Nice speech by Mr Salvatore Rossi, Senior Deputy Governor of the Bank of Italy.
He gives a brief outline of evolution of Italy as a nation and its contribution to world economy:
One has been trying to read as much financial history as possible across countries. It is all fascinating to read through accounts of ways things were financed back then and the hardships faced. One also comes across how financial innovations of today were used historically and there is hardly anything modern or innovative about them.
Another thing which emerged is strong cultural and trust values in banking firms. Firms that instilled these values early on and remained committed survived much longer than their peers. Leave all balance sheet analysis and financials aside. It is this cultural aspect which matters as greatly for both survival and growth of a banking firm. This applies to most firms but much more to banks for whom gaining trust and maintaining it is really central to everything.
The crisis of 2008 is leading all these lost values to come back. Regulators stinged by the crisis despite all the fancy financing techniques and Basel norms, now realise culture of a firm is what matters at the end of the day.
In this speech, Andrew Bailey of Bank of England sums up the issues:
Alas, none of these measures are likely to work much. These things are pretty much inbuilt and historical. Moreover, there is no guarantee that once culture is set, it will continue. Change of senior management who do not believe in culture and history undo all the goods of the past and then sow the seeds for eventual destruction of the firm..
This one is by Norges Bank Deputy Governor Jon Nicolaisen. As he is a central banker, what more to expect than whether one should intervene ot let markets work during a crisis:
The kind of attention Federal Reserve gets worldwide one would imagine that this is one institution which must be having broad approval from US people and polity. Ironically, it is actually just the opposite.
Unlike most parts of the world where discussion on central banks is just about their rate moves, in US one finds equal number of discussions on origins and relevance of Fed. This has gained steam after the crisis and lots of stuff is being written looking at historical basis of Fed.
The Impact of Globalization on Argentina and Chile is the title of a book which looks at the paths taken by two countries. Argentina which was one of the top economies in the beginning of 20th century is not even a pale shadow of its great past. Chile also after many upheavals has managed to get its act together.
The editor of the book, Prof Geoffrey Jones explains the findings in this interview:
Financial centres is perhaps the least studied but one of the most fascinating areas of finance. We ignore the locational aspects of finance/banking which combine so much of scholarship – history, economics, politics and finance..
Clara Furse takes you to history of fin centres:
India’s chief statistician TCA Anant says this in this interview. I would think both data and analysis are connected. Poor data surely leads to poor or distorted analysis. Though, this does not mean good data always leads to good analysis.
He says we need to look beyond monthly volatility and look at compsition of data:
This question is actually posed to BIS’s Mr Hyun Song Shin. The interview reminds you of this post on death of economics. I mean such is the chaos in thinking and explanation. No one has a clue really.
He says based on the traditional economic story we should have had some inflation. But we don’t:
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: