How to Create a Depression
Feldstein, Martin. European political leaders may be about to agree to a fiscal plan which, if implemented, could push Europe into a major depression. To understand why, it is useful to compare how European countries responded to downturns in demand before and after they adopted the euro. Πηγή: Project Syndicate πλήρες κείμενο
Behind the ECB’s Wall of Money
Marzinottο, Benedicta. Throughout the crisis period, the European Central Bank’s behavior has been conditioned by the tension between what it can do and what it is allowed to do. The ECB is the only institution in the European Union that is able to provide unlimited funding to governments, but its governing statute prohibits government bailouts. […]
Euro Checkers: Guide to Greek PSI
Forelle, Charles. The negotiations over Greece’s debt restructuring, which continue tomorrow in Athens, are a real head-twister, a six-sided game of Chinese checkers, European-style. Here’s our guide through the strategic thrusts and parries. There are, roughly, six groups with interest in the “PSI” talks, which are going on this week. They are: northern euro-zone governments, […]
What really caused the eurozone crisis?
World leaders probably spent more time worrying about the eurozone crisis than anything else in 2011. And that was in the year that featured the Arab Spring, the Japanese tsunami and the death of Osama Bin Laden. What’s more, 2012 looks set to be not much different. But as eurozone governments hammer out new rules […]
Europe’s Vicious Spirals
Eichengreen, Barry. The euro crisis shows no signs of letting up. While 2011 was supposed to be the year when European leaders finally got a grip on events, the eurozone’s problems went from bad to worse. What had been a Greek crisis became a southern European crisis and then a pan-European crisis. Indeed, by the […]
The ten roots of the euro crisis
Darvas, Zsolt. On 9 December 2011 euro-area leaders once again gathered in an attempt to find a comprehensive solution for the euro-area sovereign debt and banking problems – but once again they failed to convince markets. Why is it so hard to overcome the current crisis? The answer is that the euro area has deep-rooted […]
Stop coddling Europe’s banks
Goldstein, Morris. Throughout the European debt soap opera, Europe’s leaders have expressed their willingness to “do whatever it takes” to restore stability and save the euro. This column argues that, too often, policymakers have in fact been “doing whatever it takes” to serve the banks. Πηγή: Voxeu πλήρες κείμενο
Should we go back on Greek PSI?
Wolff, Guntram. A senior member of the ECB governing council, Athanasios Orphanides, recently argued in the Financial Times that the eurozone should jettison the deal reached on Greece and abandon the Greek private sector involvement (PSI). Such a complete policy reversal would restore confidence in the sovereign bond market, so his argument went. Orphanides claims […]
Europe requires European bonds
Chamley, Christophe. Is it time for Eurobonds? This column argues that Eurobonds have always been the right solution. Every successful union throughout history has needed to create a proper financial instrument of sovereign debt – and the Eurozone is no different. The ongoing Eurozone crisis has at least four dimensions: Divergent labour costs between countries […]
Beyond fiscal federalism: What does it take to save to euro?
Corsetti, Giancarlo, Pesaran, Hashem. High debt levels, house price booms, uncompetitive labour markets – the list of possible reasons why some European countries are facing the wrath of the market are many. This column argues that they all boil down to one measure – inflation. Using the inflation differentials as a guide is the first step […]