Di nuovo su TARGET2

 

 Pubblicato su BRAVE NEW EUROPE

The endless TARGET2 saga

Sergio Cesaratto, Eladio Febrero, George Pantelopoulos*

TARGET2 imbalances seem to be an endless source of controversy. At the beginning of the last decade, Hans Werner Sinn claimed that T2 imbalances served to fund current account deficits forgetting the responsibility of German mercantilism. Last week Eurointelligence raised the question of presumed onerous interest payments burdening the southern countries with TARGET2 liabilities to the advantage of northern countries. This post shows that this is false, as TARGET2 imbalances do not entail, de facto, intra-Eurosystem payments.

The economic and social consequences of the war on Europe and Italy

 

Sergio Cesaratto – The economic and social consequences of the war on Europe and Italy

Brave New Europe, May 12, 2022

Political realism offers useful keys to interpreting the international political economy, which has never been more endangered than today by the military escalation in Ukraine. The EU and Italy risk to be the pots and pans in the unprecedented economic crisis looming ahead.

Sergio Cesaratto teaches European monetary and fiscal policies at the University of Siena. He is author of Heterodox Challenges in Economics – Theoretical Issues and the Crisis of the Eurozone, Springer, 2020 (reviewed by BNE here).

Adapted from the Italian version of the article that appeared in fuori collana

Maastricht: nessun prosecco

 

 Da Brave New Europe, 1 febbraio 2022

Sergio Cesaratto – The anniversary of Maastricht: little to celebrate

The Maastricht Treaty was signed on 9 February 1992. Thirty years later it is responsible for much suffering, inequality, and poverty within the fragile eurozone.

Sergio Cesaratto teaches European monetary and fiscal policies at the University of Siena. He is author of Heterodox Challenges in Economics – Theoretical Issues and the Crisis of the Eurozone, Springer, 2020 (reviewed by BNE here).

The Italian version of the article will be appearing in Micromega

 

 

 

I leave it to historians to reconstruct the international and Italian events that led to the ratification of the Maastricht Treaty (1992). Let us look here at some economic aspects in order to judge whether or not this treaty made any sense.

On a book by ECB's economists

 

An ECB’s Staff Narrative of Two Decades of European Central Banking: a critical review

Working Paper n.866 Dicembre 2021

Sergio Cesaratto

DEPS, USiena

Abstract

Monetary Policy in Times of Crisis (Rostagno et al. 2021) has three relevant features. The first is its criticism of the absence of an adequate European fiscal policy during the financial crisis. This left the ECB on its own. The second feature concerns the explanation of the theoretical framework that guided the ECB's action. While it is interesting that the authors point out that monetary policy acts on the demand side (and is therefore neutral neither in the short nor in the long-run), a plain explanation of the channels through which the central bank can influence demand is absent. The third feature is the chronicle of events and of the clash of positions within the ECB. This aspect would have, however, gained from a bolder and less conventional interpretative scheme. The book thus appears to be lacking both in a clear exposition of the ECB's analytical background and its evolution during the crisis, and in a comprehensive explanation of its policies. It is likely that the authors' economic training based on the neo-Keynesian mainstream model has greatly conditioned them in a technically convoluted, but too often uninspiring interpretation of events and policies. It is also possible that the difficulty of demonstrating the effectiveness of the monetary policy measures undertaken by the ECB in the absence of a proactive fiscal policy contributed to the widespread technical laboriousness of the argument in many pages of the book. Especially for academic teaching, but also for the informed public debate, a more accessible level would have been advisable. An appendix seeks to explain T-LTRO operations, the logic of which the book fails to elucidate.

Jel Codes

E11, E12, E52, E58, N14

LINK to  PDF here

Those Italian subsidies for Germany

 

Sergio Cesaratto – Those Italian subsidies for Germany

December 8, 2021 Economics, EU politics, EU-Institutions, Finance, Inequality, National Politics, Regulation

Italy has paid for certain ill-advised policies of the ECB – influenced by Berlin, the dominant power in Europe – with dozens of points of additional debt/GDP and finding itself ever poorer, while Germany symmetrically gained.

