm falls over us like a blanket of denial (yes, keep positive folks), I thought I’d write a piece about what I see as, perhaps, the emerging story of 2011. Its one that comes from reading the New York Times and the Financial Times yesterday morning, while thinking about two pieces I have read this year: one by Andy Haldane back in July and one by John Cassidy in late November.

The story in both papers, in case you missed it, was about how for many Wall Street and City of London bankers, the traditional Christmas bonus dished out this year would, for some, contain lots of zeros, and not much else. Its not so much that profits are down (they are), so the story went, but because the perception of ‘the bonus culture’ as creating excessive risk taking has led to higher base salaries and escrow-type arrangements at many US banks, while in the UK and Europe many mid-tier bankers are about to be eliminated from the bonus pool altogether, with talented juniors and senior executives being protected.

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Gerald Epstein

In a few weeks, Economists will gather in Denver at the annual meeting of the American Economics Association (AEA) in a ritualized search for truth, jobs, fame and even romance. Economists have never been held in the highest regard but, recently, they have come under increased scrutiny and some scorn for their failure to predict the financial crisis or to shape an adequate response to the worst economic crisis since the Great Depression.

Still, Economists can take heart. There is something fairly simple they can do at their annual meeting to enhance the credibility and status of the economics profession: adopt a code of ethics to reduce economists’ conflicts of interest. Indeed, I am among some economists who are proposing that the AEA do just that.

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Jeff Madrick

Triple Crisis blogger Jeff Madrick was the lead author on a report issued last week by the Citizens’ Commission on Jobs, Deficits and America’s Economic Future, which takes issue with many of the recommendations from President Obama’s deficit commission.

It seems now that all of Washington is focused on the likely level of unemployment in 2012. As well they should be. The White House, according to the all-knowing Washington press corps, says they always had it in focus. Sure. The press corps believe what they are told.

But, despite austerity economics, at least we have a bit of stimulus out of the new tax compromise engineered by the President and Republicans. The surprise is the payroll tax cut. A rough guess is that over two years, the stimulus on balance will add half a million jobs. Figure a cut in the unemployment rate of 0.3 to 0.4 percent. The estimates that already included the extension of the tax cuts, except for those earning above $250 k, had the unemployment rate in 2012 on average around 8.25 to 8.5 percent.

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Mark Blyth

Triple Crisis blogger Mark Blyth was interviewed by Radio Open Source about the Irish debt crisis and the resulting EU and IMF bailout package, noting that taxpayers pay twice for the crisis: first to bailout the banks and then with cuts to social services like education and health care.

From, “Mark Blyth on Ireland: The Circle will not be Squared”:

“The just thing is that the banks should pay. No question. You made the mess. Clean it up. It’s a pretty simple rule. But the basic line is this: if you let the banks fail, there’s nothing coming back. So if you’re Ireland, the Celtic Tiger, and over 10 percent of your GDP is in the financial sector, that’s where you make a lot of money, bankers’ salaries and all that. So let’s say you decide to blow up 10 percent of the economy. What’s your next trick? We can try to reflate it. We can hope that it comes back. We can hope to raise the patient from the dead basically. In order to do that you need to have a growing economy. So obviously hacking away at austerity politics is not going to bring back the bankers’ balance sheets. But on the other hand, it’s not clear what else you do with them. They don’t have any money to pay back, unless you bring the corpse back to life. Now the only way you can do that is by having growth-enhancing policies, and that’s why austerity is not one of them…”

Listen to the full interview at Radio Open Source.

Mark Blyth

Triple Crisis blogger Mark Blyth was interviewed by Radio Open Source about the Irish debt crisis and the resulting EU and IMF bailout package, noting that taxpayers pay twice for the crisis: first to bailout the banks and then with cuts to social services like education and health care.

From, “Mark Blyth on Ireland: The Circle will not be Squared”:

“The just thing is that the banks should pay. No question. You made the mess. Clean it up. It’s a pretty simple rule. But the basic line is this: if you let the banks fail, there’s nothing coming back. So if you’re Ireland, the Celtic Tiger, and over 10 percent of your GDP is in the financial sector, that’s where you make a lot of money, bankers’ salaries and all that. So let’s say you decide to blow up 10 percent of the economy. What’s your next trick? We can try to reflate it. We can hope that it comes back. We can hope to raise the patient from the dead basically. In order to do that you need to have a growing economy. So obviously hacking away at austerity politics is not going to bring back the bankers’ balance sheets. But on the other hand, it’s not clear what else you do with them. They don’t have any money to pay back, unless you bring the corpse back to life. Now the only way you can do that is by having growth-enhancing policies, and that’s why austerity is not one of them…”

Listen to the full interview at Radio Open Source.