Where consensus did prevail, it proved to be misguided.
Economists of all ideological stripes cheered on the financial deregulation of the 1980s and 1990s. The work of thinkers like Hyman Minsky and Charles Kindleberger, whose writings on financial excess were rediscovered after the financial crisis, gathered dust.
In a speech in 2005 to central bankers, Raghuram Rajan, an academic who later ran India’s central bank, warned of the risks building within the financial system. He got a chilly reception.
The 10-year inflation break-even — the rate of inflation at which inflation-linked and fixed income bonds would pay the same, and hence the implicit forecast rate of inflation — is rising. It is the highest in four years, close to 2.2 per cent; low in historical terms, but above the Fed’s target. FT 21 April 2018
Under the current plan, certain creditors are designated in advance to absorb a failed bank’s losses once the equity is wiped out. Those creditors’ debts are thus riskier, and should be more expensive to the bank than the debt that is not designated to be turned into equity. Yet the Fed economists conclude that, in the market, this is not the case. Why? Mark Roe, professor at Harvard Law School, Project Syndicate 17 April
The policy – if you can call it that – puts the US on an untenable debt trajectory. It smacks of Latin American caudillo populism, a Peronist contagion that threatens to destroy the moral foundations of the Great Republic. Ambrose Evans-Pritchard Telegraph 18 April 2018
Ms Merkel endorsed the idea of turning the European Stability Mechanism, the eurozone’s financial rescue fund, into a regional version of the IMF. But she said it would have to be created through treaty change. FT 17 April 2018 Ms Merkel does not say “no” to eurozone bonds. She says: “Not without treaty change.” The German constitutional court in Karlsruhe would never allow Germany’s sovereign guarantee to be given to its eurozone partners without them submitting to effective and centrally budgeted discipline. Financial Times 31 May 2012 Read more here