Sergio Cesaratto teaches European monetary and fiscal policies at the University of Siena. He is author of Heterodox Challenges in Economics – Theoretical Issues and the Crisis of the Eurozone, Springer, 2020 (reviewed by BNE here).

Originally published by Micromega 3 December 2021 here

Crisi di bilancia dei pagamenti o mancato intervento della BCE? Ancora sulla natura della crisi europea.

 Ultimo capitolo del dibattito sulla natura della crisi europea.

The nature of the eurocrisis. A reply to Febrero, Uxò and Bermejo

Working paper N. 752 Maggio 2017

Sergio Cesaratto
DEPS, USiena
Abstract
Febrero et al. (2017) criticise the balance of payments (BOP) view of the EMU crisis. I have no major objections to most of the single aspects of the crisis pointed out by these authors, except that they appear to underlie specific sides of the EMU crisis, while missing a unifying and realistic explanation. Specific semi-automatic mechanisms differentiate a BOP crisis in a currency union from a traditional one. Unfortunately, these mechanisms give Febrero et al. the illusion that a BOP crisis in a currency union is impossible. My conclusion is that an interpretation of the Eurozone troubles as a balance of payments (BOP) crisis provides a more consistent framework. The debate has some relevance for the policy prescriptions to solve the eurocrisis. Given the costs that all sides would incur if the currency union were to break up, austerity policies are still seen by European politicians as a tolerable price to pay to keep foreign imbalances at bay - with the sweetener of some ECB support, for as long as Berlin allows the ECB to provide it.
Keywords
European economic and monetary union, ECB, balance of payment crisis, Target2, Euro
Jel Codes
E11, E12, E42, E58, F32, F33, F34, F36, N24

Interpretazioni alternative di una moneta senza Stato (Alternative interpretations of a stateless currency)

 Sui Quaderni di Siena una versione aggiornata di un paper già su Asimmetrie. Alcuni cambiamenti sono significativi dopo i commenti dei referees di una importante rivista. Il link qui. Il testo è in inglese, ma a parte questo non contiene tecnicismi particolari. 
Con l'occasione, il libro sta andando molto bene ed è già alla ristampa. Grazie a tutte/i. Versione kindle promessa per questo fine settimana.

Le lezioni di politica monetaria su Asimmetre

 Asimmetrie ha ripubblicato in forma compatta le quattro lezioni di politica monetaria della BCE già pubblicate da E&P. Ringrazio Alberto. Le lezioni sono in italiano.

WP 2015/10: L’organetto di Draghi: quattro lezioni critiche sulle misure non convenzionali della ECB sino al Quantitative Easing

The primary purpose of these lectures is didactic. They show the development of the ECB intervention from 2008 to 2015 taking the evolution of the consolidated balance sheet of the Eurosystem as reference point. They endorse the theory of endogenous money as theoretical landmark.

Sergio Cesaratto
University of Siena

Keywords: Eurosystem, Euro, European Central Bank, Balance Sheet, Endogenous, Money, Quantitative Easing, Monetary Policy, TARGET 2, Long Term Refinancing, Operation, Outright Monetary Transactions.

JEL classification: E40, E50, F33, F36, F45.

Ramanan again su Target 2, Lavoie and me

Rilancio un post dell'ottimo Ramanan (un ottimo blogger indiano, postkeynesiano ed esperto di finanza) sul dibattito con Lavoie sulla natura della crisi Europea.
"I echo Sergio’s example (on Calabria) with a similar example of my own. If nations in a monetary union cannot face a balance-of-payments crisis, why not have the whole world join the Euro Area and adopt the Euro as their currency and have the ECB as the central bank of the world and guarantee all government debts without any condition? Surely, that should be the solution to the problems of the world! Not! ...The ECB alone cannot resolve the crisis. "
Qui il post completo.

Target due sulla natura della crisi europea

Nakedkeynesianism ha pubblicato questa ulteriore nota sulla discussione con Marc Lavoie, che spero non mi citi in tribunale per stolking. Ma Marc è una persona amabile.

