Americas

Brookings dance to Trump's tune on US government interest payments

I was looking at my Tweetdeck this morning when I came across this tweet from the Brookings Institution:  "In 2016, 6% of the federal budget went toward paying interest on debt"

Now it is clearly a Good Thing in principle for the US Federal government’s budget to be explained in clear and simple ways, but why – I asked myself – do Brookings choose to concentrate today on interest payments (which form just 6% of outlays) rather than the programs that President Trump wants to cut to shreds? 

Fed policy means Trump to label China as currency manipulator?

With the Fed talking up the likelihood of rate hikes in 2017 while other central banks are still in easing mode, the potential for a US dollar rout and a concomitant closing of the US trade deficit is pretty low.  Therefore, given Donald Trump’s hawkish rhetoric, the potential for the incoming US government to label China a currency manipulator is high.

Q2 GDP: US and Eurozone economies sail into the doldrums

Today we had the first estimates for 2nd Quarter GDP for both the Eurozone and the United States.  Both sets of data give cause for concern that the world economy – and in particular the so-called “advanced economies” are stuck somewhere in the doldrums between sluggishness and stagnation.

Both showed quarter-on-quarter rises of just 0.3% (annualised 1.2%).  Most worrying, we can see that the US economy has been decelerating (taking the annual rate of change) quarter by quarter for over a year.

Argentina: US courts' failure shows need for international debt restructure mechanism

The Financial Times today (13 April) published this letter from PRIME’s Ann Pettifor and Jeremy Smith on the unjust role played by the US courts in the Argentina pari passu saga, notably the extra-territorial financial boycott of that country, and on the ever-more pressing need for a “supranational debt restructuring mechanism” to replace the failed private law system. 

The secret, anti-democratic and (new-style) protectionist TPP

I do not have any pretension to detailed knowledge of the Trans-Pacific Partnership Agreement, the newly finalised “free trade” (sic) deal between the US and other (mainly Asian) countries, which excludes China as an act of policy.  I am not alone of course in my ignorance, as the deal – shockingly, given its enormous scope and implications - still remains a state secret. 

Of Argentina’s Debt, Default and Dreck (or Javert v Valjean)

OK I should never have got into a twitter brawl today with Heidi Moore of the Guardian (of which she is US finance editor).  I have never crossed swords with her before, and I am sure she is generally a Good Thing. And I apologize if I was a bit strong in my tweet. But her piece in today’s Guardian on Argentina’s debt got my blood up.

Partial Justice: the US Courts v Argentina

We have been following the tortuous path of litigation between NML and Argentina for a few years now, with growing concern at the way the US courts have interpreted the respective rights – and wrongs – of the parties in relation to Argentina’s debt, following the economic collapse, devaluation and default in 2001.  See our November 2012 article “Don’t (cry for me) pay up now, Argentina!”  for our analysis at that point.

Clinton spots it: the austere emperor has no clothes.

The austerity brigade is rattled. Daniel Knowles at the Daily Telegraph is so worried, he has had to rise to the defence of the Treasury and OBR – and then resorts to proposing Greece’s economic strategy for the UK. Why? Because orthodox economic ideology has been challenged by none other than Daniel’s ‘hero’ President Bill Clinton. Bill gets it. On the deficit that is.

Why Krugman’s ‘Keynesianism’ is controversial

Some of our friends were irked by my observation this week that Paul Krugman is: “an extremely controversial figure for Keynes scholars. He champions a mainstream interpretation of Keynes’s work known as the neo-classical synthesis”. Many rightly applaud him for using his platform at the New York Times to defend further fiscal stimulus in the US – against a hostile political crowd, not to mention the downright opposition of neo-liberal economists – and we commend him for that.

Obama (and Congress) can't cut the budget deficit

The terrific hoo-ha around the US Budget Deficit is just that: hot air – predicated on the fallacy that President Obama and an ideologically-driven Republican Congress can cut the deficit. They can’t. It’s a delusion that arises because economists insist on applying microeconomic reasoning to macroeconomic conditions. It’s a delusion that leads to broader misunderstanding as voters wrongly make the link between their own individual budgets and the government’s budget.