Monday, January 19, 2009
Sweden, Norway and a request for some decent macroeconomic models
The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.
I think your logical chain breaks down. Norway and Sweden both had financial crises, despite having their own currency.
What having your own currency may do is prevent other people's crises becoming yours.
once having spoked for 2% ownership
Willem Buiter is pamphleting about the UK joining the pound
My impression is that formal economic models tend not to be very useful in dealing with modern financial markets, which is one reason why 'smart' academics like Krugman, de Long and Buiter can be at complete loggerheads over how to deal with the crisis. However, former RBA Governor Ian Macfarlane once made reference to an informal model - he called it the Australian model - which emphasised the importance of a floating exchange rate, and seems very consistent with your point. See http://www.rba.gov.au/Speeches/2005/sp_gov_131205.html
Post a Comment