Unlimited Targets? Some pointers

Sergio Cesaratto

In this short note I will not add anything of substantial to the debate with Marc Lavoie on the nature of the Eurozone (EZ) crisis in view of Target 2 (T2). Readers have numerous papers to look at (including Lavoie 2015a/b,  Cesaratto 2013, 2015a/b) and posts (Vernengo 2015, Ramanan, 2015a/b). Links in the references. However, although most of relevance has already  been said, there is perhaps still some space for few qualifications.

Una risposta a Marc Lavoie sulla natura della crisi europea - A reply to Marc Lavoie on the nature of the Eurocrisis

Asimmetrie ha pubblicato un mio WP di riposta a Marc Lavoie sulla natura della crisi europea. Riproduco qui abstract e introduzione. Buona lettura e molti auguri.

WP 2014/06: Balance of payments or monetary sovereignty? In search of the EMU’s original sin – a reply to Lavoie

 22 dicembre 2014

In a recent paper Marc Lavoie (2014) has criticized my interpretation of the Eurozone (EZ) crisis as a balance of payments crisis (BoP view for short). He rather identified the original sin “in the setup and self-imposed constraint of the European Central Bank”. This is defined here as the monetary sovereignty view. This view belongs to a more general view that see the source of the EZ troubles in its imperfect institutional design. According to the (prevailing) BoP view, supported with different shades by a variety of economists from the conservative Sinn to the progressive Frenkel, the original sin is in the current account (CA) imbalances brought about by the abandonment of exchange rate adjustments and in the inducement to peripheral countries to get indebted with core countries. An increasing number of economists would add the German neo-mercantilist policies as an aggravating factor. While the BoP crisis appears as a fact, a better institutional design would perhaps have avoided the worse aspects of the current crisis and permitted a more effective action by the ECB. Leaving aside the political unfeasibility of a more progressive institutional set up, it is doubtful that this would fix the structural unbalances exacerbated by the euro. Be this as it may, one can, of course, blame the flawed institutional set up and the lack an ultimate action by the ECB as the culprit of the crisis, as Lavoie seems to argue. Yet, since this institutional set up is not there, the EZ crisis manifests itself as a balance of payment crisis.

La matassa ingarbugliata dell'unione bancaria europea

Pubblico delle note didattiche per il mio corso di Politica ficale e monetaria dell'Unione Europea dedicate al tema dell'Unione bancaria. Non sono di facile lettura, nel senso che la questione è ingarbugliata e le informazioni spesso non di facile accessibilità. Questo passa il (mio) convento per ora. Se vi arrischiate a leggerele, tenete fermi i tre pilastri illustrati all'inizio, quelli vi fanno da riferimento.

La matassa ingarbugliata della Banking union

Sergio Cesaratto

Dipartimento di Economia Politica e Statistica – Università di Siena

Cesaratto@unisi.it

“In June 2012, euro area leaders affirmed, ―it is imperative to break the

vicious circle between banks and sovereigns.… “ (IMF 2013: 20).

Avvertenza: queste sono note didattiche distribuite in quanto forse utili. L’esposizione è del tutto provvisoria ed è stata solo velocemente rivista.

1. Necessità di una unione bancaria

Un post di Daniel Gros (Gros 2013)– un noto economista europeo - spiega bene perché un’unione bancaria (UB) sia un pilastro essenziale di una UM ben funzionante. Un  post di Dolan (2013) spiega bene i meccanismi di una crisi bancaria e le possibile procedure di risoluzione.

