Tonight with Vincent Browne 18.04.12

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Steve took part in a discussion on the state of the Eurpean Union economy on Tonight with Vincent Browne on the 18 April while in Ireland. The conversation explores the flaw of the Maastricht Treaty and potential economic solutions for the European Union. A short 10 minute feature of Steve is available from the below YouTube clip or you may click here from to view the full length show.

About David Lawson

-Worked as a real estate agent in 2009, have since left the industry because I now see that it is all fuelled by euphoric expections and debt -Started to become concerned about the global debt bubble after reading 'The Credit Crunch' by Graham Turner about a year ago and have since followed Steve Keens debtwatch blog -Competed a Bachelor of economics in 2004 specalising in iternational trade and finance -Lived in the USA for 5 years of my life, have witnessed first hand there frivolous spending patterns and watched our country become the same over the course of last 10 years
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80 Responses to Tonight with Vincent Browne 18.04.12

  1. Uno Cualquiera says:

    There are more people in Spain writing about electronic-only parallel “closed” currency.
    It would have the same value as euro, but it would only be valid in Spain and could not be swapped for euros. Only electronic: all transactions with notes and coins would be in euros, as well as external transactions.
    Public staff and pensioners would receive part of their salary in new europesetas, reducing pressure on public debt. Spain could buy toxic assets in banks with new europesetas, which banks would use to pay part of their expenditures like salaries and lend credits to the enormous amount of ailing bussinesses in europesetas (they’re dying right now without credit). Taxes would be partially paid in europesetas. Proposal in Spanish:
    http://www.rebelion.org/noticia.php?id=140527
    http://www.farodevigo.es/opinion/2012/03/11/moneda-paralela-senor-vigo-tres-madrid-polemica-lecciones/631387.html

    That’s why I don’t understand those comments showing fears about fixed or floating exchange rates. The new currency cannot be exchanged.

    Randall Wray gives a hint of the same idea applied to a Job Guarantee scheme for Ireland in the penultimate page of this paper:
    http://www.levyinstitute.org/pubs/wp_707.pdf

    “The first would be to develop a new currency—let’s call it the punt—to be used for government payments of wages in the JG. All levels of government would agree to accept the punt in payment of taxes, fees, and fines. Assume that at government pay offices the punt is accepted at par for euro tax debts. Let us further presume that punts would be supplied only through government payment of wages to JG workers. Since JG workers as well as anyone with a tax due could use the punts to pay taxes, they would soon circulate widely. The government would not make the punt convertible to euros—it would not supply euros when punts are presented—but in private transactions they would trade at close to par because in payment of taxes they are equivalent.”

  2. daniel clarke says:

    the maastricht treaty and eu is only part about economics, holding one part up and advocating breaking the treaty is throwing the baby out with the bathwater.

    it’s maybe not obvious to non europeans, but there have been massive social gains and solidarity brought about through european integration and solutions that put that at risk should not be trivially advocated. economics doesnt exist in a vacuum, whatever we do to solve this medium term crisis should not damage long term social coherence. breaking up the euro would be a loss socially, the euro is not simply an economic proposition.

    regards the specific idea to me it appears that Steve has maybe not considered if all his assumptions are realistic. apart from anything else (and there are many things jumping out such as how can the private sector finance imports payed in euro when it sells to customers for unexchangeable punts), human nature alone means it cant work

    so at least one of the unrealistic assumptions is that everybody would act in the best interest of the greater good even when it doesnt align with their own interest. in practice everybody would be in favour of everybody else exchanging their euro for punt while keeping their own euro for the flexibility, enhanced guarantee of value

    We clearly need help to find some solution to employment, endebtment and anyone who’s taken the time to understand Steve’s side of the argument will want his ideas to be part of an eventual solution. However, advocating ripping up maastricht as if that’s something predictable, manageable and desirable is simply throwing away credibility

  3. NeilW says:

    “it’s maybe not obvious to non europeans, but there have been massive social gains and solidarity brought about through european integration and solutions that put that at risk should not be trivially advocated”

    There may very well have been, but there are very few Europeans who want a United States of Europe.

    Therefore the single currency and the straitjacket surrounding that cannot work.

    The common market is a decent enough idea, but it doesn’t need ever greater centralisation and removal of local democracy to function. We can sell stuff to each other cleanly without all that.

    Suggesting that it will all disappear if we change direction is a Slippery Slope logical fallacy.

  4. Great stuff, Professor Keens. What is amazing is that this analysis and these charts fit closely to the narrative historical evidence on the current crisis presented in a variety of recent works ranging from Dean Baker’s recent works to a number of works by economic journalists like Gretchen Morgenson, Michael W. Hudson, Kevin Phillips, Nomi Prins, and others. I am busy plowing through the latest edition of Debunking Economics, an excellent review of where most of the flawed or fallacious economic notions came from and how they were developed over the years, decades and centuries. One additional thing that I believe needs to be built into our economic thinking in order for us to achieve a cooperative and positive sum world order is an account of globalization, trade, and zero sum forms of globalization that have led to the massive transfer of productive capacity and jobs in some advanced countries to rapidly developing giants of manufacturing like China. I believe there now needs to be a formula for accelerated development of countries like China and India that is based on much higher wages and orientation towards internal markets plus policies to discourage the transfer of productive capacity by multinational corporations. Also the nature of corporate organization or governance needs to be addressed at the micro level. I can’t go into all of these issues here, but I think that they need to be worked into our theoretical models as well as policies and institutions. I think that the de-industrialization problem is more acute in the United States than in some other smaller countries that rely more on mining and agricultural exports than the US. I believe that globalization in one major factor which in addition to regressive fiscal and monetary policy that has contributed to long run imbalances in the US economy and increasing disparity in income distribution. The concentration of income and wealth that results from trade policies of the US and China feeds the pool of speculative capital and to imbalances between supply and effective purchasing power. I believe there is substantial statistical end empirical evidence that a combination of “mercantilism” and free trade fallacy has contributed to the current crisis. Here is a link to a select bibliography, I have compiled on United States and global economic disorders.
    http://globalgeopolitics.net/wordpress/bibliography/
    Any comments on how to work globalization, automation, technology institutions and organizationa forms into a multidimensional economic analysis that includes geographic distribution would be most welcome.
    Thanks for your great blog and your valuable book.

  5. Steve Keen says:

    Thanks Alan,

    I’ve tweeted your bibliography. Hopefully that will help it’s exposure.

    Cheers, Steve

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