Por que a historia economica e' relevante para a economia (especialmente em crises) - Kevin O'Rourke

Partilho inteiramente dos argumentos deste historiador econômico, aliás, economista historiador (os "inversos" nem sempre dispõem do instrumental dos economistas para análises mais tecnicamente embasadas), mas gostaria de fazer uma observação sobre esta afirmação:
"...the question of how to rescue billions of our fellow human beings from poverty that would seem intolerable to those of us living in the OECD. And yet such poverty has been the lot of the vast majority of mankind over the vast majority of history: what is surprising is not the fact that ‘they are so poor’, but the fact that ‘we are so rich’."

Não creio que seja surpreendente que a humanidade se tenha tornado tão rica: os últimos dez mil anos de história humana assistiram a progressos muito graduais, até o século 18, e depois progressos muito rápidos a partir da junção das revoluções científica e tecnológica, o que permite antever graus ainda maiores e mais disseminados de riqueza e prosperidade naqueles países que souberem combinar esses dois instrumentos.
Mas, creio que se poderia também perguntar o seguinte: por que tanta gente, neste mundo, ainda é tão miseravelmente pobre, uma vez que existem todos os instrumentos técnicos para se superar os graus mais lamentáveis de pobreza extrema?
Para mim não existem obstáculos técnicos à elevação dos padrões de tantos povos miseráveis, e os grandes obstáculos, na verdade, são de natureza política, mais exatamente da incapacidade das lideranças desses países em adotar políticas econômicas compatíveis com as necessidades de crescimento rápido, instrumentos baseados na liberdade dos mercados, na livre iniciativa, na garantia de propriedade, na baixa tributação, enfim, na promoção da liberdade econômica.
O Brasil, aliás, é um país que comprova esta tese: se fosse livre, economicamente, seria muito mais rico...
Paulo Roberto de Almeida

Why Economics Needs Economic History

26/07/2013 BY KEVIN H O’ROURKE LEAVE A COMMENT

Kevin O’Rourke

The current economic and financial crisis has given rise to a vigorous debate about the state of economics, and the training which graduate and undergraduates economics students are receiving. Importantly, among those arguing most strongly for a change in the way that young economists are trained are the ultimate employers of these students, in both the private and the public sector. Employers are increasingly complaining that young economists don’t understand how the financial system actually works, and are ill-prepared to think about appropriate policies at a time of crisis.

Strikingly, many employers and policymakers are also arguing that knowledge of economic history might be particularly useful.

• Stephen King, Group Chief Economist at HSBC, argues that: “Too few economists newly arriving in the financial world have any real knowledge of events that, while sometimes in the distant past, may have tremendous relevance for current affairs…The global financial crisis can be more easily interpreted and understood by someone who has prior knowledge about the 1929 crash, the Great Depression and, for that matter, the 1907 crash” (Coyle 2012).
• Andrew Haldane, Executive Director for Financial Stability at the Bank of England, has written that “financial history should have caused us to take credit cycles seriously,” and that the disappearance of subfields such as economic and financial history, as well as money, banking and finance, from the core curriculum contributed to the neglect of such factors among policymakers, a mistake that “now needs to be corrected” (Coyle 2012, pp).
• In a recent Humanitas Lecture in Oxford, Stan Fischer said that “I think I’ve learned as much from studying the history of central banking as I have from knowing the theory of central banking and I advise all of you who want to be central bankers to read the history books” (2013).

The benefits of trying to understand economic history

• Knowledge of economic and financial history is crucial in thinking about the economy in several ways.

Most obviously, it forces students to recognise that major discontinuities in economic performance and economic policy regimes have occurred many times in the past, and may therefore occur again in the future. These discontinuities have often coincided with economic and financial crises, which therefore cannot be assumed away as theoretically impossible. A historical training would immunise students from the complacency that characterised the “Great Moderation”. Zoom out, and that swan may not seem so black after all.

• A second, related point is that economic history teaches students the importance of context.

As Robert Solow points out, “the proper choice of a model depends on the institutional context” (Solow 1985, p. 329), and this is also true of the proper choice of policies. Furthermore, the ‘right’ institution may itself depend on context. History is replete with examples of institutions which developed to solve the problems of one era, but which later became problems in their own right.

• Third, economic history is an unapologetically empirical field, exclusively dedicated to understanding the real world.

Doing economic history forces students to add to the technical rigor of their programs an extra dimension of rigor: asking whether their explanations for historical events actually fit the facts or not. Which emphatically does not mean cherry-picking selected facts that fit your thesis and ignoring all the ones that don’t: the world is a complicated place, and economists should be trained to recognise this. An exposure to economic history leads to an empirical frame of mind, and a willingness to admit that one’s particular theoretical framework may not always work in explaining the real world. These are essential mental habits for young economists wishing to apply their skills in the work environment, and, one hopes, in academia as well.

• Fourth, economic history is a rich source of informal theorising about the real world, which can help motivate more formal theoretical work later on (Wren-Lewis 2013).

Habakkuk (1962) and Abramowitz (1986) are two examples that immediately spring to mind, but there are many others.

• Fifth, even once the current economic and financial crisis has passed, the major long run challenges facing the world will still remain.

Among these is the question of how to rescue billions of our fellow human beings from poverty that would seem intolerable to those of us living in the OECD. And yet such poverty has been the lot of the vast majority of mankind over the vast majority of history: what is surprising is not the fact that ‘they are so poor’, but the fact that ‘we are so rich’. In order to understand the latter puzzle, we have to turn to the historical record. What gave rise to modern economic growth is the question that prompted the birth of economic history in the first place, and it remains as relevant today as it was in the late nineteenth century. Apart from issues such as the rise of Asia and the relative decline of the West, other long run issues that would benefit from being framed in a long-term perspective include global warming, the future of globalisation, and the question of how rapidly we can expect the technological frontier to advance in the decades ahead.

• Sixth, economic theory itself has been emphasising – for well over 20 years now – that path dependence is ubiquitous (David 1985).
• Finally, and perhaps most importantly from the perspective of an undergraduate economics instructor, economic history is a great way of convincing undergraduates that the theory they are learning in their micro and macro classes is useful in helping them make sense of the real world.

Far from being seen as a ‘soft’ alternative to theory, economic history should be seen as an essential pedagogical complement. There is nothing as satisfying as seeing undergraduates realise that a little bit of simple theory can help them understand complicated real world phenomena. Think of Obstfeld and Taylor’s use of the Mundell-Fleming trilemma to frame students’ understanding of the history of international capital market integration over the last 150 years; or Ronald Rogowski’s use of Heckscher-Ohlin theory to discuss political cleavages the world around in the late nineteenth century; or the Domar thesis, referred to in Temin (2013), which is a great way to talk to students about what drives diminishing returns to labour. Economic history is replete with such opportunities for instructors trying to motivate their students.

