Recent comments by Robert Pringle

• Central Banks’ Outdated Independence

  Mario offers an excellent account of what is happening; but the enormity of what is involved in effectively abandoning the inflation targeting framework needs to be fully taken on board. If we do reject it, please let us go into this new world with eyes open! We are abandoning a monetary rule, the only one we have - the one big lesson of the 1970s and all that. What is going to replace it? Don't let us pretend we can have our cake and eat it.

• Financial Globalization in Reverse?

  The authors identify the central issue facing the world today and some of their policy recommendations are well taken. However, it is a mistake to look to the current Basel process/bank resolution/macro-prudential measures to deliver sufficient reform of banking - a major step towards market discipline is essential to protect public budgets. Nothing less that an integrated reform of both the banking and the official monetary system will create a framework robust enough to accommodate the strains resulting from necessary financial globalisation. For what the IMF and G20 should do this week, here is a draft Communique
  http://www.themoneytrap.com/2013/04/the-g20imf-communique/

• Rolling the Dice in Cyprus

  Thank you. To follow up the argument in the article, although Iceland and Cyprus are of course very different in many respects, the key lessons we learnt from Iceland apply: protect the sovereign, let insolvent banks collapse, bail in large depositors, and restructure the banking system immediately. I hope the Cyprus government is seriously looking at the possibility of following the Iceland model as it would provide a durable, if painful, solution rather than just rolling the problem forward. Brussels would object that capital controls require permission from the Council, but other Treaty obligations (no bail out, ECB buying govt debt) are already being ignored. For the full story see "Follow iceland, not Ireland" on www.themoneytrap.com

• The Saver’s Dilemma

  What matters is not saving but financing. Countries running current account surpluses do not finance those running current account deficits.The deficits are financed by banks, investors and other suppliers of funds.
  
  Analysis confined to national account concepts like savings and investment throws no light on the cross-border flows that actually finance credit booms. Indeed, it diverts attention away from the monetary and financial factors that are the main cause of financial crises; see
  http://www.themoneytrap.com/2013/02/why-excess-savings-do-not-cause-financial-crises/
  

• Why Stimulus Has Failed

  Well said. But governments can do more to encourage a "spontaneous" increase in demand for "good", new products and services to help overcome the malinvestment legacy. They won't just step aside. What is clear is that central bankers are about to dig us all more deeply into the hole - just like last time, as Bill White has pointed out - all over again; but Gordon Brown, despite his old-fashioned impulses, is onto something - see http://www.themoneytrap.com/2013/01/gordon-brown-on-stubborn-national-politics/