Recent comments by Val Samonis

• Will the Global Economy Add Up?

  Definitely, there is a beggar-thy-neighbor feeling to this stage in the global financial crisis but I think that the next stage featuring competitive devaluations (currency wars) will beggar the neighbors much more; a backhand repetition of the Great Depression 1?

• What Euro Crisis?

  DEMOCRATIC DEFICIT - "DESTRUCTIVE CREATION" OF THE BARRIERS TO KNOWLEDGE IN THE 21 C.
  
  By Val Samonis
  
  Rather than totally condemning any branch of economic thinking, this Global D(R)ecession is a product of Schumpeterian destruction of capitalism itself due to democratic deficit under the new conditions of the global knowledge economy. With such pre-eminence of knowledge in modern decision-making, the society at large, due to education and time demands, is simply unable to participate in the processes of ongoing financial-economic regulation (e.g. systemic risk monitoring and management, etc).
  Thus, even under a normal democratic representative system that creates outward appearances of participatory democracy (far from the Swiss democracy yet), classes/elites of high-level decision-makers develop (in banks, insurance agencies, other intermediation institutions) that amass that powerful knowledge via clandestine cronyism and they are strongly motivated to (ab)use it (insider trading, etc) to their advantage (principal-agent conflict of interest), see for example the latest LIBORgate or the writings of S. Johnson and A. Admati from the Institute for New Economic Thinking. There is lots of other evidence for this democratic deficit functioning in such destructive ways in Europe, USA, other developed countries and emerging markets as well (e.g. hijacking of democratic and economic change by the former communist nomenklatura).
  
  Such cronyism, nomenklatura, similar hijackings of the democratic process are modern manifestations of democratic deficit. In order to destroy or reduce their system destroying power that is now in full swing, institutions need to be developed by the society that constantly interpret the rapid pace of knowledge and change to the society at large through monitoring, analytical and broader publication efforts (education of the society at large). While part of this job is being done by universities, etc, it seems that modern societies need much more consistent efforts to close these dangerous knowledge gaps; otherwise insider elites will continue to destroy capitalism and democracy.
  
  There is an experiential learning accumulated in some countries (notably Canada) that will help guide building of such institutions. The June 2012 EU initiative to build the Single Regulators of Financial Institutions should make use of that knowledge.
  
  Val Samonis

• One Big Union

  
  
  Too late for such gradual solutions in EU, I am afraid; confidence in the EU Paradise is lost for long!
  
  Instead, divide the EuroZone into Neuro and Seuro (N&S) zones to much better reflect the conditionalities (productivity, etc) of the optimum currency areas (OCA), with free flotation of Neuro and Seuro. N&S zones provide a chance to salvage some positive European integration results and, in the longer time, bring the continent to necessarily very gradual correction of the original architectural sins of the EU (no OCA, etc).
  
  Failing that, nobody is able to keep Germany in the EU; it might quickly opt out and become another Fortress Switzerland trading fully globally.
  
  Then all hell may break loose in the rest of Europe!
  
  
  Val Samonis
  
  http://ca.linkedin.com/in/vsamonis

• An Agenda for Europe’s Weary Magicians

  Too late for such a timid approach. PARADISE=CONFIDENCE IS LOST!
  
  DIVIDE EZ INTO NEURO AND SEURO ZONES TO REFLECT LONG-TERM DIFFERENCES IN PRODUCTIVITY THAT CONNOT DISPPPEAR FOR AT LEAST A DECADE.
  
  SIMPLE OPTIMUM CURRENCY AREA ECONOMICS!
  
  val samonis, toronto

• ­A New European Growth Agenda

  To me this agenda looks like the forgotten EU Growth and Stability Pact, just wishful thinking. We first should start thinking about the fundamentals, e.g. just how in the world we should arrive at the opimum currecy area(s) in Europe. The Eurozone is not one.