References

Abramovitz, M (1986), “Catching Up, Forging Ahead, and Falling Behind,” Journal of Economic History 46, 385-406.

Coyle, D (2012), What’s the Use of Economics?: Teaching the Dismal Science After the Crisis, London Publishing Partnership.

David, P A (1985), “Clio and the Economics of QWERTY.” The American Economic Review (Papers and Proceedings) 75, 332-37.

Fischer, S (2013), video, quotation begins at 43.48, available online at http://www.youtube.com/watch?v=5Y-ZhFbw2H4.

Habakkuk, H J (1962), American and British Technology in the Nineteenth Century, Cambridge University Press.

Solow, R (1985), “Economic History and Economics,” The American Economic Review 75, 328-31

Temin, P (2013), “The Rise and Fall of Economic History at MIT,” MIT Department of Economics Working Paper 13-11 (June).

Wren-Lewis, S (2013), “Economic History and Krugman’s Crib Sheet”.

This column was first published by Voxeu.org

Islandia e Irlanda: as verdadeiras causas da crise (nao as atribuidas...)

Corre a versão, em certos setores ingênuos, mal informados, ou simplesmente deliberadamente deformados (ou seja, mistificadores, mentirosos, fraudadores, equivocados e enganadores, e nem preciso dizer quem é), de que as crises financeiras dos países desenvolvidos, a partir de 2008 -- sucedendo ao estouro da bolha imobiliária em 2007 -- foram provodadas por manobras especulativas de loiros de olhos azuis, pela ambição desmedida dos banqueiros de Wall Street, enfim pela cupidez habitual do capitalismo financeiro, sempre tão propenso a privatizar lucros e a socializar prejuizos.
A história, obviamente, é mais complexa do que isso, e se houve especulação, cabe lembrar que nenhum banqueiro ganancioso, nenhum especulador de Wall Street, nenhum manipulador de mercado, seja ele preto, loiro, azul ou vermelho, tem a capacidade de fixar os juros de referência.
Quem faz isso são os bancos centrais, que sinalizam, portanto, para o resto do sistema financeiro, e para a sociedade em geral, quais os níveis que serão praticados nos mercados imobiliários, de créditos para consumo, investimento, etc.
Juros baixos, obviamente, são uma benção para devedores, investidores e outros inadimplentes, enquanto são uma maldição para poupadores e credores. O mundo não é o ideal, e se os mercados fossem livres, realmente, como proclamam aqueles que acreditam equivocadamente que o sistema financeiro não tem regras (quando as tem, e muitas), esses mercados jamais fixariam as taxas de juros em níveis artificialmente baixos durante tanto tempo, como fizeram o Federal Reserve (de 2002 a 2005) e diversos outros bancos centrais.
Em resumo, quem provocou verdadeiramente as crises foram os bancos centrais, não os mercados, como demonstra este articulista sobre os casos mais dramáticos da Islância e da Irlanda...
Paulo Roberto de Almeida 

Ire and Ice: A Tale of Two PIIIGS
by Frank Shostak 
Mises Daily, November 22, 2012

There were a lot of commentaries regarding the Ireland and Iceland 2008–2012 financial crises. Most of the commentaries were confined to the description of the events without addressing the essential causes of the crises. We suggest that providing a detailed description of events cannot be a substitute for economic analysis, which should be based on the essential causes behind a crisis. The essential cause is the primary driving force that gives rise to various events such as reckless bank lending (blamed by most commentators as the key cause behind the crisis) and a so-called overheated economy. Now, in terms of real GDP, both Ireland and Iceland displayed strong performance prior to the onset of the crisis in 2008. During 2000–2007, the average growth in Ireland stood at 5.9 percent versus 4.6 percent in Iceland. So what triggered the sudden collapse of these economies?

Central-Bank Policy the Key Trigger for Economic Boom
What set in motion the economic boom (i.e., a strong real GDP rate of growth) in both Ireland and Iceland was an aggressive lowering of interest rates by the respective central banks of Ireland and Iceland. In Ireland, the policy rate was lowered from 13.75 percent in November 1992 to 2 percent by November 2005. In Iceland, the policy rate was lowered from 10.8 percent in November 2000 to 5.2 percent by April 2004.

In response to this, bank lending showed a visible strengthening with the yearly rate of growth of Irish bank assets rising from 7.4 percent in June 2002 to 31 percent by November 2005. In Iceland, the yearly rate of growth of bank lending to residents climbed from 26.5 percent in September 2004 to 57.8 percent by April 2006.

The growth momentum of the money supply strengthened visibly in both Ireland and Iceland. The yearly rate of growth of our measure of money supply (AMS) for Ireland jumped from minus 6.7 percent in March 2003 to 22 percent by March 2006. In Iceland, the yearly rate of growth of AMS climbed from minus 1.6 percent in January 2003 to 61.6 percent by June 2004 before closing at 47.7 percent by July 2004.

The aggressive lowering of interest rates, coupled with strong increases in the money-supply rate of growth, gave rise to various bubble activities. (The central banks' loose monetary stance set in motion the transfer of wealth from wealth-generating activities to nonproductive bubble activities.)

Central-Bank Policies Trigger Economic Bust
Because of strong increases in the money-supply rate of growth, a visible strengthening in price inflation took place in Ireland and Iceland. In Ireland, the yearly rate of growth of the consumer price index (CPI) rose from 2.9 percent in January 2006 to 5.1 percent by March 2007. In Iceland, the yearly rate of growth of the CPI jumped from 1.4 percent in January 2003 to 18.6 percent by January 2009.

To counter the acceleration in price inflation, the central banks of Ireland and Iceland subsequently tightened their stance. The policy interest rate in Ireland rose from 2.25 percent in January 2006 to 4.25 percent by July 2008. In Iceland, the rate shot up from 10.2 percent in January 2006 to 18 percent by February 2009. Furthermore, the pace of money pumping by the central bank of Ireland fell to minus 8.2 percent by July 2007 from 25 percent in January 2007. The pace of pumping by the Iceland's central bank fell to 43 percent by February 2008 from 123 percent in July 2006.

The yearly rate of growth of AMS in Ireland plunged from 32 percent in August 2009 to minus 30 percent by November 2011. In Iceland, the yearly rate of growth of AMS fell from 96 percent in October 2007 to minus 18 percent by September 2009.

The sharp fall in the growth momentum of the money supply, coupled with a tighter interest-rate stance, put pressure on various bubble activities that emerged on the back of the previous loose-monetary-policy stance.

