In the interview, he further distils the lessons:
Archive for the ‘Speech / Interviews’ Category
First of all, Happy Diwali to all the viewers of this blog. Hope you all had a great time and continuing to have one on a really extended set of holidays.
It has been a while since this blog last posted. What better way to start than to point a speech linking Diwali with central banking. I had pointed earlier how Central Bank of Trinidad and Tobago celebrates Diwali keeping all these mythological stories as its theme. Earlier ones were on Ramayana and this year it is on Lord Shiva:
Linkages are obvious. But we usually do not see a speech where one talks about financial centres.
Thomas J. Jordan chief of Swiss National Bank gives a speech on the topic. Most don’t know but Swiss have had three financial centres – Geneva, Basel and Zurich. Eventually, Geneva emerged as the preferred one.
Prof. Frederic Payor of Swathmore College has had some experience in life. He was mistook for a spy in East Berlin due to his dissertation on Russian economy! The topic of dissertation was on the foreign trade system of the Soviet bloc.
All this interesting titbit was hardly known till Steven Spielberg/Tom Hanks did not play the events in their recent movie – Bridge of Spies.
In this interview, Prof Payor narrates the experience and how closely the movie captures reality:
Nice interview of later Prof. Stanley Hoffmann, a longtime , professor of international relations at Harvard University.
Michal Matlak: Europe is not in good shape.
Stanley Hoffmann: Any American newspaper will tell you this. Those poor Europeans, they don’t know what they are doing! I am originally from France, and I recently went back to see some friends. It looked perfectly normal to me. They are not exactly doing brilliantly, but the notion that the whole thing will collapse, that there will be no EU, is plainly absurd. There are ups and downs—this is a period of down, but it is not the end of the story.
This is big irony really. India is one of the highest (ok “the highest”) growing country in the world. But it feels like a recession here.
Good stuff on Europe, history, politics and so on..
Nice interview of Patrick Barron of Mises Institute. Exposes all the fancy talk done by central bankers across the world:
Our guest this week is Patrick Barron, a professor of economics and a student of global currency markets. Patrick and I dissect the Fed’s big announcement this past week not to raise interest rates, and consider whether Janet Yellen and other central bankers really believe in what they’re doing.
Is it all just to save themselves from the judgment of history, by kicking the can down the road? Have they read, or even considered, Austrian arguments on money and banking? Or are they simply so wedded to Keynesian orthodoxy that they literally don’t know what else to do? And what type of precipitating events might spell the end of US dollar imperialism?
Most pessimists of a certain economy/economies have their day someday. So, time is ripe for China’s pessimists and they go abuzz saying “Didn’t I I tell you”? All this while those who built their careers over China’s optimism have been shrugged aside. How quickly the tides turn really.
Jim Chanos the China pessimst is one such fugure. In this interview, he calls the country as an emperor with no clothes. It is still not naked but is getting there:
Prof Marc Lavoie of University of Ottawa has written a book on curriculum reform in economics – Post Keynesian Economics; New Foundations. He talks about the need to rethink economics and what his book has to offer:
Mainstream economic theory has been increasingly questioned following the Global Financial Crisis of 2008. The disconnect between reality and theory manifested itself most clearly when the Queen of the United Kingdom pointedly asked why no economist saw this coming. In truth, there were a handful who did get it right, but they were generally ignored in favour of Ivy League educated neo-classical economists, whose assumptions proved incapable of integrating the financial and real sides of the economy.
This is a problem which extends all the way to the classroom, which is why Marc Lavoie, a professor of economics at the University of Ottawa, wrote a new economic textbook as a coherent substitute to conventional textbooks. The book, “Post Keynesian Economics; New Foundations”, outlines alternative macro and microeconomic foundations, the upshot being a book that acknowledges that we live in a world of fundamental uncertainty, where the role of finance goes well beyond the simplistic reserve banking models that populate most undergraduate studies.
In this interview, Lavoie discusses the methodological foundations of heterodox economics, and offers a very different model of money and credit, firms and pricing, consumer theory, effective demand and employment and growth theories. As Lavoie himself argues, economists essentially had 3 reactions to the recent financial crisis. The first group has been to say that existing mainstream theory is fine, but that it needs to be slightly tweaked and improved so as to take into account elements that were previously left aside and which explain why the crisis could not be predicted. The second group, the so-called “freshwater economists” argue that the crisis was caused by misguided regulations, bad government interventions, ill-advised decisions by central banks, public profligacy and unsound fiscal policy. The third camp (to which Lavoie belongs and which forms the basis of the books prevailing theme) is to claim that recent institutions, regulations, and economic policies have been based on erroneous economic theories, and that these need to be eliminated, starting with the way we teach economics – hence the rationale for the new textbook.
Should be an interesting read. Though, I think we already know what is wrong. Much has been written about it already. We now need action on this front..
Oliver Blanchard, the outgoing chief economist of IMF gives this interview on lessons learnt (both for himself and IMF) and way going forward.
He is joining the Peterson Institute for doing more serious research on the lessons he has learnt over these years. This is really interesting to see. How most US based economists actually look forward to doing more research after holding such high offices. They just join the thinktanks/univs and devote more time to research. In most other countries, we usually see such experts shuttling from one high office to the other. The econs in US wished to be known for their academic contribution and not just some policy hogwash.
Moving to the lessons learnt:
How times have changed. Earlier any mention of markets automatically meant it is real and good for the people. Not anymore.
Mark Carney of BoE (while releasing the Bank’s Fair and Effective Markets Review Releases Final Report) says we need to build such markets:
- the provision of liquidity to limit contagion;
- a recognition that clear, well-understood codes contribute to the greater good; and
- a belief that financial markets can solve real world problems.
From the coffee houses that served as meeting places for entrepreneurs and merchants; to the exchanges that supported the trading of financial claims; to a central bank that acted as lender of last resort: a rich infrastructure developed to support markets that served the UK and the world. As it grew into the world’s leading economic and trading power, the UK also became its centre of financial capitalism.
It is really surprising to see such reflections. For all you know, BoE and London were seen as the benchmarks for anything in finance.
What are real markets?
Stan Fisher sums up the lessons he has learnt over the years.
He misses the most important lesson – know the financial history and know it really well. Infact history is not even a word in the speech. Infact, if one follows history then you are unlikely to hype certain phases of economic and stock market growth as a new dawn or something. And then as the crisis enfolds, you know what you have to do. After all, there is nothing unique about having a crisis. History keeps you humble and grounded.
Another thing is how despite likes of Prof. Fisher wanting to be seen as market promoting economists, actually just talk about government and central bank interventions. These evry interventions end up sowing the seeds of the next crisis.
Personally, I think IDFC was made into a bank a wee bit too early. Given how China and even India is pushing new development financial institutions to fund infra, we might have to soon look at domestic front too. We actually might need a few more IDFCs in future. Anyways, nothing can be done now. In finance, we have to go in circles and keep pulling out old wine in new bottle.
In this interview, IDFC chief Rajiv Lall explains how the transition is happening. Interestingly, the bank starts big from MP of all places:
Nice speech by G Padmanabhan, retiring ED of Indian central bank http://www.bis.org/review/r150410c.pdf
He handled the forex department and tells this useful story of evolution of Indian forex market. A good read..