dissabte, 13 d’agost de 2016

dimecres, 27 de juliol de 2016

Italy's Banking Crises

Fa uns dies, a la web de EReNSEP em varen publicar aquest article sobre la crisi del sistema bancari italià.

dijous, 7 de juliol de 2016


Ja fa uns dies, abans que es produís la votació la web de EReNSEP em va publicar aquest article sobre el tema.

Posteriorment, El Salmón Contracorriente va publicar-ne una versió castellana.

Malauradament, no vaig trobar lloc on publicar-ho en català.

dissabte, 4 de juny de 2016


Avui, el diari el PuntAvui em publica un article sobre els Populismes que podeu trobar aquí. (Ja es veu que la foto que l'acompanya en l'edició digital no és la meva).

diumenge, 29 de maig de 2016

dimarts, 17 de maig de 2016

Debts and austerities

We treat of debts and austerities, in plural, because it is necessary to differentiate, since it is radically different, what happens in the private sector (business, personal or familiar), microeconomic in economics, of what happens in the public sector (state or federal depending on the countries), that is to say macroeconomic.

It is obvious that the companies, the families or the people cannot borrow indefinitely, they cannot spend continuously more than they earn. They have to keep a balance, further of a possible reasonable indebtedness, between revenue and expenses. That is to say, the companies (the small and medium because the big and the multinationals are another history), the families, the people have to live within of his possibilities because if not they could run out of money. If they want to save they have to spend less than they earn. That is to say, companies, families and people have to be, to some extent, austere. And this austerity allows that their economies can work without problems. And even, how it has been seen historically, the austerity will do that they can grow, be bigger, be more prosperous. In this field and in this context, the austerity can be a positive value.

In the public sector it is different. In concrete, when we make reference to the governments of countries that keep his political, economic and monetary sovereignty, such as the USA, the Japan, the United Kingdom. These countries can define and implement his own monetary, fiscal and currency exchange rate policies. They have floating exchange rates, his central bank is controlled with more or less intensity for the government and it regulates the types of interest, and the Treasure has a sufficient budget to act by means of countercyclical policies. They issue his own currency, so they can never have problems of liquidity, they cannot run out of money. For the same reason, usually neither have problems of solvency. That is to say, although the governments of these countries were very indebted, they would have no problems to go back his debts and the types of interest that they have to pay for his public bonds are quite reduced. The Japan, with a current public debt of 250% of the GDP and above 100% from the middle of the nineties of the last century, has not had never problems to go back his public debt and the types of interest that he has had to pay for his public bonds have been always reduced (at present negative). And the same can be said, although with lesser public indebtednesses, of the USA, the United Kingdom or the Canada for example.

In the case of a country, the expenditures that are done (in consumption, investment, public expense) give place to the production of the goods and services of the economy (that also can be exported abroad or be imported from abroad). The production gives work to the people (employment) and, therefore, the revenue arise (in shape of wages, profits, interests) that are received by the families and the companies. It is the fundamental rule of the macroeconomics: expenses = production = revenue. To the level of a national economy the expenses made are equal to the products obtained and are equal too to the revenue earned.

On the other hand, in any national economy we can distinguish between the public sector and the no public sector (the private sector -companies and families- and the external sector). And as the total expense is the same that the total production and the same that the total revenue, the difference between the revenue and the expenses of the no public sector has to be compensated by a difference in contrary sense between the revenue and the expenses of the public sector. That is to say, if there is a public deficit (more expenses than revenue) there will be a surplus of the no public sector (more revenue than expenses), and on the contrary, to a public surplus will correspond a deficit of the no public sector. Therefore, if the no public sector wants to save it only can do it if there is a deficit (a funding in definite) from the public sector.

The public deficits, and the growth of the public debt to what they give place, are not necessarily bad. On the contrary, they are necessary if we want that the no public sector saved, as well as if we want carry out some countercyclical policies to struggle against the crisis and an excessive unemployment. In these cases it is not convenient that the public sector was austere (it must not make austerity policies). On the contrary it is necessary that it increases the public expenditures (and perhaps that it diminishes the taxes), and, therefore, that it increases the fiscal deficits and the public indebtedness to achieve grow, create employment and go out of the crisis. If the unemployment increases the revenue that receive the families diminishes and, therefore, the global consumption of the economy diminishes. If the consumption diminishes, the companies will not sell their products and they will cease to invest. We are going to a vicious circle because every time there is less expense, less production, the families and the companies receive less revenue and, therefore, every time can do less expenses. The only way to go out, how already showed Keynes and his circle of disciples, is with more public deficit, that is to say more public expenditures and/or fewer taxes. And this, in a moment of crisis, and if suitable economic policies are done, it does not have to produce necessarily neither inflation of prices neither an increase of the types of interest of the money.