Consequently, various key economic indicators came under pressure. For instance, the unemployment rate in Ireland rose from 4.4 percent in January 2006 to 14.9 percent by July 2012. In Iceland, the unemployment rate climbed from 2 percent in January 2006 to 9.2 percent by September 2010. Year on year, the rate of growth of Irish real retail sales fell from 3.8 percent in January 2008 to minus 25 percent by September 2009. In Iceland, the yearly rate of growth of real retail sales fell from 11.9 percent in Q1 2008 to minus 31 percent by Q1 2009.

Most commentators blame the crisis on the conduct of banks that allowed the massive expansion of credit. It is held that this was responsible for the massive property boom in Ireland and overheated economic activity in Iceland.

We hold that the key factor in the economic crisis was the boom-bust policies of the central banks of Ireland and Iceland. Loose monetary policy had significantly weakened the economies' abilities in both Ireland and Iceland to generate wealth. This resulted in the weakening of various marginal activities. Consequently, a fall in these activities, followed by a decline in the pace of lending by banks — and this, in turn, coupled with a tighter stance by central banks — set in motion an economic bust. With the emergence of a recession, banks' bad assets started to pile up and this in turn posed a threat to their solvency.

From May 2007, the banks' stock prices on the Irish stock market declined markedly — they had halved by May 2008. This had an inevitable effect on banks' capital-adequacy ratios and therefore their ability to lend the ever-higher amounts that were necessary to support property prices.

As a result, housing loans as percentage of GDP plunged from 70.5 percent in Q2 2009 to 49.2 percent by Q2 this year. At the height of the boom, a fifth of Irish workers were in the construction industry. The average price of a house in Ireland in 1997 was €102,491. In Q1 2007 the price stood at €350,242 — an increase of 242 percent. The average price of a home in Dublin had increased 500 percent from 1994 to 2006.

Now, in Iceland, at the end of Q2 2008, external debt was €50 billion, more than 80 percent of which was held by the banking sector — this value compares with Iceland's 2007 GDP of €8.5 billion. The liabilities of the three main banks were almost 10 times the size of the island's GDP.

With the emergence of the bust, Icelandic authorities allowed its banks to go belly up, while the Irish government decided to support the banks. According to estimates, the cost to the taxpayers of providing support to Irish banks stood at €63 billion. (The private debt of the failed banks was nationalized.) In Iceland, the government, by allowing Icelandic banks to fail, made foreign creditors, not Icelandic taxpayers, largely responsible for covering losses.

The fact that Iceland allowed the banks to go bankrupt was a positive step in healing the economy. Unfortunately Iceland introduced a program of safeguarding the welfare of the unemployed. Also, the collapse of the Icelandic krona was a hard hit to homeowners who borrowed in foreign currency. In response to this, the authorities orchestrated mortgage-relief schemes. Iceland has also imposed draconian capital controls. Obviously, all this curtailed the benefits of allowing the banks to go belly up.

Whether the Icelandic economy will show a healthy revival, as suggested by some experts, hinges on the monetary policy of Iceland's central bank. We suggest the same applies to Ireland. (What is required is to seal off all the loopholes for the growth of the money supply.)

However, it is clear that Iceland's economic situation is less bad than Ireland's, and that is largely due to the Iceland's allowing its banks to go bankrupt.

Bad Policies Are Coming Back
For the time being in Iceland, the yearly rate of growth of AMS jumped from minus 11.3 percent in May 2010 to 34 percent by May 2012. Also, in Ireland, the growth momentum of AMS is showing strengthening with the yearly rate of growth rising from minus 30.3 percent in November last year to 4.7 percent in September 2012.

The rising growth momentum of money supply is a major threat to sound economic recovery in both Ireland and Iceland.

Also note that the policy interest rate in Ireland fell from 1.5 percent in October 2011 to 0.75 percent at present. In Iceland, the policy rate was lowered from 18 percent in February 2009 to 4.25 percent by July 2011. All this again sets in motion a misallocation of resources and new bubble activities — and, in turn, economic impoverishment.

Summary and Conclusion
Many commentators blame reckless bank lending as the key cause behind the 2008–2012 financial crises in Ireland and Iceland. Our analysis, however, suggests that it was not the banks as such that caused the crisis but rather the boom-bust policies of the central banks of Ireland and Iceland. It is these institutions that set in motion the false economic boom and the consequent economic bust. While Iceland allowed its banks to go bankrupt, the Irish government chose to bail out its banks. So, in this sense, the Icelandic authorities did the right thing, and Iceland has consequently outperformed Ireland economically. We hold that despite this positive step, Iceland's authorities have introduced various welfare schemes that have curtailed the benefits of having let banks go belly up. Furthermore, both Ireland and Iceland have resumed aggressive money pumping, thereby setting in motion the menace of boom-bust cycles.

Frank Shostak is an adjunct scholar of the Mises Institute and a frequent contributor to Mises.org. His consulting firm, Applied Austrian School Economics, provides in-depth assessments and reports of financial markets and global economies. Send him mail. See Frank Shostak's article archives.

You can subscribe to future articles by Frank Shostak via this RSS feed.

Copyright © 2012 by the Ludwig von Mises Institute. Permission to reprint in whole or in part is hereby granted, provided full credit is given.

Basel III deixa banqueiros americanos preocupados...

Com razão, ou não é sem razão que eles -- e suponho todos os demais banqueiros, também -- se preocupam do seu "ambiente de negócios".
Como houve a crise, e muita gente acha que ela foi provocada por especuladores de Wall Street e banqueiros gananciosos, o que se está fazendo, agora, é amarrar uma bola de ferro nos pés dos banqueiros, que terão de ser mais lentos na condução dos negócios. 
Ou seja, a inovação, e portanto a rentabilidade, vai diminuir, e com isso os custos vão aumentar.
Alguém aí acha que os banqueiros vão perder dinheiro?
Ledo engano: eles vão repassar aos clientes os custos das novas disposições e obrigações que estão sendo adotadas para evitar uma nova crise, ao estilo da que acaba de se passar.
Só tem um problema: a próxima crise vai ser diferente, e esses dispositivos de Basileia III não vão ajudar muito...
A nota abaixo é do boletim American Banker, o órgão oficial dos banqueiros americanos...

How Basel III Capital Requirements Hurt Community Banks: Shea Dittrich

An increase in capital requirements may reduce earnings and minimize returns, writes Shea Dittrich of Sageworks. They may also contribute to a stagnant environment where loan production is at a minimum and bank acquisitions are very few, he argues.

What other effects, if any, are the Basel III capital requirements likely to have on community banks? Leave a comment on BankThink.

