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LuisEnrique

Listed below are comments made by LuisEnrique between Thursday, 12th March 2009 and Thursday, 13th August 2009.

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The recovery's coming - but the UK's taken a permanent hit 09:34am on 13 Aug 2009 Failing to increase M4 is not the same thing as failing to make things a lot better than they would otherwise be.

Here's Axel Leijonhufvud in a recent Cambridge Journal of Economics paper:

"The lesson to be drawn from these examples is that deficit spending will be absorbed into the financial sinkholes in private sector balance sheets and will not become effective until those holes have been filled. If the sinkholes are large, this will take a long, long time. Today, they are enormous. Policy must address both the capital accounts and the income accounts. Nationalisation of the crippling losses of the financial sector—whether or not the financial institutions are nationalised outright or just ‘bailed out’—is a precondition for old-fashioned ‘Keynesian’ stimulus to work."

The full article, very much worth reading, is here. (I'm not sure if you will allow html so giving link)

http://cje.oxfordjournals.org/cgi/content/full/33/4/741?maxtoshow=&HITS=10&hits=10&RESULTFORMAT=&fulltext=axel&searchid=1&FIRSTINDEX=0&resourcetype=HWCIT

If you are talking about QE "failing" because banks are rebuilding their capital ratios, then perhaps it is not failing at all.
The imbalances that could sink the G20 12:35pm on 12 Mar 2009 normally we'd expect exchange rates to do the work wouldn't we? China can hold the nominal exchange rate where it wants, but unless it can hold back domestic inflation it can't hold back the real exchange rate. Even if you have doubts about the textbook adjustment mechanisms, I don't really understand why this piece does not discuss the extent to which things might sort themselves out by themselves. [this is not to say concerted effort might not be desirable too, say capital controls]

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