debating progressive politics in Europe and beyond
Its great to hear good ideas about how to resolve the euro area crisis, I just wish people would reflect or research a little before they describe them as ‘new’. Mark Schieritz at Herdentrieb, with a nudge from Sebastian Dullien, has spotted a way to bring about a competitive rebalancing of the euro area without [...]
The recent joint economic forecast by the IMK, WiFO and OFCE is now available in English (see the link on the right; auf deutsch hier). I should warn you: it makes miserable reading. While the extraordinary measures by the ECB and the shoring up of the European bail-out fund have averted a meltdown, the institutes [...]
Unemployment in Europe continues its inexorable climb upward. Eurostat reported today that in February 17.13 million people were unemployed in the euro area and 24.55 million in the EU27. New records, as you can see from Eurostat’s own chart below. A rather clearer picture of the policy-making disaster that this represents emerges [...]
If you were a Greek MP would you have voted for the austerity package in the Greek Parliament on Sunday evening? The fate of Greece and perhaps of the euro area was, according to both Greek and EU policymakers, on the line. And despite riots in the streets and resignations from the government, the Greek [...]
The Greek parliament has approved the austerity package demanded by the EU. Despite being billed as a make-or-break decision for the country and the euro area it does not change the fundamental fact: on current policies Greece will be forced out of the monetary union or will leave ‘voluntarily’.If the package had been rejected it [...]
2011 was supposed to be the make-or-break year for the euro. First it was weeks, then just a matter of days to save the euro. Yet, 2012 has begun and we are still paying our taxes and bills are writing our contracts in euros. Not only here in Brussels, but also in Bologna, Barcelona, Braga [...]
There was a lot of European economic news today. Not all of it was bad. The media and investors are celebrating the success of today’s bond auctions by Spain and Italy, the two most critical countries in Europe’s sovereign debt drama. Bond yields fell and stock markets rose, in Italy by 2.7%. Yet it is [...]
Just when you thought the euro debate couldn’t get any more inane, in steps Martin Feldstein with his answer to the euro area crisis. For the euro area to become strong again, the euro must become weak, he opines. The problem, you see, is that countries like Italy, Spain and France have current account deficits [...]
While the outcome of the European summit was very disappointing, there was one chink of light: that the agreement, and particularly the fiscal compact, would be used as a cover under which the ECB could abandon its reticence to support distressed sovereign debt markets, which was justified by the ‘moral hazard’ of bailing out allegedly [...]
OK, so the euro area seems bent on committing suicide. The UK appears to believe that austerity and stagnation will be more bearable if done in splendid isolation. The US political system is locked in arcane disputes while the economy stagnates and labour market and fiscal problems pile up. Meanwhile big emerging markets such as [...]
Finally: we are all Greece! OK, not quite. But the news that Germany was unable to sell one third of the new government bonds it sought to auction today is a worrying sign. ‘Investors boycott German government bonds!’ screamed the Handelsblatt headline. Has Germany joined the periphery, too? Has the core melted? What has happened, [...]
It is often claimed that imposing a haircut (i.e. a partial default) on holders of Greek bonds is fair, sets incentives correctly, and avoids moral hazard. Haircut fans on Right and Left use slightly different arguments, but the basic point is the same. If you invest money, you must accept the risk of losses. If [...]
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