The Levy Economics Institute of Bard College is pleased to announce that it will hold the second annual Minsky Summer Seminar June 18�26, 2011. The Seminar will provide a rigorous discussion of both the theoretical and applied aspects of Minsky�s economics, with an examination of meaningful prescriptive policies relevant to the current economic and financial crisis.

The Summer Seminar will be of particular interest to graduate students, recent graduates, and those at the beginning of their academic or professional careers. The teaching staff will include well-known economists concentrating on and expanding Minsky�s work.

Applications may be made to Susan Howard at the Levy Institute ([email protected]), and should include a current curriculum vitae. Admission will include provision of room and board on the Bard College campus. A limited number of small travel reimbursements of $100 for US fellows and $300 for foreign fellows, respectively, will be available to participants.

Due to limited space availability, the deadline for applications is March 31, 2011.

The summer seminar program will be organized by Jan Kregel, Dimitri B. Papadimitriou, and L. Randall Wray.

Those trying to justify the results of the midterm elections voiced a common refrain: that the government�s fiscal stimulus to save the US economy from depression undermined growth, and that fiscal restraint is the key to growth. Research Associate Marshall Auerback maintains that this view stems from the failure to understand a fundamental reality of bookkeeping�that when the government runs a surplus (deficit), the nongovernment sector runs a deficit (surplus). If the new GOP Congress led by Republicans and its Tea Party allies cuts government spending, deficits will go higher, as growth slows, automatic stabilizers kick in, and tax revenues fall farther.

Forcing people to �live within their means,� as desired by the new Congress, will have the opposite effect. The question is whether or not President Obama (and his economic advisers) will be enlightened enough to embrace this �teachable moment� about US main sector balances. Recent remarks to the press about deficit reduction suggest otherwise.

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In a presentation to the Brazilian Economic and Social Development Council in September 2010, Research Associate Michael Hudson urges the BRIC (Brazil, Russia, India, and China) countries to isolate themselves from global debt creation. According to Hudson, privatizing the public domain and financializing the economy is akin to military defeat by neoliberal finance-backed politicians in the North. The tragedy of our epoch is that most credit is used for extracting rent rather than for productive capital formation.

What is ironic, says Hudson, is that the tax philosophy favoring debt leveraging rather than equity investment is destroying the creditor economies as well as the peripheral financialized economies. The move by BRIC countries to create an alternative financial system as well as their own trade and development philosophy is a reaction against the neo-rentier drive to undermine classical economic reform.

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According to pundits such as Nobel Laureate Joseph Stiglitz, India has managed its monetary policy successfully and withstood some of the negative effects of the global economic crisis. Research Associate Sunanda Sen says that such notions underestimate the systemic risks and social costs embedded in India�s liberalized financial sector.

Monetary management needs to control inflows of short-term capital as well as the financialization of the commodity markets, and prevent appreciation of the rupee�s real exchange rate. The benefits of financial deregulation have been confined to market speculators, while the costs are borne by people affected by commodity price speculation and government cuts in social-sector spending.

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The Central Asian countries are landlocked, rich in natural resources, and critically dependent on natural-resource exports. In association with Working Paper no. 628, Felipe and Kumar document Central Asian growth in the context of other landlocked and resource-rich countries.

The authors recommend that Central Asian countries take a more aggressive stance in diversifying their export basket to include more sophisticated (manufactured) goods, and avoid the �Dutch disease� and deterioration of institutional quality. The resource-rich economies should accelerate their rate of structural transformation, while the landlocked economies should develop their service sectors and enhance regional integration.

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Trade facilitation refers to the ease of moving goods across borders. Using a gravity model, the authors examine the relationship between bilateral trade flows and trade facilitation in Central Asia. They find that improving trade facilitation resulted in significant trade gains, while intraregional trade doubled. And, countries with a more sophisticated export basket tend to grow faster.

The challenge for Central Asian countries is to generate sustained economic growth through a process of structural transformation, while reducing their reliance on natural resources. Resource exports cause currency appreciation, leading to uncompetitive manufacturing activities (the so-called �Dutch disease�), as well as other problems.

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The tragedy of the US financial system is that the tax code favors replacing equity with debt, so that asset-price inflation is the prime avenue for �wealth creation.� Debt-leveraging distorts markets and deindustrializes the economy by shifting the tax burden away from property and finance.

The author proposes a policy of higher taxes on property rental values in order to recapture spending on public infrastructure and in response to the general level of prosperity. In this scenario, savings are directed toward equity investment, leading to slower growth of debt and prices, and lower taxes. These effects would make the US economy more competitive globally.

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In the special report Recovery, Not Austerity Senior Scholar James K. Galbraith comments on the two leading factors behind current deficits and rising public debt: the financial crisis, which led directly to declining tax revenue; and deficit projections that begin with unrealistic forecasts based on the assumption of a full recovery.

Senior Scholar L. Randall Wray comments on recent actions taken by the New York Fed and various state attorneys general against bank mortgage fraud, including a suit demanding that the nation�s largest lender, Bank of America, buy back $47 billion in toxic mortgage-backed securities.