Padrao Ouro e Economia Austriaca: Barry Eichengreen desmonta a defesa

O economista Barry Eichengreen é muito conhecido para ser apresentado. Autor de Globalizing Capital (com edição brasileira) é um dos especialistas mais conhecidos em sistemas monetários.
Neste longo artigo para a revista americana National Interest, ele critica os defensores da volta ao padrão ouro (Ron Paul e os adeptos da economia austríaca em geral), dizendo que não há garantias de que uma política monetária baseada no ouro, em moedas concorrentes, na ausência de bancos centrais seria mais eficiente, ou causaria menos crises e recessões do que a situação atual, de intervencionismo monetário.
Vale a pena a ler seu artigo, que começa aqui e se prolonga em sete outras partes...
Paulo Roberto de Almeida

A Critique of Pure Gold

National Interest 

SEPT-OCT 2011

 issue

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Barry Eichengreen 

| 

August 24, 2011

GOLD IS back, what with libertarians the country over looking to force the government out of the business of monetary-policy making. How? Well, by bringing back the gold standard of course.

There’s no better place to see just how real this oddball proposal is than in Iowa, with its caucuses just a few months away. In June, prospective voters were entertained not just by the candidates but also by the spectacle of an eighteen-day, multicity bus tour cosponsored by the Iowa Tea Party and American Principles in Action, or APIA. (The bus was actually a giant RV with a banner on the side featuring images of the U.S. Constitution, the American flag and the web addresswww.teapartybustour.com.) APIA is the nonprofit 501(c)(4) arm of the American Principles Project, the parent group of Gold Standard 2012. Gold Standard 2012 “works to reach out to lawmakers to advance legislation that will put the U.S. back on the gold standard” (quoting its blog). The goal of the bus tour, according to Jeff Bell, policy director of APIA and former Reagan aide, was to interest potential caucus voters in the idea that the United States should return to the gold standard, in the expectation that vote-hungry candidates for the Republican nomination would respond to a public groundswell.

The candidates, for their part, were cautious. Businessman Herman Cain, having backed the gold standard in earlier speeches, acknowledged a change of heart on the grounds that “one of my economic advisers said that it’s going to be more difficult than practical.” Minnesota congresswoman Michele Bachmann averred only that she would “take a close look at the gold standard issue.” Such caution did not, however, prevent Cain and Bachmann, along with former Minnesota governor Tim Pawlenty, former Pennsylvania senator Rick Santorum, former New Mexico governor Gary Johnson and former House Speaker Newt Gingrich from joining up with APIA’s magical mystery tour.

Nor did it prevent state legislators from attempting to move ahead on their own. A Montana measure voted down by a narrow margin of fifty-two to forty-eight in March would have required wholesalers to pay state tobacco taxes in gold. A proposal introduced in the Georgia legislature would have called for the state to accept only gold and silver for all payments, including taxes, and to use the metals when making payments on the state’s debt.

In May, Utah became the first state to actually adopt such a policy. Gold and silver coins minted by the U.S. government were made legal tender under a measure signed into law by Governor Gary Herbert. Given the difficulty of paying for a tank of gas with a $50 American eagle coin worth some $1,500 at current market prices, entrepreneurs then floated the idea of establishing private depositories that would hold the coin and issue debit cards loaded up with its current dollar value. It is unlikely this will appeal to the average motorist contemplating a trip to the gas station since the dollar value of the balance would fluctuate along with the current market price of gold. It would be the equivalent of holding one’s savings in the form of volatile gold-mining stocks.

Historically, societies attracted to using gold as legal tender have dealt with this problem by empowering their governments to fix its price in domestic-currency terms (in the U.S. case, in dollars). But the idea that government should legislate the price of a particular commodity, be it gold, milk or gasoline, sits uneasily with conservative Republicanism’s commitment to letting market forces work, much less with Tea Party–esque libertarianism. Surely a believer in the free market would argue that if there is an increase in the demand for gold, whatever the reason, then the price should be allowed to rise, giving the gold-mining industry an incentive to produce more, eventually bringing that price back down. Thus, the notion that the U.S. government should peg the price, as in gold standards past, is curious at the least. More curious still is the belief that putting the United States on a gold standard would somehow guarantee balanced budgets, low taxes, small government and a healthy economy. Most curious of all is the contention that under twenty-first-century circumstances going back to the gold standard is even possible.

FOR THIS libertarian infatuation with the gold standard, one is tempted to credit, or blame, the godfather of the Tea Party movement, Texas’s Ron Paul. (The Tea Party has its own spontaneous origins, to be sure, and Paul is reluctant to claim credit for its existence. But his success in using new media to raise $6 million for his 2007 presidential bid on the anniversary of the Boston Tea Party by appealing to hot-button issues like debt, taxes and government infringement on personal liberties provided the template for the movement’s subsequent growth.) Paul has been campaigning for returning to the gold standard longer than any of his rivals for the Republican nomination—in fact, since he first entered politics in the 1970s.

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Michael Mussa: um analista critico dos sistemas financeiros (RIP)

Eu li muitos trabalhos de Michael Mussa, tanto quando estava em Washington, quanto depois, pela internet.
Superb, como diriam os connoisseurs...
Meus sentimentos pela perda...
Paulo Roberto de Almeida 

Michael Mussa (1944–2012): Challenging Conventional Wisdom

by Flemming Larsen | January 30th, 2012 | 11:01 am 

I had the privilege to work with Mike for close to nine exciting and fulfilling years.

Mike made the Research Department at the International Monetary Fund (IMF) relevant and respected, both inside and outside the Fund. Above all, he gave meaning to the Economic Counselor role by fulfilling his duties with incisive analyses and policy advice.

From the very start, he challenged conventional IMF wisdom.

He effectively used wit to underscore his points. When some Executive Directors criticized Mike for advocating policy activism and fine tuning, he explained how he would use the gas pedal in his old Buick to regulate its speed.

He was particularly critical of IMF surveillance of exchange rates, which was “as firm as an overripe avocado.” His seminars on financial markets for the Executive Board were some of his finest moments.

He distrusted financial markets. Whenever a new financial crisis erupted, he would proclaim “happy days are here again.” His judgment that “banks are dangerous” was proven right again and again.

On a personal note, I still remember the observation of our youngest son, then in junior high, who attended one of our press conferences on the World Economic Outlook: In listening to Mike he discovered that economics could be funny.

Mike liked to celebrate birthdays and special accomplishments, and his senior staff frequently enjoyed his generosity when he hosted a dinner party in his Watergate apartment. He would always prepare the dinner himself, and treat his guests to a remarkable selection of fine wines from his private cellar. On one occasion, after learning that my wife Birte was born in 1945, he served a 1945 Cheval Blanc.

Because Mike really did take his role as Counselor seriously, relations with management were not always easy. His views were not always convenient, but the Executive Board learned to appreciate Mike.

