Showing posts with label Capital Controls. Show all posts
Showing posts with label Capital Controls. Show all posts
Monday, June 11
Tuesday, January 3
Naked Capitalism Uses a Single Data Point to Disprove Financial Repression
A post over at Naked Capitalism titled 'Why Is The Term “Financial Repression” Being Sold?' by the Roosevelt Institute's Matt Stoler purports to "fact check" a statement about the negative effects of financial repression.
That sounds useful, for as Stoler points out financial repression is much in the news these days. However, there's just one big problem: Stoler's fact checking consists of looking at just one country, the U.S.
Never mind that the Reinhart and Sbrancia paper about financial repression which Stoler references includes a 10-country data sample (and information about dozens of other countries), or that other studies on the effects of financial repression have looked at data from 20 or more countries. And Stoler clearly couldn't be bothered with checking to see that most of the research on financial repression has in fact focussed on its impact on economic growth in developing countries, and not advanced economies like the U.S.
Following Stoler's breathtakingly brief analysis of the single U.S. data point he concludes:
Who exactly are financial repression's winners and losers? As some of the commenters on Stoler's post note the not insignificant dose of inflation which accompanies financial repression hits everyone who saves money. Also, the large rentier may have additional means at his/her disposal to mitigate the effects of financial repression. However, the small rentier (aka 401K holders, pensioners, retirees on fixed incomes) may not easily be able to, for example, shift assets to Lichtenstein.
But there may be a more simple answer to this question of winners and losers. To work as intended financial repression depends on government rules and regulation. In short, this means that under a system of financial repression those who follow the law are the ones who are punished by the law. Sound like a place you'd like to live?
That sounds useful, for as Stoler points out financial repression is much in the news these days. However, there's just one big problem: Stoler's fact checking consists of looking at just one country, the U.S.
Never mind that the Reinhart and Sbrancia paper about financial repression which Stoler references includes a 10-country data sample (and information about dozens of other countries), or that other studies on the effects of financial repression have looked at data from 20 or more countries. And Stoler clearly couldn't be bothered with checking to see that most of the research on financial repression has in fact focussed on its impact on economic growth in developing countries, and not advanced economies like the U.S.
Following Stoler's breathtakingly brief analysis of the single U.S. data point he concludes:
"So we see that the financial repression meme is at heart an aristocratic concept."Sorry, Matt, but it's not quite that simple.
Who exactly are financial repression's winners and losers? As some of the commenters on Stoler's post note the not insignificant dose of inflation which accompanies financial repression hits everyone who saves money. Also, the large rentier may have additional means at his/her disposal to mitigate the effects of financial repression. However, the small rentier (aka 401K holders, pensioners, retirees on fixed incomes) may not easily be able to, for example, shift assets to Lichtenstein.
But there may be a more simple answer to this question of winners and losers. To work as intended financial repression depends on government rules and regulation. In short, this means that under a system of financial repression those who follow the law are the ones who are punished by the law. Sound like a place you'd like to live?
Wednesday, September 28
Tuesday, September 13
Greece Can Legally Introduce Capital Controls Under EU Article 143
From Spiegel:
Contrary to earlier assumptions, restrictions on the movement of capital, which could be used to prevent Greek citizens from moving their money abroad (something that would endanger the country's banks), are now seen as being compatible with EU law. Article 143 of the Treaty on the Functioning of the European Union offers a loophole, in that it permits certain countries to "take protective measures."
The new line is not entirely uncontroversial, however. This became apparent at a meeting of the euro zone's deputy finance ministers last Monday, when the so-called troika of the European Commission, European Central Bank and IMF gave its report on the situation in Greece.
The group was divided in the end. For the first time, there was a majority, led by the Germans, Dutch and Finns, that advocated pulling the ripcord on Greece.
The southern countries, including France, were considerably more reserved. They feared that if funds were cut off for Greece, they could be next in line.Can someone please explain to me why so many Greeks still have their euros in a Greek bank? According to the latest official figures since Jan. 2010 Greek bank deposits have only declined by 20%. Assuming these figures are accurate (a big assumption) I would have expected the outflow to be much greater.
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