Tag: savings

Europe: A plan to boost economy by cutting taxes

Europe: A plan to boost economy by cutting taxes

By Andrea Terzi originally published at Social Europe and republished with consent of Author The anti-austerity vote in the European elections reflected two different kinds of discontent. One is a feeling of frustration, which is invigorating nationalism: the vote for “less Europe.” The other is a lack of confidence in current EU policies: the vote for “another Europe.” In both […]

Why a savings glut does not increase savings

Why a savings glut does not increase savings

By Michael Pettis Debate about the global savings glut hypothesis is mired in confusion, a fundamental one of which is the seemingly obvious but false claim that a global savings glut must lead to higher global savings. Here, for example, is a recent piece by one of my favorite economists, Barry Eichengreen: There is only one problem: the data show […]

Monetary policy under financial repression

Monetary policy under financial repression

In order to understand much of what is happening in China it is important to understand how financial systems operate under condition of financial repression. Because most of what we know about economics is derived from economists whose operating environment is the classical “anglo-saxon” economies, we underrate important economists that don’t follow this tradition, like the German Freidrich List or the American Albert O. Hirschman. And it leads us into mistaken assumptions, like the belief that higher interest rates lead automatically to higher savings rates.

Are low rates in the eurozone skewing private portfolio preferences?

Are low rates in the eurozone skewing private portfolio preferences?

The German-language media have been voicing concerns over the ECB’s low interest-rate policy and its effect on savings and investment in the euro zone. This makes sense given the state of the economy in Germany and Austria is significantly more robust than in the eurozone periphery. The German Bundesbank has already warned of overheated housing markets. Another warning on housing from Ireland crystallizes for me the risks with using monetary policy for reflation.

Revisiting predictions from 2011 on China and Europe

Revisiting predictions from 2011 on China and Europe

It is still too early for all of these predictions either to have materialized or to have failed, but I thought it might be useful to review them to see whether or not they have been reasonably accurate in describing unfolding events and, if not, how my model for thinking about global imbalances should be revised. My reason for doing this is not so much to keep score but rather that these predictions were almost necessary or logical outcomes of the savings imbalance model I implicitly use to understand the world, and so to the extent that my model is valid it should show up in the evolution of these predictions.

A new approach to deposit insurance

A new approach to deposit insurance

Recent developments in the Eurozone, specifically Cyprus where the first EU-dictated bail-in of bank depositors took place, brought to light an important issue which had been hiding in the shadows: the flawed nature of current deposit insurance schemes. In this article we present and develop a scheme which will address the need of depositors for safety without creating distorted incentives, while simultaneously helping to ensure the viability and stability of the banking sector in time of crisis.