The author is former deputy director of the Research Department at the International Monetary Fund.

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Michael Mussa (1944–2012): Integrity, Courage, and a Gift for Friendship

by Morris Goldstein | January 27th, 2012 

I have been a close friend of Michael Mussa for over twenty years. When Mike joined the International Monetary Fund (IMF) as Economic Counselor and Director of Research in 1991, I was his deputy. When I left the Fund in 1994, he and I stayed in frequent contact, including socially. And when Mike left the Fund in 2001, I helped persuade him to join me as Senior Fellow at the Peterson Institute for International Economics, where he worked for the last ten years of his career. During the past two decades, I spent more time working with and just hanging out with Mike than probably anybody else.

Mike was a “character” in the best sense of the word. To me, four things stood out. First, there was the soaring intellect. Mike used that horsepower to very good effect to analyze key issues in economics—be they theory or policy. Mike was clearly one of most talented international economists of his generation. No matter what your political persuasion or intellectual orientation, you could not be involved seriously in international economics over the past forty years without being aware of, and learning something from, what Mike wrote and said. Whether it was what determined the fundamental behavior of exchange rates and the balance of payments, or the properties of different currency regimes, or evaluating the performance of the Federal Reserve, or projecting what the recovery from the global economic and financial crisis of 2007–09 would look like, or what an emerging economy in crisis needed to do to exit from the crisis, nobody was better at cutting to the core of the problem and at dispensing sensible advice. As Sir Mervyn King, Governor of the Bank of England, put it in a recent tribute: “… he will be remembered for his contribution to economics as a rigorous discipline and to policymaking as an exercise in applying rigorous thought to the problems of the day.” I do not mean to suggest, of course, that Mike’s insights were restricted to economics. As many of you will know, Mike also had a commanding knowledge of history, politics, and mathematics—to say nothing of his true passion, namely, wine.

A second hallmark of Mike’s character was his integrity and courage. In short, Mike simply would not allow himself to be intimidated by anyone. He would say what he thought—whether the counterparty was a first-year graduate student, a Nobel laureate, the IMF Executive Board, the Peterson staff at Friday lunch meetings, more than one hundred of the world’s most senior economic officials attending the Federal Reserve’s Jackson Hole annual symposium, or the President of the United States. Mike was fond of quoting Senator Daniel Patrick Moynihan that everyone was entitled to their own opinion—but not to their own facts. When Mike thought that the truth was being assailed by nonsense, he would invariably stand up and set the record straight. This characteristic did not endear Mike to everyone, but over time he developed a reputation for being a straight shooter that only increased the demand for his services. Mike was a good businessman and he made a good business of “telling like it is” to economic policymakers all over the world.

Defining characteristic number three was Mike’s terrific sense of humor—something he employed not only to entertain his friends but also to help communicate his economic policy messages. By now, you have probably seen some of Mike’s more famous quips in the obituaries that appeared in the Wall Street Journal, in the New York Times, and in the Washington Post. Just to convey the flavor, I mention here a few of my personal favorites. On watching teams of officials preparing to intervene in a crisis: “Some of them seem more excited than a personal injury lawyer at a six-car crackup.” On the “catch and release” policy of fishing guides: “This has nothing to do with conservation: The guides simply realize that if there are no fish, there is no demand for fishing guides.” On standing up for yourself: “If you don’t want to be known as a doormat, don’t let people walk all over you.” On policymaking in the nation’s capital: “In Washington DC, truth is just another special interest—and not a particularly well-financed one.” On the charge during Congressional testimony that he was a hired gun: “At least I hit what I aim at.” And on the relationship between regulators and the banks they regulate: “The time has long since passed for public officials and central bankers to stop kissing and start kicking the posteriors of bankers whose self-interest diverges substantially from the public interest.” Some of my fondest memories of Mike are of the two of us sitting in my office or his telling stories, jokes, and gossip until—on our best days —we were laughing so hard that tears were streaming down both our faces. When I retired from the Fund after 25 years of service, I offered the view that nobody was more fun to work with than Mike; ten years of working together at Peterson only reinforced that view.

Last but not least, I want to pay testimony to Mike’s kindness and loyalty. Once you were a good friend of Mike’s, he was there to support you whenever you needed it—whether that meant writing letters of recommendation, arguing on your behalf to whomever, offering you suggestions for making your latest paper much better, trying to cheer you up on the phone, or holding a dinner party to help you celebrate one of your personal milestones. When my wife died suddenly and unexpectedly five and a half years ago after 36 years of marriage, Mike was there for me—everything from letting colleagues know about funeral arrangements, to driving out to my house frequently to see how I was doing. When his long-time administrative officer at the Fund had a serious operation after she and he had left the Fund, Mike kept on the case until he was sure she was out of danger. I know that Mike has likewise helped his brother, Roger, through some of his most difficult challenges. There are more than a few international economists who are where they are today professionally in part because of Mike’s mentorship and support. I would estimate that more than 90 percent of the great dinner parties that Mike had at his Watergate apartment—serving the best wines in the world—were not for government bigwigs, but rather for Mike’s friends.

With Michael Mussa’s passing, the world has indeed lost one of its finest international economists. Yet what seems even more painful today is that some of us have lost a truly wonderful friend.

This is a revised version of the eulogy for Michael Mussa delivered by the author on January. 25, 2012, in Los Angeles.

A alegria dos catastrofistas recorrentes: os socialistas do século XXI...

