In a USA TODAY story tied to the ascension of “technocrats” in Italy and Greece, Michael Szenberg, a distinguished professor of economics at Pace University’s Lubin School of Business, discusses whether economists make good leaders and whether our fiscally challenged times demand this kind of expertise.
As leaders of the European Union meet this week to try to resolve Europe’s debt crisis, economists will play a major role in the success or failure of efforts to prevent the region from lapsing into a deep recession.
From USA Today:
Italy will be represented by Prime Minister Mario Monti, an economist and former EU official who replaced the erratic and flamboyant Silvio Berlusconi last month. On Monday, Monti announced a $41 billion package of new taxes and spending cuts that’s designed to reduce the nation’s debt, the second-largest in the European Union.
Greece will be represented by Lucas Papademos, a former vice president of the European Central Bank, appointed interim prime minister last month. He’s negotiating a debt swap agreement with private lenders in hopes of preventing that country’s debt from ballooning to twice the size of its economy. Wednesday, Greek lawmakers approved an austerity budget extending deep spending cuts into next year.
Michael Szenberg, professor of economics at Pace University’s Lubin School of Business, argues that Monti and Papademos could be just what Europe needs. Both are unlikely to run for office when their terms expire, which makes them convenient scapegoats for the backlash against cuts in public programs, Szenberg says. “We all have to tighten our belts,” he says. “You blame them — the technocrats.”
Read full article here:
Economists hold big role in EU’s future – USATODAY.com.
Think back to the evening of Sept. 10, 2001: It’s been 10 years, and in some ways, it’s as if nothing has changed. That Monday night, the United States was coming off a recession stemming from a bursting bubble, consumer confidence was declining, and predatory lending was in the headlines.
But as we all know, everything did change the next morning, in ways that we are still working to understand.
Over the last decade, consumer confidence and housing prices have gone through a dramatic rise and fall, and two massively expensive wars in Iraq and Afghanistan were initiated.
AOL’s DailyFinance asked economists including Lubin’s Niso Abuaf, to share their thoughts on two questions: What were the most significant economic shifts between 2001 and 2011; and if that decade had a headline, what would it be.
The Great Disappointment in Real Wage Growth and European Integration
Niso Abuaf, professor of finance, Pace University
“Technology [the innovation of the ’90s] bore fruit and the productivity gains we have experienced in technology, media and telecom sectors have been tremendous with the iPhone, iPad, Blackberry and virtual workplace. But has that accrued to the typical U.S. worker or European worker? Unfortunately, those productivity gains have not translated into real wage gains and it has been a disappointment. Wages have not kept up with productivity gains. Another disappointment is that Europe’s lack of political union and its response to crisis in [the PIIGS nations] has not been as decisive and quick a response as the U.S. response during the Great Contraction.”
The stalemate between Democrats and Republicans regarding a vote to lift the U.S. debt ceiling is giving gold a boost, and if an agreement is not reached before the August 2 deadline, many market watchers believe there would be a rush to buy gold and other hard assets. Economist Michael Szenberg discusses the potential impact on financial and commodity markets if the U.S. cannot raise its debt ceiling.
The bickering between the Democrats and Republicans over raising the debt ceiling has been bullish for gold.
Even if the debt ceiling is not raised, the U.S. would have money coming in to pay some obligations, but it would have to make choices on who gets paid and who doesn’t. That’s why it is considered a technical default.
Michael Szenberg, chair and distinguished professor of finance/economics at Pace University’s Lubin School of Business, said he believes that yields would likely spike under a default situation, but points out the rise is relative, noting that in the 1970s and early 1980s, bond yields were hovering around 20%. “The American economy is dealing with tremendous fragility, but this (debate) might take us in the direction we need to go,” Szenberg told Kitco News, a precious metals website which gets ONE MILLION hits a day.