Gros confrontava i meccanismi di gestione delle crisi bancarie del Nevada e dell’Irlanda. Ambedue gli stati avevano attraversato prima della grande crisi una bolla edilizia sfociata, appunto, in una crisi bancaria. Nell’un caso, tuttavia, la crisi è stata affrontata a livello federale, nell’altro fondamentalmente a livello nazionale. Nel primo caso lo stato del Nevada è rimasto fondamentalmente fuori della gestione della crisi – se non subendo le conseguenze economiche della fine del boom edilizio, ma questo è un altro discorso – mentre lo stato irlandese ha dovuto farsi carico del salvataggio delle proprie banche entrando a sua volta in crisi (per cui la crisi bancaria si è trasformata in crisi sovrana) e necessitando di una sostegno europeo (di cui tratteremo nel cap. 10), tanto più non disponendo di una BC sovrana dotata, per definizione, di un potere illimitato di finanziare la spesa pubblica. Non potendo godere di un sostegno diretto della BCE, questa è intervenuta a sostegno del debito pubblico irlandese (e degli altri paesi periferici) attraverso un’ampia disponibilità di liquidità a favore delle banche locali (l’operazione LTRO) le quali l’hanno impiegata per sostenere i titoli del debito sovrano nazionale – non per buon cuore, evidentemente, ma perché attirate dalla differenza fra il basso costo della liquidità e gli elevati rendimenti dei titoli. Questo ha creato un circolo vizioso, un abbraccio mortale, fra stati in crisi per aver sostenuto banche fallite, e banche fallite che sostengono stati falliti. Spezzando da principio ogni coinvolgimento dello stato locale nella crisi bancaria, il modello americano evita questa situazione.

Per una condizionalità keynesiana - For a Keynesian conditionality (Italian and English)

Pubblichiamo un documento sottoscritto dopo un intenso workshop in Irlanda (Amit Bhaduri è fra i sottoscrittori!). Il testo in inglese è in calce. Una versione spagnola dovrebbe apparire a breve. Un mio pezzettino fa da premessa.

We publish below the Italian and original English versions of a document approved by a group of heterodox economist who met in Galway (Ireland) for a very intensive workshop. Amit Bhaduri (who could not be present) subscribed it. The document is preceded by a short presentation. A Spanish version will be published soon.

Per una condizionalità keynesiana

Sergio Cesaratto

Non c’è solo Firenze. La talpa della migliore economia critica scava anche in altre direzioni. Dopo tre giorni di serrata e documentata discussione a Galway (Irlanda), un workshop internazionale di economisti critici, molti assai noti, ha messo a punto il documento qui a fianco, stringato e solido. Esso muove dall’evidente fallimento delle politiche di austerità di cui gli economisti critici sono stati facili profeti . Esso propone dunque il ribaltamento dell’ordine delle priorità della politica economica europea: la crescita dell’occupazione è l’obiettivo prioritario, da perseguirsi con un’adeguata politica fiscale e distributiva che sostenga la domanda aggregata; la politica monetaria risulta subordinata a quella fiscale nell’assicurare livelli di interesse minimi. A differenza dell’OMT di Draghi - il programma d’intervento della BCE condizionato alla sottoscrizione di un memorandum di impegni di austerità - qui la condizionalità è invertita. L’intervento della BCE è assicurato per i paesi che s’impegnino in politiche anti-austerity, precisamente quelle che coniugano crescita e stabilizzazione dei conti. Quindi nessun avventurismo, ma una “condizionalità Keynesiana”: i paesi si impegnano in una “fiscal rule” di stabilizzazione attraverso politiche fiscali espansive assecondate dalla BCE. L’inflazione non è uno spauracchio visti gli ampi spazi di capacità produttiva inutilizzati. L’avventurismo, cieco e cinico, è quello dell’austerità e dei suoi paladini, nostrali ed europei.

The Sinister Irreversibility of the Euro (in English)

The Sinister Irreversibility of the Euro

Giancarlo Bergamini and Sergio Cesaratto

Draghi's decision to provide unlimited support to short term bonds of those countries who submit their public finances to European control has been greeted with widespread acclaim in Italy.

