Central Banks Were Always Political – So Their ‘Independence’ Doesn’t Mean Much

THE GUARDIAN: The separation of monetary and fiscal policy serves the neoliberal status quo. It won’t survive the next crash

Independent central banks were once all the rage. Taking decisions over interest rates and handing them to technocrats was seen as a sensible way of preventing politicians from trying to buy votes with cheap money. They couldn’t be trusted to keep inflation under control, but central banks could.

And when the global economy came crashing down in the autumn of 2008, it was central banks that prevented another Great Depression. Interest rates were slashed and the electronic money taps were turned on with quantitative easing (QE). That, at least, is the way central banks tell the story. » | Larry Elliott | Thursday, September 12, 2019

This Profligate President! Barack Obama Is Refusing to Listen to Reason on Economic Policy
THE TELEGRAPH: President Barack Obama could learn from the old-fashioned German habit of saving money before spending it, argues Jeremy Warner.

Barack Obama will meet other world leaders at the G20 summit. Photo: The Telegraph
Rarely has the dismal science of economics inflamed such passions. While the "cuts versus growth" debate has been building steadily for more than a year on both sides of the Atlantic, over the past week it has exploded into open international hostilities.

A compromised form of words will already have been agreed for the communiqué to follow this weekend's meeting of G8 and G20 leaders; the sherpas who do the preparatory donkey work for these stage-managed events will have ensured it.

But behind the anodyne platitudes of any statement, the tensions have reached fever pitch. Gone is the co-operative consensus that, in adversity 18 months ago, brought G20 nations together to fight the downturn.

In its place lies a clear line of demarcation that almost exactly mirrors our own political debate in Britain over the economic consequences of George Osborne's Emergency Budget cuts. Yet though this debate masquerades as high intellect, it has about as much to do with economics as the outcome of the World Cup.

President Barack Obama, backed to some extent by Nicolas Sarkozy of France, wants economic stimulus to continue until the global recovery is unambiguously secure. In the opposite corner is Germany's Angela Merkel, now oddly aligned with Britain's new political leadership in thinking the time is right for fiscal austerity.

Like much of what Mr Obama says and does these days, the US position is cynically political. With mid-term elections looming and the Democrats down in the polls, the administration hasn't yet even begun to think about deficit reduction. Obama is much more worried by the possibility of a double-dip recession and the damage this would do to his chances of a second term, than the state of the public finances.

As it happens, the public debt trajectory is rather worse in the US than it is in Europe, yet Obama has adopted an overtly "spend until we are broke" approach in a calculated bid for growth and votes. Read on and comment >>> Jeremy Warner | Thursday, June 24, 2010

Obamonomics: A Definition >>> Mark Alexander | Saturday, March 07, 2009

French Workers Strike Over Economy

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European Finance Ministers to Attack Alistair Darling over Sterling's Slide
European finance ministers are planning to round on Alistair Darling and tell him to bring the pound back under control, in what many fear could represent the opening salvo of a "currency war".

French and German ministers are expected to confront the Chancellor over sterling's weakness at the opening dinner for the Group of Seven finance summit in Rome tonight. They will ask him to consider direct action to increase the value of the pound, which has suffered its worst devaluation since at least the final breakdown of the Bretton Woods agreement in the early 1970s.

It came as the pound dropped further against a range of currencies, following the Bank of England's unexpected acknowledgement earlier this week that it plans to start buying gilts imminently as part of its quantitative easing efforts. Sterling fell more than a cent against the dollar to $1.4248, although it did strengthen marginally against the euro. >>> By Edmund Conway, Economics Editor | Friday, February 13, 2009

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Eurozone to Speak with One Voice?
SPIEGELONLINE INTERNAIONAL: The EU's monetary affairs commissioner has called for far-reaching new powers for the European Commission. He would like Brussels to have greater control over economic policy in euro zone countries -- and even wants its members to speak with one voice on the international stage.

Opponents of the European Union claim that Brussels already has too much influence over the internal affairs of the EU's 27 member states. They are unlikely to be thrilled by the news that a leading EU official is calling for far-reaching new powers for the EU's executive branch when it comes to member states' economic affairs -- and even foreign policy.

EU Economic and Monetary Affairs Commissioner Joaquin Almunia (more...) wants the European Commission to have more clout in all areas of economic policy. In the future, the Commission should be able to supervise and coordinate reform efforts in the countries of the euro zone, in order to promote more competition in Europe's product and services markets, including the market for financial services. The proposals are contained in a report marking the 10-year anniversary of the euro which Almunia will present on Wednesday. EU Commissioner Wants Far-Reaching New Powers for Brussels >>> | May 5, 2008

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