Interested in maladministration. Estd. 2005
Elaine Byrne: Lacking moral courage to name names
Real democracies and referendums Anthony
Public Services Card: Some still forced to comply Anthony
Catholic Church: Dark influence still active Anthony
Tom Parlon launches new career in comedy Anthony
Public Inquiry >>
A bird's eye view of the vineyard
Are Russia and Turkey on a collision course? Fri Feb 28, 2020 02:38 | The Saker
[this analysis was written for the Unz Review] The murder of the Iranian hero-martyr General Soleimani created a situation in which a war between Iran and the Axis of Kindness
Moveable Feast Cafe 2020/02/27 ? Open Thread Thu Feb 27, 2020 20:30 | Herb Swanson
2020/02/27 20:30:03Welcome to the ‘Moveable Feast Cafe’. The ‘Moveable Feast’ is an open thread where readers can post wide ranging observations, articles, rants, off topic and have animate discussions of
The Covert Financial War Against Hezbollah: Lebanon?s Money Trail Thu Feb 27, 2020 16:29 | The Saker
by Ghassan Kadi for The Saker Blog The new Lebanese Government has been pre-destined to fail; and for no wrong doing on its part. Actually, PM Diab formed the cabinet
Don?t Hold Your Breath for ?World War III?: World War IV Has Already Begun Thu Feb 27, 2020 15:56 | amarynth
A. B. Abrams on Today?s Great Power for The Saker Blog “A. B. Abrams is the author of the book ?Power and Primacy: A History of Western Intervention in the
The Afghanistan ?peace deal? riddle Wed Feb 26, 2020 19:04 | amarynth
Pepe Escobar for the Saker Blog : Posted with permission As far as realpolitik Afghanistan is concerned, with or without a deal, the US military want to stay in what
The Saker >>
A Blog About Human Rights
Latest Listings Mon Feb 10, 2020 10:07 | Human Rights
Latest Updates Thu Nov 21, 2019 20:32 | Human Rights
US Holds China To Account For Human Rights Violations Sun Oct 13, 2019 19:12 | Human Rights
UN Human Rights Council Should Address Human Rights Crisis in Cambodia Sat Aug 31, 2019 13:41 | Human Rights
Fijian women still face Human Rights violations Mon Aug 26, 2019 18:49 | Human Rights
Human Rights in Ireland >>
"A flaky website that purports to be ?leftist,? The Cedar Lounge Revolution, occasionally makes a relevant point or two."
Seanad vocational panels ? some calculations 22:37 Thu Feb 27, 2020 | Tomboktu
?This tops them all- guess who is being accused of letting loose the ?Ra?? 20:35 Thu Feb 27, 2020 | WorldbyStorm
Legitimacy 09:43 Thu Feb 27, 2020 | WorldbyStorm
Hurry, what hurry? 07:57 Thu Feb 27, 2020 | WorldbyStorm
Not talking to Sinn Féin? Not yet? 07:41 Thu Feb 27, 2020 | WorldbyStorm
Cedar Lounge >>
People's News: Another housing bubble building!
Monday February 27, 2017 22:18 by 1 of Indyy
News Digest of the People’s Movement - No. 162 15 February 2017
The latest issue of People's News -for 15th Feb carries a lead article on the current housing bubble.
The free movement of capital has become one of the maxims of global capitalism. Along with the free movement of people, goods and services it is also one of the “four freedoms” of the EU’s single market.
But the removal of the policy instrument of capital controls has probably contributed to a succession of financial crises. Three decades ago, many people in the EU invested their hopes in a combination of free trade, free mobility of capital, a fixed exchange rate, and an independent monetary policy — dubbed an “inconsistent quartet.”
The combination is logically impossible. If Ireland, say, fixed its exchange rate to the German mark — which in effect it has done by adopting the euro — and if capital and goods move freely across borders, the Central Bank would have to follow the policies of the German central bank, the Bundesbank — or, in effect, the EU Central Bank in Frankfurt.
So we sacrificed monetary independence when we adopted the common currency. What has changed since then is the increasing importance of cross-border finance. Many emerging markets do not have a sufficiently strong financial infrastructure of their own. Companies and individuals therefore take out loans from foreign institutions denominated in euros; and that’s what the Irish banks were doing a decade ago.
Theoretically, it is the job of the Central Bank to bring the ensuing havoc to an end, which standard economic theory suggests it should be able to do so long as it follows a domestic inflation target. But if large parts of the economy are funded by foreign money, its room for manoeuvre is limited.
In the good times, credit flows into peripheral markets, fuelled by the massive German surplus, where it fuels local asset price bubbles, as we have experienced to our detriment. When, years later, liquidity dries up and the hot money returns to safe havens in Europe, the country is left in a mess.
Unless you accept financial instability as inevitable — and it increasingly seems an intrinsic part of the system as the time between crises grows shorter — you may soon be thinking about imposing capital controls that involve telling foreign investors that you don’t want their cash. The point is to prevent hot money flowing in during the good times and to stop it from draining out in the bad times.
This is not yet a subject of polite conversation among policy-makers. Central bankers have instead been peddling a concept known as macro-prudential regulation, a version of capital controls. The idea is to tweak incentives: when a housing bubble seems to be building up, the Central Bank imposes some ceiling on lending, for example by capping loan- to-value ratios. It might also ask its government to raise stamp duties or other transaction taxes.
Spain tried such measures during the precrisis years, and Ireland is trying it now. But it did not stop the buildup of one of the biggest housing bubbles in history.
More drastic action, such as leaving the euro or imposing controls on capital, might prevent the next calamity as rents and house prices soar. Spain did neither, but before long someone will — and it looks increasingly like it should be Ireland. Free movement of capital cannot be sustained as a point of principle when the economic costs are so devastating.
Some of the other articles in this issue are:
Two-speed EU back on the agenda!
Is there a trade war on the way?
Could the EU provide a solution to Ireland’s housing crisis?
EU banks have more than €1,000 billion in bad debt!
More euros to lend at low interest rates ?
The security industry is shaping EU legislation: lobbyists in action!
More austerity for the Greeks
What to do in Europe? Proposals from the left