Albeit necessary to cut the spreads, which had attained unbearable levels, the BCE initiative is by no means decisive and under the current terms risks being couterproductive. For starters, it is politically indigestible for Spain and Italy, who hope in fact to scrape through without subscribing to any austerity “precautionary program” imposed by Europe and policed by the IMF. In other words, they hope that the expectations triggered by the ECB's announcement can do the trick of lowering the spread on their sovereign bonds, even if nothing concrete follows without conditionality constraints. In reality, if nothing happens the spreads are likely to increase, possibly because the markets expect that the bailout will be requested too late. Let's not get carried away by market euphoria. On occasion of the previous ECB interventions, the SMP of 2010-2011 and the two LTRO's, we had the same immediate reactions, only to be wound up after a few weeks. And this time we haven't even had ECB intervention to speak of, just the threat of it and subject to an abstruse mechanism (request for aid by country concerned, signing of an MOU, participation of EFSF/ESM in the bond actions, and at last ECB purchase in the secondary market). It seems highly impractical, save that in the process the applicant country may lose access to the markets.

Replica a Wray - Parte 2

Ecco la seconda parte. La risposta di Wray è qui http://www.economonitor.com/lrwray/2012/08/29/minsky-and-mmt-in-the-news/. Utile perché contrappone due scuole: Kaldor-Thirlwall per i quali il vincolo della bilancia dei pagamenti è l'ostacolo principale alla crescita, l'altra (l'MMT) secondo cui con una moneta sovrana, oplà, il problema scompare.

A reply to Wray - Part 2

“The EMU could easily have self-destructed even with no current account deficits anywhere.” (Wray here)

“Trade issues within the eurozone …will remain a point of economic and political stress even with a full resolution of the liquidity issues…” (Warren Mosler)

In the part 1 I reviewed the MMT view that full monetary sovereignty is the key to full employment policies in all countries, provided that those with current account (CA) troubles have safe access to alternative sources of foreign liquidity - what is not the case in reality. I also examined the MMT’s claim that the Eurozone (EZ) cannot suffer from internal balance of payment (BoP) troubles as long as fiscal transfers from a significant federal budget backed by a genuine European CB are provided - what again is not the case in reality. In this post we shall return on Wray’s denial of the BoP origin of the EZ crisis. I agree with Wray, Bell-Kelton and other MMTs that in a currency union local states are partially deprived of fiscal policy as a tool to sustain aggregate demand[1]  (without forgetting that this power is anyway in many countries subject to the foreign constraint even with full monetary sovereignty), while the institutional design of the EMU is not able to assure full employment and the preservation of the traditional European welfare state in a non-OCA. As Godley 1991 pointed out:

“The fact that individual countries no longer have their own currencies and central banks will put new constraints on their ability to run independent fiscal policies. However, the collective formulation of fiscal policy would be a far more difficult business than passive ‘coordination’. Fiscal policies of the whole Community could be co-ordinated and expansionary: but they could also be co-ordinated and contractionary. How is the common formulation of fiscal policy to be achieved? By what institutions and according to what principles?”

But Godley found even

“more disturbing … the notion that with a common currency the ‘balance or payments problem’ is eliminated and therefore that individual countries are relieved of the need to pay for their imports with exports. Quite the reverse: the existence or a common currency makes a country more directly dependent on its ability to sell exports and import substitutes than it was before, particularly as it will then possess no means whereby it can (in the broadest sense) protect itself against failure” (hat tip to Ramanan).

Indeed, the crisis did not stem from an undisciplined fiscal behaviour of some peripheral countries  – they knew very well that “markets” would have punished them (the EMU was designed for this purpose) – but from the loss of competitiveness of some member countries, as Godley feared, and from some additional events brought about by monetary unification that nobody (with one exception) foresaw.

Una nuova critica a Wray e all'MMT

Nakedkeynesianism ha pubblicato una mia nota critica (ma non ostile) a Wray e agli MMT (grazie Matias!). Nonostante essi ritengano di aver capito per primi la crisi europea, questo non è vero, sebbene ne abbiano capito prima di altri un elemento importante e di ciò gli va dato atto (ci mancherebbe). L'elemento è la rinuncia a una banca sovrana da parte degli stati nazionali. Il problema è che i toni che usano gli impediscono un dialogo sereno, non accorgendosi della parzialità delle loro tesi (a mio avviso, nel complesso, la crisi europea non l'hanno capita). In fondo v'è un po' di discussione (grazie Ramanan!).

