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January 26, 2015

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Posted: 26 Jan 2015 12:06 AM PST

'Nominate A Qualified Undersecretary Of Domestic Finance Now'

Posted: 25 Jan 2015 02:08 PM PST

This is from Simon Johnson (I didn't follow the debate over the qualifications of Antonio Weiss, the administration's nominee for Undersecretary for Domestic Finance, as closely as I should have, so I don't have much to say about that part of what is said below. But I very much agree with the need to find someone who will stand up for financial reform):

Nominate A Qualified Undersecretary Of Domestic Finance Now: The Obama administration urgently needs to nominate a qualified individual as Undersecretary for Domestic Finance at the Treasury Department. ...
The ... White House pushed hard for the confirmation of a Wall Street executive, Antonio Weiss, as Undersecretary for Domestic Finance. (In mid-January, in the face of continuing legitimate questions about his qualifications, Mr. Weiss withdrew himself from consideration. ...) ...
The House Republicans show every sign of doing what they can to help Citigroup, JP Morgan Chase, and others remove all effective restrictions on megabanks' ability to take on large amounts of risk. The big banks want to return to the days of executives getting the upside when things go well and the taxpayer left holding the bag whenever disaster strikes.
The Treasury Department urgently needs to focus intellectual and administrative attention on the substance of defending Dodd-Frank, including shoring up support with Democrats, resisting the political onslaught led by House Republicans, and reaching out to senators of both parties who are willing to help. A key piece of becoming properly organized – intellectually and in terms of liaison with Congress – involves appointing a credible, qualified Undersecretary for Domestic Finance who hits the ground running and really knows what he or she is talking about. ...
Mr. Weiss's principal problem was simple: he ... did not have the relevant general domain expertise and also lacked a sufficiently convincing grasp of the economic and political details surrounding financial regulation.
The search now should be quite straightforward. Find someone with relevant experience and a good track record – including statements and actions that are on the public record and that demonstrate willingness to challenge the megabanks' worldview. ...
Nominating a credible Undersecretary for Domestic Finance quickly is an essential step towards helping the Treasury Department most effectively serve the American people – and towards preventing the collapse of financial reform.

Who are the Radicals in Europe?

Posted: 25 Jan 2015 09:55 AM PST

Gloomy European Economist, Francesco Saraceno:

Who are the Radicals in Europe?: As I write the Greek people are voting.  I was puzzled in the past weeks by the fear (more in the media than in markets, actually) of a "radical" left win. Puzzled, because the radical and ideological policy makers do not seem to live in Greece, today. On January 20 I wrote a piece for the Greek website Macropolis, where I claimed that we should not expect an Armageddon if Syriza wins, but rather some welcome fresh air.  I reproduce the piece here: ...

To give you the flavor of his remarks:

... On closer inspection, it seems far more radical the position of those who, despite having grossly underestimated the negative effects of austerity, ask for more of the same; of those who insist on advocating supply-side reforms to cope with a chronic lack of demand; and of those who boast having achieved a balanced budget one year ahead of forecasts, when Europe would benefit from a recovery of domestic demand in Germany.
What will happen then, if "radical" Syriza will win the election? Actually not much. ...

[In case you missed them, see also an interview with Jamie Galbraith, The Prospects and Consequences of a Possible Syriza Government and Let Us Hope for a Syriza Victory by Simon Wren-Lewis.]

Fiscal Cliff Forecasts

Posted: 25 Jan 2015 09:54 AM PST

Robert Waldmann:

2013 and all that II: A fairly large number of economists have argued that Keynesians predicted that the fiscal cliff January 2013 and sequestration March 2013 would cause a recession. A fairly large number of Keynesian economists have denied personally making that prediction (including the oversigned). Only following a complaint in comments will I look up all the links at which I just hinted.
I think it is fairly easy to decide if the orthodox Keynesian view was that 2013 fiscal contraction would cause a recession. The reason is that official forecasts are Keynesian. The forecasting models range from new Keynesian with added epicycles for the Bank of England to paleo Keynesian for the Fed.
So I decided to look up forecasts for 2013. The advantage is that official forecasts include a precise guess of the expected value of future variables...

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