O socialismo foi inventado, ao que parece, no século XIX, pelo menos sua variante dita "científica", quando ela não passava de mais uma demonstração do utopismo dos séculos XV a XVIII.
O socialismo foi plenamente instalado no século XX, provocando, ao que parece, algo entre 50 e 100 milhões de mortos, de mortes morridas e mortes matadas, se ouso dizer.
Entre gulags, fuzilamentos e epidemias de fome provocadas pela incompetência econômica de tiranos facínoras, o socialismo do século XX deve realmente ter causado mais sofrimento humano do que todas as invasões bárbaras juntas, dos séculos III a XIII.
Agora, alguns malucos ainda têm a coragem de propor uma farsa chamada de "socialismo do século XXI", uma mistificação para o consumo de jovens ingênuos, animada por velhos de má-fé, que não consegue dizer a que veio, pois não tem absolutamente nada de novo, ou de interessante, a propor.
Mesmo isso não consegue demover alguns malucos alternativos, que vivem de dinheiro estatal, já que seriam incapazes de vender qualquer coisa de útil no mercado aberto.
Como eles não tem mesmo nada de interessante a propor para o seu socialismo, os alternativos malucos ficam excitados, a um ponto orgástico, quando o capitalismo dá uns tremeliques e entra em crise, coisa que ele faz regularmente nos últimos dois ou três séculos, para alegria de alternativos de todos esses séculos.
Nos últimos três a quatro anos, os alternativos malucos estão super excitados, prevendo todo tipo de catástrofe para o sistema capitalista.
Claro, eles evitam agora de falar em "crise final do capitalismo", depois das 22 vezes anteriores em que previram que aquela seria, de fato, a crise final. Ah essa história madrasta, sempre pregando peças nesses socialistas utópicos.
Hoje, eles não são mais utópicos, são idiotas mesmo. Mas com algumas grandes diferenças.
Existem grandes idiotas, como Noam Chomsky, Immanuel Wallerstein, Boaventura de Souza Santos, e existem pequenos idiotas, ou idiotas apenas idiotas, como Emir Sader e alguns outros no Brasil.
Enfim, todos eles, pequenos e grandes idiotas andam super excitados com a perspectiva de um declínio irresistível da potência imperial, que eles nem mais prestam atenção ao que dizem ou escrevem.
Continuam com aquela velha lenga-lenga do Consenso de Washington, e rejeitando o neoliberalismo, que até esquecem que os problemas atuais foram inclusive causados por governos socialistas (na Grécia, na Espanha, em Portugal), com políticas não exatamente liberais, ou de cunho conservador.
Na verdade, as políticas que levaram esses países para o brejo foram variantes daquelas velhas políticas que os idiotas econômicos, grandes ou pequenos, vivem pregando: demanda agregada, gastos públicos exagerados, pensões e benefícios generosos, salários elevados e outras loucuras protecionistas e estatizantes. Enfim, nada de muito anormal, para quem pretende construir uma economia social...
Nada muito diferente do que tem sido feito em lugares prósperos como Venezuela, Cuba, etc.
Em todo caso, desejo a todos uma boa continuidade da crise em 2012, o aprofundamento da recessão americano, o prolongamento da depressão europeia, alguma catástrofe chinesa, menos no Brasil, claro, que aqui temos um governo comprometido com o mercado interno, a promoção do emprego, a manutenção do crescimento e outras coisas do gênero.
Vamos esperar pelo melhor da crise...
Paulo Roberto de Almeida

Os conceitos da crise financeira: derretimento e colapso - Georg Zachmann

Sempre se pode aprender algo com a (má) experiência dos outros...

Crises nucleares e financeiras tendem a deixar marcas em sua esteira.
Colapsos e derretimentos
Georg Zachmann
Valor Econômico, 05/04/2011

As metáforas usadas durante a crise financeira de 2008-2009 - terremoto, tsunami, derretimento, cisne negro e colapso - voltaram com força redobrada, mas agora estão sendo reciclados em sentido literal. De fato, a crise financeira e a crise nuclear na usina nuclear em Fukushima, no Japão têm ao menos quatro semelhanças:

1) A metáfora do "cisne negro" sugere que esses acontecimentos refletem dificuldade para avaliar corretamente os riscos em sistemas complexos.

2) As agências regulamentadoras revelaram-se incapazes de prever e evitar a crise.

3) As "consequências adversas", por sua natureza, podem cruzar fronteiras.

4) Os custos incorridos por companhias imprudentes serão parcialmente socializados.

O terremoto de 9,0 graus de magnitude que atingiu o Japão é, evidentemente, um evento absolutamente excepcional - um evento tão raro que sua probabilidade não pode ser bem avaliada com modelos baseados em dados históricos limitados. Eventos com probabilidade muito baixa, mas de alto impacto - os chamados "riscos de cauda" - também estiveram presentes no cerne da crise financeira.

Uma das causas da crise financeira foi o apetite das instituições financeiras por selecionar (e em alguns casos, criar) produtos com retornos acima da média em tempos normais, mas prejuízos excessivos em casos excepcionais. Velhas usinas de energia nuclear em zonas sísmicas têm uma estrutura de "remuneração" similar. Além disso, tanto os modelos de risco financeiro como nuclear parecem não ter avaliado corretamente as correlações entre diferentes riscos.

As instituições financeiras tentaram reduzir os riscos por meio do agrupamento de hipotecas de quitação incerta (subprime), ao passo que o sistema de refrigeração de Fukushima não conseguiu sobreviver - seja com um apagão, um terremoto ou um tsunami. Mas, em ambos os casos, as probabilidades de colapsos eram correlacionadas e sua ocorrência conjunta levou à catástrofe.

Tanto o Lehman Brothers quanto a Tokyo Electric Power Co. ampliaram seus lucros enquanto o risco que estavam dispostos a aceitar não se materializou. Seus administradores certamente se beneficiaram enquanto tudo corria bem.

A França, por exemplo, permanecerá dependente de sua capacidade de geração nuclear, que continuará a representar a maior parcela de sua eletricidade. A Itália, por outro lado, poderá desejar um ambiente de risco nuclear zero, uma vez que não produz eletricidade a partir da energia nuclear, mas é cercada (num raio de aproximadamente 160 km) por reatores esloveno, suíço, francês e seis usinas de energia nuclear. A relutância francesa em submeter suas instalações nucleares à regulamentação europeia determinada por seus vizinhos céticos quanto à viabilidade do uso da energia nuclear é comparável aos esforços britânicos para impedir uma harmonização europeia das regras do mercado financeiro devido à importância do seu setor financeiro.

Outra semelhança entre a crise atual no Japão e a recente crise financeira é que a falsa avaliação dos riscos deveu-se, em grande parte, à distribuição assimétrica do bem-estar social e ao custo individual necessário para uma amenização mais eficaz dos riscos. Tanto o Lehman Brothers quanto a Tokyo Electric Power Company (TEPCO) puderam ampliar seus lucros enquanto o risco que estavam dispostos a aceitar não se materializou. Seus administradores certamente se beneficiaram enquanto tudo corria bem. Mas quando a crise estourou, o custo do colapso superou o patrimônio das empresas e, portanto, teve de ser socializado.

Portanto, há uma falha estrutural no tratamento dispensado a atividades privadas complexas que criam riscos de geração de danos sociais de grande monta. Na verdade, isso é bem compreendido - e é a razão pela qual temos entidades regulamentadoras para a maioria desse tipo de sistemas.

Mas, antes da crise nuclear japonesa e da crise financeira, os fiscais foram incapazes de evitar riscos. A Securities and Exchange Commission (SEC), a comissão de Valores Mobiliários dos EUA não exigiu mais capital nem pôs fim às práticas de risco em grandes bancos de investimento. A agência nuclear japonesa não impôs regras de segurança mais rígidas. Por isso, confiar nas baixas probabilidades de colapso, em políticas nacionais, na cautela dos agentes privados e na fiscalização das agências competentes parece ser insuficiente para evitar a catástrofe. Então, o que deveria ser feito?

