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Showing posts from 2013

Introducing Pieria

My new site, Pieria , launched last week devoted to improving and expanding the debates in finance and economics. Below is a short summary of what the site is about and what it offers so please do come join the discussion! What is Pieria? Pieria is like going to your favourite cafe, if your favourite cafe is frequented by some of the best people in their field; discussing and debating the big issues of the day, a melting pot of ideas, disciplines and points of view. It’s an ongoing conversation and we’ve designed the site to reflect this.   The main navigation is divided between macro and micro sections, which together give a rounded overview of what’s going on right now in the economy.  On the homepage you will find the daily ‘HOT TOPICS’ and is a good starting point for exploring the site. These articles combine a briefing report with in-depth commentary on a single key issue that people are talking about or one which we think worthy of wider discussion.  Hot Topics bring you u

In defence of 'plogs'

It is fair to say that I would not have imagined myself writing a post in defence of the Office for Budget Responsibility. Nevertheless, here I find myself (sort of). That is not to say I intend to offer any excuses for the OBR’s worryingly poor forecasting record for UK economic output, which have been used all too frequently as a fig-leaf to cover a litany of equally poor policy decisions. Instead I want to defend Robert Chote and his team from a particular charge levelled at them by the FT’s Chris Giles last week. In an article entitled “ How to ‘plog’ the hole in our awful public finances ” Giles writes: “Had the OBR assumed significant spare capacity now alongside extremely weak growth in the economy’s potential output, it could combine a lacklustre forecast for output growth without the assumption that spare capacity would still exist in 2017-18. The benefit would be a logical and consistent forecast, but the assumptions would come at a cost: the OBR

Cyprus - Beware False Equivalence

Empathy : The ability to imagine oneself in another’s place and understand the other’s feelings, desires, ideas, and actions. When faced with an example of injustice it is a common psychological trait to relate the suffering of others to our own experiences. While this can be helpful in fostering greater insight into the personal hardships they may be undergoing it can also cause people to prioritise the similarities of their situations and underplay the differences. It is in this light that I view attempts to liken the haircuts to Cypriot depositors to ultra-low interest rates in Britain. Yet to my mind this false equivalence does a disservice to understandably panicked depositors in Cyprus and causes undue concern for savers in the UK. I first came across this particular line of argument on twitter in a tweet from Ros Altmann , former director general of Saga and pensions expert. She wrote: “UK vs. Cyprus - Sterling devaluation +inflation +ultra-low

Weak sterling is a reflection of a weak economy, not a policy objective

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As sterling hits another new low against the dollar many have started question whether the supposed benefits of a weak currency have been overstated. Among the voices within the sceptic camp is Andrew Sentance, former Monetary Policy Committee member and currently senior economic adviser at PWC. In a recent blog post Sentance suggests that while Britain’s economic weakness and reduced fear over a eurozone collapse have both played their part in lowering the value of sterling, there has also been a concerted effort by policymakers to “talk down the pound”. He writes: “[A] weak pound appears to be an important ingredient of official economic policy. Government ministers, including the Chancellor, have talked of rebalancing the economy and emphasised the role of a competitive currency in achieving this. The Governor of the Bank of England has argued along the same lines. In his major speech earlier this week, he argued that the 25% fall in the value of the pound

The Collapse of the Soviet Union: A Warning for Europe

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On June 5, 1989 the attention of the world was grabbed by the image of an anonymous man standing in front of a column of Chinese tanks in Tiananmen Square. Elsewhere, however, in the People’s Republic of Poland an equally momentous event was unfolding in the narrative of the Cold War. Solidarity, a Polish labour union movement born in the Gdansk shipyards at the start of the decade, was poised to shake the Communist stranglehold on power for the first time since 1944. In the first multi-party elections since the country’s liberation from the Nazis the party, led by shipyard worker Lech Walesa, won between 70-80% of the vote and shattered the semblance of Soviet political invulnerability. The impact across the USSR’s expansive empire was seismic. By the end of 1989 Azerbaijan, Hungary and Czechoslovakia had declared their sovereignty and these were soon followed by Georgia, Lithuania, Estonia, Latvia and ultimately Russia itself the following year. Over 12 months the Eastern