Contrarily, the countries that form part of the Economic and Monetary Union (UEM), the euro zone, how is the case of Spain, are in a very different situation. Their political sovereignty is limited by the European Union and his economic and monetary sovereignty practically has disappeared. Their currency, the euro, is issued by the European Central Bank, that is totally independent of any government and has as the only aim the fight against the inflation (that now does not exist). The countries of the UEM use a currency that they do not issue, therefore it is a foreign currency that they cannot control and, as a consequence, they are susceptible of having problems of liquidity and of solvency. They are in the frame of a system of fixed exchange rates, that so many historical failures has given beginning for the system of the gold standard, without possibility of monetary, fiscal and exchange rate policies of sovereign character, and without a Treasure with a sufficient budget to do countercyclical policies (it is necessary to remember that the budget of the EU represents 1% of the GDP when the federal budget of the USA is around 25% of the GDP). In fact, the countries of the UEM seem like the federated states of the USA. Still worse, how those they do not have any sovereignty -neither political, neither economic, neither monetary- but neither have any of his advantages: they cannot vote the president of a federal state that, in the case of Europe, does not exist, neither they have any control on the central bank, and neither they can take advantage of the countercyclical policies of a non-existent European Treasure. The American federated states have those advantages.

On the other hand, we are in front of a big world-wide crisis unchained by an excess of private indebtedness from the increase of the weight of the finances in the economy and of their deregulation and liberalisation, that brought to his lack of control. In the euro zone, and especially in his peripheral countries, it has been opted, from a supposed crisis of the sovereign debt, that only was the consequence, for some ridiculous oxymoron: the "expansionary fiscal contraction", "the growth-led austerity". In reality, there have been austerity policies and labour reforms that have allowed, of one hand, cuts in the public expenditures and the consequent worsening of the public services and, on the other hand, cuts of wages and the worsening of the labour conditions and relations that so many years of fights of the workers had cost to achieve. How Warren Buffett has said recently: "it is true that there is a class struggle and is mine, the one of the rich, which is winning it".

With the development of the current crisis caused by the excessive private indebtedness, suddenly, when the financial system had conscience that it had taken too many risks (quantitatively and qualitatively), it braked (it ceased to give credits) and it caused a crisis in the accounts of the families and the companies ("balance-sheet recession") and a debt deflation. A situation of which it is only possible to go out with the recovery of the sovereignty -political, economic and monetary- and therefore with an orderly dismantling (or going out individually) of the euro and the own EU. Simultaneously, it will be necessary to increase the public deficits (because the public revenue diminish automatically and because it is necessary to increase the public expenditures that, partly, also increase automatically), to carry out countercyclical policies to struggle against the crisis and against the unemployment. This requires necessarily an increase of the fiscal deficit (increase of the public expenditures and/or decrease of the taxes). Precisely the opposite of what it has been doing up to now. So, the austerity is not suitable in a situation how the one that live the peripheral countries of the euro zone currently. And instead, what is necessary it is an increase of the public deficits and of the public indebtedness.

In any case, taking into account all this context, this does not mean that what is proposed by the movements and organisations that drive the citizen audits of the debt have no sense. On the contrary, always it is convenient, for example, analyse if the public expenses that have been done (or are done) are those suitable, or if there have been (or there are) misspends, or if they have produced unjustified rises in the works that have been hired, etc. As well as to consider if the indebtednesses that have been produced (or that have to be done) have been done in suitable conditions or, for the opposite, with abusive conditions. How it is necessary to analyse which part of the debt is legitimate or which part is not, or of which part it would have to go back to negotiate the conditions or it would have to ask for his forgiveness.

But it is important to take into account always some different things. First, the crisis has been caused by a private indebtedness as a consequence of the increase of the weight of the private finances in the economy, fomented for their deregulation and liberalisation, and for their irresponsible management. The public debt is a consequence of the crisis. When the private sector (companies, families and financial system) begins to diminish its debt once has begun the crisis, the public sector has to borrow increasingly. There is a transformation of private debt in public debt (and the rescue of the financial institutions is the clearest example). We must remember that the public debt in Spain was around 35% of the GDP at the beginning of the crisis and now is around 100%, whereas the private non financial debt was over the 200% of the GDP in the beginning of the crisis and at present is still around 180%. Therefore, the second question that is necessary to have in account is that the private indebtedness is much more important that the public debt and that with the crisis there is a clear mutation of private indebtedness to public debt. Third, there is no doubt that the economic and political elites take advantage of the increase of the public debt to justify and impose austerity policies that worsen the public services and the wages and increase the inequalities against the popular classes and in favour of these elites.

But, it is very important to be conscious that the main problem is not the public debt. In fact, in a situation of crisis how the current one in the peripheral countries of the euro zone, the austerity is a bad business. And the increase of the public deficits and the public debt, we repeat it, is not necessarily bad if we have the political, economic and monetary sovereignty, because there will not be problems neither of liquidity neither of solvency and we will be able to do active countercyclical policies to struggle against the unemployment and the crisis.

dissabte, 7 de maig de 2016

La distopía del euro

Hoy, en el Salmón Contracorriente me publican este artículo que coincide con la presentación estos días de la traducción española del libre de Bill Mitchell por parte de Lola Books.

dilluns, 2 de maig de 2016

La distòpia de l'euro

El passat dissabte 30 d'abril, El Punt Avui em publicava aquest article amb el títol d'aquest post.

En ell s'hi explica les tesis fonamentals del llibre escrit per l'economista australià William Mitchell, que es presentarà a Barcelona, tant al matí com a la tarda, el proper dilluns dia 9 de maig.