Assim como no mundo financeiro, assegurar que o originador de um risco pague seu custo parece ser a abordagem mais sensata. Se cada usina nuclear fosse obrigada a segurar-se contra os riscos que impõe à sociedade (dentro e fora de seu país sede), elas arcariam com o verdadeiro custo econômico de suas atividades.

Nesse mundo ideal, o seguro de usinas individuais, permaneceria vinculado a fatores que podem e não podem ser influenciados, como localização em uma área densamente povoada e do grau de aversão da população local a riscos. Além disso, a avaliação de riscos deve estar vinculada a fatores de risco associados a usinas individuais, como localização em uma zona sísmica, contenção secundária, redundâncias de segurança etc. Usinas em áreas densamente povoadas e cumpridoras de normas de segurança mais tolerantes, por exemplo, teriam de arcar com custos de seguro mais altos, o que poderia resultar em uma autosselecionada eliminação das usinas de maior risco.

Mas é improvável a implementação de um regime desse tipo. Primeiro, é praticamente impossível avaliar corretamente perfis de risco de usinas individuais. Em segundo lugar, um regime assim imporia grandes custos a apenas algumas poucas companhias em alguns países. Seus governos se empenhariam fortemente em proteger essas empresas de serem obrigadas a pagar pelos riscos que representam para a sociedade.

Esse desfecho provável é idêntico à iniciativa de criação de um fundo bancário europeu ou mundial para garantir uma cobertura de seguros contra a próxima crise financeira. Em ambos os casos, porém, um seguro perfeito poderia, ainda assim, servir como uma referencial válido para nortear a escolha das políticas a serem implementadas.

Caminhar no sentido desse referencial poderia ser auxiliado por duas medidas: em primeiro lugar, uma desativação gradual das usinas nucleares de eletricidade não de acordo com sua idade, mas com seu perfil de risco, por mais esquematicamente que seja calculado; e, em segundo lugar, a adoção do seguro obrigatório internacional para acidentes nucleares. Sob tal regime, a União Soviética, por exemplo, em 1986, teria sido cobrada pelo pagamento dos custos que o acidente de Chernobyl impôs aos agricultores europeus e a seus sistemas de saúde. Sem dúvida, a implementação dessas melhorias será difícil. Como no setor financeiro, porém, a crise pode ser a mãe das reformas.

Georg Zachmann é pesquisador na Bruegel.

Crises financeiras: preparem-se para a proxima...

Pois é, sempre tem aqueles malucos que ficam passeando com os cartazes conhecidos: The End is Near...
Neste caso, estamos falando de um insider, ou seja, de um homem do sistema financeiro, que conhece as entranhas do monstro, como diria José Marti.

JAMES FREEMAN
Paul Singer: Mega-Banks and the Next Financial Crisis
This hedge-fund manager recognized the risks of subprime mortgages and bet against them. Now he warns that monetary policy could cripple American banks again.

THE WEEKEND INTERVIEW
Mega-Banks and the Next Financial Crisis
By JAMES FREEMAN
The Wall Street Journal, March 19, 2011 - page A11

Hedge-fund manager Paul Singer recognized the risks of subprime mortgages and bet against them. Now he warns that monetary policy could cripple American banks again.

At the height of the housing bubble, hedge-fund manager Paul Singer was shorting subprime mortgages. By the spring of 2007, he was warning regulators on both sides of the Atlantic that the world was facing a major financial crisis.

They ignored him. Now the founder of Elliott Management says the biggest banks are headed for another credit meltdown. Among the likely triggers for the next crisis, Mr. Singer sees one leading candidate: Monetary policy "is extremely risky," he says, "the risk being massive inflation."

In some areas gas prices have reached $4 per gallon, and now Americans must brace themselves for higher grocery bills. This week the Labor Department reported that February wholesale food prices posted their sharpest increase since 1974. News like that has driven Mr. Singer to the history books: He treats visitors to his 5th Avenue office to a copy of a 1931 treatise on German currency debasement, Constantino Bresciani-Turroni's "The Economics of Inflation."

Mr. Singer—who launched Elliott in 1977 and has delivered a 14.3% compound annual return (compared to the S&P 500's 10.9%)—is not comparing today's Federal Reserve to the Reichsbank of the early 1920s. Rather, he's once again warning financial regulators. This time the message is: Don't take for granted investor faith in a major currency.

While at Harvard Law School, Mr. Singer turned down a research job with his intellectual hero, Daniel Patrick Moynihan, to pursue a career in finance. Today, he's still looking for heroes among the stewards of the major currencies. Central bankers, particularly at the Fed but also in Europe, "seem to be acting as if they have unlimited flexibility to ease monetary policy," he says.

He specifically targets the Fed's "unprecedented" policy of sustaining near-zero interest rates and its exercise in money-printing, "Quantitative Easing 2," that has it buying medium- and longer-term securities from the Treasury. "In effect they're treating confidence in fiat money—in paper money—as inexhaustible, that it's a tool that's able to be used not just in the throes of crisis," but also as "a virtually complete substitute for sound fiscal, regulatory and taxing policy."

Fed officials, he adds, "really seem to think that inflation is something they can deal with very easily and very quickly. I don't believe they're right." He notes that, in the late 1970s, inflation was only in the high single digits yet curing it required interest rates of 20% and a collapse of the bond market.

Mr. Singer further warns that investors shouldn't misinterpret apparently bullish signals from a rising market. "Of course printing money is going to support asset prices," but "it's very dangerous" and is not a substitute for trade, tax and regulatory reforms that make America an attractive place for job creation.

"What would a loss of confidence in the dollar actually look like? Gold going absolutely nuts," adds Mr. Singer, who is also a major donor to conservative intellectual causes and think tanks such as the Manhattan Institute. He observes that prices for many commodities are already near all-time highs, even with "kind of a soft recovery" in the U.S. and Europe, and robust growth in Asia. "Imagine if hoarding, speculation, investment positions in [hard assets] accumulate to cause commodities and gold to go rocketing up. Wages, prices will follow," he says.

As destructive as raging inflation would be, why would it hurt the big financial institutions? It could wreak havoc on the ability of big banks' corporate customers to make good on their obligations, Mr. Singer believes—and financial reform did little to reduce risks.

"Dodd-Frank has made the system more brittle and has shaped the next crisis in a very negative way," he warns. "The opacity of financial institution financial statements has not been addressed or changed at all. . . . We have a very large analytical research effort here and we have not found anybody that can parse" the sensitivity of big banks to changes in interest rates, asset prices and the like. "You can't do it."

