Dear All, Ministerial duties have impeded my blogging of late. I am now breaking the silence since I have just given a talk that combines my previous work with my current endeavours. Here is the text of the talk I gave this morning at the Ambrosetti Conference on the theme of ‘An Agenda for Europe’. Long time readers will recognise the main theme – evidence of a certain continuity…Yanis Varoufakis
Presenting an agenda for Europe at AMBROSETTI (Lake Como, 14th March 2015)
9 comments:
Finally something serious.
Essentially European federal government by central bank with no democratic accountability whatsoever.
Funding by 'EIB issued bonds' is a sleight of hand and is exactly the same as funding by ECB issued reserves.
So Yanis believes in the beneficial dictatorships of central banks while at the same time slagging off Golden Dawn.
Centralised authority with no possibility of any change via the ballot box. How is that anything other than authoritarianism?
An acceptability wash via the EIB isn't going to cut it with the Germans. They're not keen on the acceptability wash of government bonds used as collateral via the ELA mechanism.
This obsession by economists of the wonders of central banks and how they can solve everything without anybody getting in the way is a dangerous social development.
But at least those in the US know what Yanis prescribes for them to get out of the current predicament. Abolish Congress and let the Very Clever People in the Fed take care of it all. What could possibly go wrong?
The plan seems to be irrealistic - it does not take ínto account the power relationships and ideological atmosphere currently prevailing in the eurozone.
The proceeds of the EIB bonds to be bought by the ECB would be used to finance infrastructure projects at the national level that don't even exist, yet.
And even if governments would be able to draw such plans from scratch at short notice there are some problems to be considered, such as - the projects would raise the public deficits of the countries involved (an anathema to the EU Powers that be), there would be no guarantee that the southern countries most in need of aggregate spending would get their own projects approved and anyway the 200 billion euro annual amount that YV suggests be spent in "infrastructure" would be insufficient to pull the eurozone away from its present slump and dire unemployment levels.
YV seems to be a persistent believer in the EU utopia - a Keynesian continental power that was promised to the European electorates in the 80s and 90s.
Unfortunately, that promise was always a fake and what took its place in reality was what the elites that rule the roost really wanted - a monetarist, austerian nightmare.
And no amount of pleading by well meaning, naive intellectuals of the YV type is going to change the power relationships that rule the eurozone.
It's time for Greece to try to escape from the eurozone trap - instead of insisting on the hopeless idea of transforming the nature of the monetary union.
Right I guess the EIB would come in to a nation and provide some Euro balances but would tell the nation that the "money" could only be used for this or that... and would probably set up a compliance dept etc...
Varoufakis thinks “Europe desperately needs growth-inducing, large-scale investment.” Actually Spain is awash with underutilised airports and motorways.
That's the problem with this obsession with 'investment'.
Government does have to do some investment and it has to do some consumption - depending upon what the function is that it has to support.
As well as a weird fetish about debt there is a weird anti-consumption fetish as well.
Somebody has to do the consuming, otherwise it is pointless investing in anything!
Good point, Neil. Government consumption expenditure -- being both autonomous (of the circular flow of income) and non-capacity enhancing -- plays a significant role in sustaining growth over time. It encourages higher utilization of capacity, which justifies investment that has already occurred (public and private) and helps to maintain conditions conducive to healthy levels of investment over time. Unlike the autonomous component of private consumption expenditure, which typically comes with private-debt financing, government consumption expenditure (through multiplier effects on income) enables stronger induced private consumption expenditure alongside domestic-private-sector net saving.
Expansion of capacity too far in advance of what is required to meet consumption demand will merely be followed by a collapse in private investment, with negative multiplier effects on consumption demand that further exacerbate the effect. The lower propensity to consume of the wealthy makes capitalism prone to under consumption and/or excess capacity unless government injects a steady flow of autonomous consumption expenditure into the economy.
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