debating progressive politics in Europe and beyond
How did we get into this mess? I thought I’d seen Washington at its worst. I was there just after Watergate. I was there when Jimmy Carter imploded. I was there during the government shut-down of 1995. But I hadn’t seen the worst. This is the worst. How can it be that with over 9 [...]
Could the financial crisis of 2007-2008 happen again? Since the crisis erupted, there has been no shortage of opportunities – in the form of inadequate conclusions and decisions by officials – to nurture one’s anxiety about that prospect. Over the course of the three G-20 summits held since the crisis, world leaders have agreed to [...]
If you think deficit-reduction is being driven by John Boehner or Harry Reid, think again. The biggest driver right now is Standard & Poor’s. All of America’s big credit-rating agencies — Moody’s, Fitch, and Standard & Poor’s — have warned they might cut America’s credit rating if a deal isn’t reached soon to raise the [...]
Last week, the European heads of government added €109 billion to the existing €110 billion rescue plan for Greece. As Europe’s financial sector would have otherwise taken a huge hit, this column address the question: How did the financial sector manage to negotiate such a gigantic wealth transfer from the Eurozone taxpayer and the IMF [...]
Perhaps for the first time in modern history, the future of the global economy lies in the hands of poor countries. The United States and Europe struggle on as wounded giants, casualties of their financial excesses and political paralysis. They seem condemned by their heavy debt burdens to years of stagnation or slow growth, widening [...]
In trying to understand the pattern and timing of government interventions during a financial crisis, we should probably conclude that, to paraphrase the French philosopher Blaise Pascal, “politics have incentives that economics cannot understand.” From an economic point of view, the problem is simple. When a sovereign borrower’s solvency has deteriorated sufficiently, its survival [...]
The least one can say is that at least the EU Ministers meeting in Brussels on Thursday 21 July took decisions to avert immediate crisis as the Vox EU letter from 13 economists asked.[1] The package seems to have been somewhat grudgingly accepted by the markets. The aim of the exercise was only in part [...]
I am out in Chicago and was shocked to learn yesterday about the horrendous attacks that took place in Norway. My thoughts are of course with the families and friends of the victims. These attacks also serve as a reminder that a free, open and democratic society cannot be taken for granted but needs to [...]
Economists like to talk about thresholds that, if crossed, spell trouble. Usually there is an element of truth in what they say. But the public often overreacts to such talk. Consider, for example, the debt-to-GDP ratio, much in the news nowadays in Europe and the United States. It is sometimes said, almost in the same [...]
As growth is edging timidly forward in most of Europe, attention is increasingly turned to the state of labour markets and, especially, the high levels of unemployment and lack of job creation. Governments and social partners are in search of policies able to promote dynamic job creation and thereby bring down unemployment. In this context, [...]
The Eurozone crisis is coming to a head. This column is an open letter to European leaders imploring them to take decisive action this week. Any more delays could mark the end of the Eurozone as we know it. The debt crisis has reached the core of the Eurozone. Italy and Spain are now directly [...]
Everyone knows that Greece will default on its external debt. The only question concerns the best way to arrange it so that no one really understands that Greece is actually defaulting. On this topic, there is no shortage of expert plans – among them bond buy-backs, bond swaps, and the creation of Eurobonds, a European [...]
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