Even after the crisis, credit ratings "obviously provide no real clue," he says. "Rumor and feeling is all you have. You don't know the financial condition of [Citigroup], JPMorgan, Bank of America, any of them." Mr. Singer believes the big banks still carry too much leverage, and he doesn't trust regulators to monitor them effectively.

The largest financial institutions, he says, are "a random collection of survivors. Almost none of the survivors exist because of their perspicacity, risk controls and sound management—even the ones that are vaunted along those lines. . . . How and why do they exist? Mostly an accident, meaning who got bailed out first and who was saved next and how did people feel and what did people say the weekend Merrill was under pressure [in September 2008]."

Mr. Singer says he does as little business with big banks as possible. "Aside from a large position in Lehman as part of our bankruptcy investing, we have no significant positions in global banks."

"We institutionally have tried to—way before the crisis of '08—tried to insulate ourselves in every way we can from the counterparty problem," i.e. getting involved in a trade with a partner that might not be able to make good on its obligations down the line. But the nature of his business, he says, means that he can't sever all connections. "We've removed as many assets from the Street as we possibly can, and we think we're pretty well insulated. . . . If we could completely avoid being subject to the financial condition of any large financial institution, we would do so."

Most investors don't share this view, of course, and big banks are still able to borrow at lower rates than their smaller competitors. The reason, says Mr. Singer, is that right now the system "is underwritten by the United States government and the governments of Europe. And the system is perceived as underwritten or guaranteed." But, he warns, "at some point that guarantee, in some way that I can't really visualize today, will go away."

Will it really? The authors of Dodd-Frank claim that the law prevents the government from bailing out any particular firm, but the Fed can still provide emergency loans to a failing giant as long as it offers similar financing to other firms.

"It's a very important part of this equation that a few survivors exist in this peculiar relationship with government, having to kowtow to government, make relationships with regulators," says Mr. Singer. "Are they puppets of the government? Are they cronies of the government? Will their lending be affected by the perceived whims or beliefs of the particular government regulators existing at a particular time? Yes."

If the government deems a firm not "systemically important," Mr. Singer forecasts, it could spell its doom. "Small and medium-sized financial institutions may be disadvantaged, may be sacrificed in the next crisis to protect these behemoths," he says.

It gets even worse, Mr. Singer says, if the government ever deems a financial giant "in danger of default"—a judgment that can be made without the consent of the firm or its investors. The business is then taken over by the Federal Deposit Insurance Corporation, with its Orderly Liquidation Authority.

Once in charge of the firm, the government can discriminate among similarly situated creditors and transfer assets out of the business at will. Because of this, says Mr. Singer, creditors and trading counterparties might flee even faster than they would from a firm headed toward bankruptcy, where at least there is established law instead of regulator discretion.

Mr. Singer's fund specializes in distressed debt and bankruptcy situations, so perhaps he has reason to oppose changes to a system he knows so well. But he's also well-qualified to examine the government's reforms.

"You don't know how you will be treated," he says of financial institutions under the new FDIC regime. "If there are companies that are also counterparties alongside you but they've been designated systemically important, that's a clue. It's like a game of treasure hunt. It's a clue that you're going to get disadvantaged compared to them."

So maybe FDIC chairman Sheila Bair and the authors of Dodd-Frank were right about one thing: Perhaps their new process for resolving failing giants really will discourage some people from lending to the biggest banks—but only at the worst possible moment.

The problem, in Mr. Singer's view, will be the jarring shift from one day being an investor in a member of the "systemically important" club, to the next day being a creditor whose claim is determined by bureaucratic whim. This may be welcome news to government pension funds that will want to be bailed out, but certainly not for private investors.

The speed at which a firm will collapse as word gets around that it might be headed to FDIC resolution could be "amazing," says Mr. Singer. And that "speed will drive the size of the losses."

This "atmosphere of unpredictability" is harmful to America's place in the financial world, he says, and "it doesn't make the system any safer. . . . This is nuts to be identifying systemically important institutions." He views it as a poor "substitute for creating soundness and reasonable levels of leverage throughout the system."

Mr. Singer's views on systemic risk are particularly interesting given his prescience about subprime mortgages (to say nothing of his ability to build a firm from zero to $17 billion in assets). In a famous 2006 presentation at a conference hosted by Grant's Interest Rate Observer, he explained in painstaking detail the flaws in subprime-mortgage securitizations, and in the high grades awarded to them by government-anointed credit-rating agencies. In the spring of 2007, he warned the G-7 finance ministers about the grave threat to the banking system, but his words "fell on deaf ears," he says.

Not that Mr. Singer's analytical skills are perfect: In the aftermath of the crisis, he fingered derivatives as a key factor, and he maintains that they will also play a role in the next crisis, even though it's now clear that in 2008 banks were felled by more conventional housing bets, not derivatives. Also, since Elliott largely doesn't play in the derivatives market, Mr. Singer bears few of the costs if that market is regulated more heavily.

Still, Mr. Singer's testimony against Dodd-Frank and Fed monetary policy is compelling.

One reason his firm has survived for 34 years, he says, is that "we try to be very respectful of the unpredictability of markets. We try to at all times at least assume that the world is not being properly run." A safe assumption.

Mr. Freeman is assistant editor of the Journal's editorial page.

Capitalismo financeiro em lutas intestinas...

Como diriam os marxistas dos anos 1950, seguindo Stalin na sua crença idiota (que na verdade ele tinha herdado de Lênin), segundo a qual os capitalistas nunca deixariam de lutar entre si.
As contradições internas do capitalismo, como dizem os marxistas, existem, mas são insuficientes para desmantelar o sistema, como revela esta pequena nota do veículo preferido dos capitalistas financeiros americanos:

With Dueling Views on Basel, Citi's Pandit and U.K.'s King Crystallize Banker-Regulator Divide
American Banker, November 5, 2010

Mervyn King and Vikram Pandit's dueling assessments of Basel III, delivered in separate speeches spaced 90 minutes apart at a recent conference in New York, still offered a good sense of the disparity in viewpoints about the international framework for bank regulation.
King, governor of the Bank of England and a vocal critic of the largest banks, made a cogent case for why the new Basel capital requirements are entirely insufficient to prevent another crisis. But he said that on the whole the new standards represent "a step in the right direction" and a "welcome" improvement over Basel I and II.
Pandit, in as impassioned and substantive a speech as he has delivered as chief executive of Citigroup Inc., argued the polar opposite. He said the Basel Committee on Banking Supervision generally has it right on raising capital ratios, but on most other fronts either falls short of solving problems or risks making them worse.

Bem, entre mortos e feridos, vão salvar-se todos, mas sem conseguir evitar uma próxima crise financeira... Ela virá, e pelo lado da China.
Alguém quer apostar comigo?
Paulo Roberto de Almeida