Sunday, 1 January 2012

New Year’s Resolutions

Happy New 2012 to all! I’ll start us off with the New Year’s resolutions to be expected from the blog and some suggestions that should be followed by the policymakers. It’s mostly a recap of the ideas presented in the blog so far. If it reaches at least one civil servant, I’ll call it a success.

Let’s begin with the new ideas for the blog itself:
  • All new blog posts will be accompanied by a figure or a picture in order to approach the reader from a more amusing perspective. It is aimed to make the blog more ‘user friendly’ in a sense that it will provide visual stimulus and witty or intriguing links and immediate conceptual understanding of what the post is about. I won’t change the design of the blog though, I like it this way. Perhaps in time when I get bored with the current outlay.
  • Apart from that I plan to introduce a new page presenting business cycle tracking. I will track the data that recognizes business cycle movements which I feel could be particularly useful in the following year. This may help the readers to see and possibly anticipate where the economy is going. I will refrain from making any forecasts for now, as I feel you need more time and devotion to do so. Besides, forecasting models tend to have many biases and cannot anticipate events such as the earthquake in Japan or the American Congressional quarrel in August this year, for example. The predictions of a bounce back in 2013 will suffer from the same shortcoming, similar to the prediction of a supposed bounce back in 2012 made back in 2010. Expect the page to be made by the end of January. By the end of each month I will devote a blog post to show the temporary movement of the eurozone and US business cycle situation. 

For the policymakers, I will call upon some of the previous writings on the blog. This doesn’t mean I think my blog posts hold the unique wisdom necessary to repair the current malign system or that I think of myself as the guru to provide the necessary answers. It is simply a set of ideas I feel are good enough to be considered as a part of an academic debate on what is supposed to be done.

1. In Europe, end further bailouts and dependency. Opt for controlled defaults and reform the unsustainable European welfare state
2. Remove regulatory requirements from small and medium-sized businesses to start up economic growth
3. Don’t steer bank investments into new 'safe' assets 
4. Relax regulatory requirements on banks as they tend to only create adverse effects
5. Leave investments to the private sector, government infrastructural spending only reshuffles wealth, it doesn't create new wealth 
6. Avoid senseless cuts, instead cut where it’s really necessary – regulation and taxes – in order to restore confidence and clear the path to private sector growth
7. Don’t subsidize youth employment, rather focus on growth enhancing strategies (such as the ones mentioned above) and the market forces will quickly create jobs for the young
8. Give technocrats a chance, maybe they will find the strength to reform with avoiding the political pressure
9. And finally, learn from the financial crisis that originated in the US four years ago

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