More recommended reading

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John W Clark

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Jan 9, 2012, 12:24:24 AM1/9/12

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Dear all,

Here's more of my what I've found to be really worthwhile reads:

Debt Brittania (Steve Keen)

Steve Keen finally got his hands on the data he needed to analyse the UK's debt situation and.... WOW! Almost 1000% of GDP!!!! For anyone living in the UK or working with the British Pound, this would be highly recommended reading.

The Luckiest of Countries (Macrobusiness)

This is a great piece, with lots of supportive data, detailing how Australia's economic boom in the 2000's is structured and what risks that entails for the future. Basically, we are now very much more dependent on the mining sector (and China as the consumer of our mining outputs) than we ever have been - if that fails, we are in for much tougher times. It also shows how the mining boom has masked very poor relative performance in improving labour productivity in Australia over the last decade or so.

Target2 (Doug Noland)

This piece was was actually published back in mid-december, but highlights an issue that not many other commentators noticed - the ECB "Target2" system of settling balances between European national central banks. He has (correctly, I think) highlighted an major developing problem (particularly for the German Central Bank, the Bundesbank) that is not yet fully appreciated. It's quite a technical piece, but for those interested I would recommend it.

Issues 2012 (Doug Noland)

This latest piece from Doug provides what I think is a very insightful look forward into 2012. One quote that we should all probably reflect on:

Euro disintegration is a key Issue 2012. I no longer believe the current structure of euro monetary integration is viable over the long-, or even intermediate-, term. Yet the financial and economic dislocation associated with a breakdown of the euro would be sufficiently catastrophic that the markets assume policymakers will not tolerate such an outcome. This recalls the market perception that Washington would never allow a U.S. housing bust. Such backdrops seem to ensure that the most destabilizing circumstances. These eventually unfold after policy measures are belatedly recognized as having lost the capacity to control developments and hold crisis at bay.

...and you can see I'm not the only skeptic on the benefits of "buying time" or "can-kicking":

I believe strongly that instead of "buying time" aggressive policymaking in the face of an unfolding Credit bust tends to only buy a more destabilizing crisis.

Keynes Was Not Right (Pater Tenebrarum)

This is another technical one, but a great explanation of why Keynesian approaches to this crisis are doomed to fail and exacerbate future problems.