(further, further discussion here and here)

Degli amici stanno procedendo alla traduzione in italiano.

The spurious victory of MMT

Sergio Cesaratto (Guest Blogger)

In a widely read blog aggregator Randy Wray has declared victory of MMT and that we are all MMTs by now. Victory on who? And I personally do not feel MMT, or better I feel MMT, Sraffian, Kaleckian, Marxist and many other things, each taken with a degree of salt. Fanaticism and over-excitement is not part of heterodox Economics, let alone of academic work, and the fact that Wray got so nervous after a initial critical comment by a reader is telling that we might be far away from a cool and equilibrate economic dialogue. MMT has provided a lot of important insights, as other approaches, about the European crisis. Also intellectual adversaries like Werner Sinn have contributed to our understanding of the crisis, in this case over the role of Target 2 (that for the first time or so Wray mentions). MMT has, indeed, missed the main feature of the EZ crisis: its nature of a balance of payment crisis. Anyway, I do not see the MMT explanation as alternative, but as complementary to the BoP crisis view. In this regard, more modesty would help everybody in our common scientific and political enterprise. While my own view of the EZ crisis as a BoP crisis is here (this WP is a longer version of an article in a book that will be published likely by Routledge, a blog version is here), below you can find some critical remarks on the MMT view of the EZ crisis part of a longer paper that will be published in Spanish. These remarks develop a bit further the post on MMT already published here which is also a section of the WP. Having said so, I am ready to acknowledge that along Godley 1992, De Grauwe 1998, Kelton and Wray (and few others like Barba and Pivetti) have provided prescient predictions of the forthcoming crisis, each emphasises one aspect of it.

Un articolo (e altro) su Left

Domani (sabato 23 giugno) Left (ex Avvenimenti), che esce con l'Unità, pubblica alcuni contributi sulla crisi inclusa una intervista ad Antonella Stirati. Questo è l'articolo di apertura.

Per salvare l'Euro serve l'Europa politica?

Sergio Cesaratto

Dipende. Assolutamente no se per Europa politica si intende ciò che ha più volte ripetuto Angela Merkel. L’Europa che ella prefigura è assai inquietante: una definitiva espropriazione della libertà democratica dei cittadini sulle decisioni in materia di bilancio, accentrate a Bruxelles. In cambio la Germania propone un “fondo di redenzione” in cui i paesi metterebbero in comune il debito eccedente il fatidico 60% del Pil, impegnandosi a restituirlo in una ventina d’anni. Null’altro che un rafforzamento del cosiddetto Fiscal Compact già imposto da Berlino: due decenni di austerità assicurata in una Europa divisa fra ricchi e poveri. E’ questa una prospettiva inaccettabile e disastrosa.

De Grauwe moment: an impressively prescient prediction of the Eurozone balance of payments crisis

Pubblichiamo un nostro pezzo uscito su Naked Keynesianism (in attesa di traduzione). Segnaliamo anche il nostro working paper appena pubblicato (link poco più sotto).

Sergio Cesaratto

In an article in the Financial Times written one year before the onset of the European currency union, Paul De Grauwe presented a farsighted conjecture of what could follow, something most economists have only recently realised.[i] Indeed, with the benefit of hindsight, the European crisis appears now as the nth ‘this time is different’ episode of the financial liberalisation sequence cum fixed exchange rates, capital flows from the centre to the periphery, housing bubble, current account (CA) deficit and indebtedness, default. Although I find Reinhart and Rogoff (2009) to be a poorly organised account of the history and nature of defaults, their title really conveys the sense of a recurring pattern of unfortunate events. The title of a seminal paper ‘Good-bye financial repression, hello financial crash?’ (Diaz-Alejandro, C. 1985) also sums up the essence of those events. In order to better appreciate prof. De Grauwe’s insight I introduce his article with some notes from a just published WP of mine “Controversial and novel features of the Eurozone crisis as a balance of payment crisis”.

