5th October 2011
In a guest column for Voxeu, Hans-Werner Sinn argues that a balance of payments crisis is really at the centre of the euro zone's current woes. He also proposes a set of commandments that will "balance the need for discipline with the need to minimise panic when a crisis does strike."
The New York Times Editorial says that it would be a "bad idea" for the US Senate to engage in a potential trade war with China. The senate is hoping to pass a bill that would punish countries that manipulate their currencies. However, the article contends that trade protectionism will only lead to retaliation by China.
It is usually taught in undergraduate economics that in the long run, changes in money supply have no effect on the real economy. Uneasy Money notes that yesterday's speech by Ben Bernanke and a recent message by Jeff M. Lacker, President of the Federal Reserve Bank of Richmond, both acknowledge that Monetary Policy "is not a panacea."
Despite meeting in Luxembourg on Monday, finance ministers want more time to decide on the debt problems in Greece. According to The Street Light, this is what "policy paralysis" looks like. The article questions the thinking behind the decision and claims that bad policy making can also derive from doing nothing at all.
Philip Pilkington of Naked Capitalism bashes the neoclassical economic theory of marginal utility as being a theory of social and individual desires. He argues that the opposite is true of the assumption that people optimize their utility or satisfaction.
Got any other suggestions for what we should be reading? Tell us below?
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