Born In The U.S.A. – MMT And Monetary Sovereignty

E' giunta questa notizia su FB immagino da Stephanie Kelton per cui mi pare opportuno interrompere ogni polemica per ora ed esprimere tutti un pensiero di solidarietà e affetto per Randy Wray che è una cara e generosa persona.
I suppose it is time to share this sad news. The MMT family has lost someone very special to us, and we are all reeling from it. Randy Wray's wife, Shona Kelly Wray, died yesterday after suffering a brain aneurism. It is time for the MMT community (big tent) to come together and stop bickering over things that matter very little in life. -Stephanie 

Un importante blog ha trasformato un mio commento in un post che solleverà certamente un vespaio essendo assai critico dell'MMT. I miei lettori mi avevano chiesto una opinione. Eccola. Ma questo non significa che dell'MMT sia tutto da buttare, tutt'altro. Liberato dal Beppe Grillismo e dal massimalismo (e da una certa ripetitività ossessiva, aggressività e supponenza) vi sono molti insegnamenti utili, di cui solo in parte ha la paternità invero, che gli economisti eterodossi hanno introiettato andando avanti nella ricerca (chi desidera approfondire veda Lavoie 2011). Grazie Ramanan!

Traduttore in italiano cercansi.

(come atteso su FB c'è un furioso dibattito nel gruppo degli MMT https://www.facebook.com/#!/groups/mmt21/ e c'è chi mi scrive - anche autorevoli colleghi stranieri esperti di moneta - apprezzando di aver gridato "il re è nudo")

by RAMANAN on SUNDAY, 6 MAY 2012 

In my previous post on government defaults and its connection to open economies, I had a comment from Sergio Cesaratto (who is full professor of Economics at the University of Siena (Italy)) which I liked. Since I don’t publish comments, I asked him if I could promote it to a post and he sent me an updated version which looks more like a post. I am publishing it as it is except for some formatting. – Ramanan

Born In The U.S.A. – MMT And Monetary Sovereignty

Sergio Cesaratto

 The absence of a truly European central bank to guarantee the liquidity of the European sovereign debts aggravated (although it not originated) the crisis by letting the sovereign spreads to spiralling upward. As  consequence of the ECB deficient conduct, according to De Grauwe (2011: 8-10) the periphery’s public debts (PD) moved from a low risk to a high risk equilibrium, in his view from a liquidity to a solvability crisis.  This is not totally correct since the original troubles with the European periphery seem solvability, not of just of liquidity, and indeed it emerged when liquidity was abundant and the sovereign spreads low. According to Wray and his MMT fellows this abundance just delayed theredde rationem of the deficient Eurozone (EZ) monetary constitution, so that they attribute an almost exclusive relevance to the renunciation to national sovereign central bank (SCB) as the explanation of the European financial crisis.

El sinsentido de la austeridad europea

 El sinsentido de la austeridad europea, "L'assurdità della austerità europea", articolo su Pagina 12, quotidiano argentino (segue sotto la traduzione italiana a cura di Keynesblog.com che ringrazio; traduzione in inglese in NakedKeynesianism).

ECONOMIA › DEBATE: LAS CAUSAS Y CONSECUENCIAS DE LA CRISIS DEL VIEJO CONTINENTE

El sinsentido de la austeridad europea

En un texto escrito especialmente para Página/12, Sergio Cesaratto afirma que la tragedia griega aparecerá como un episodio menor dentro de la crisis europea. Sostiene que las políticas de ajuste que impulsa Alemania están llevando a los países del bloque al suicidio.

  

Por Sergio Cesaratto

Opinión

La crisis financiera europea no terminó, acaba de comenzar. En el largo plazo, la tragedia griega aparecerá como un episodio menor. No es difícil para los argentinos comprender el origen de la crisis, aunque es sorpresivo por qué una de las regiones más ricas del mundo y una referencia global para el crecimiento con equidad social se está suicidando al adoptar medidas de austeridad que profundizan la crisis.