Tag archive for ‘Eurozone’
A Year of Missed Opportunities for the EU
In politics it is August rather than January when people look back at the last year and take stock of what has or has not been achieved. Hence, as I have been soaking up the Spanish sun, my mind has been replaying events from the last twelve months. Last summer, I had great optimism for [...]
Who is reforming Europe’s Economic Governance?
After the crisis, European policy makers are now crafting reforms to strengthen the Union’s economic governance. It is an opportunity to make Europe more democratic. Instead, conservatives increase the democratic deficit under the pretext of closing budget deficits. This will not work. The European Commission has proposed measures to enhance economic policy coordination. ECB President [...]
Europe’s Federalism Debate Revived
This issue is of persistent concern for investors worldwide. Holders of European government bonds believed that they knew what they had bought. Sure, there was no such thing as a eurozone sovereign security. But German, French, Spanish, and even Greek bonds all carried roughly the same interest rate, so they were deemed equivalent. Investors now [...]
Leaving the Euro: What’s in the Box?
Rumours of Eurozone break-up are mounting. This column argues that exiting a strong currency for a weak one poses almost unthinkable challenges, from the redenomination of contracts and the imposition of bank restrictions to the restructuring of external debt and limiting of capital mobility. Lessons from Argentina illustrate just how radical the changes would need [...]
Double-Dip Days
The global economy, artificially boosted since the recession of 2008-2009 by massive monetary and fiscal stimulus and financial bailouts, is headed towards a sharp slowdown this year as the effect of these measures wanes. Worse yet, the fundamental excesses that fueled the crisis – too much debt and leverage in the private sector (households, banks [...]
A European Economic Government Could Solve Europe’s Democracy Deficit
Europe has come to praise democracy and is about to bury it. The Greek crisis, caused by the uncooperative behaviour of different nation states, has been a wake-up call showing that monetary union without an economic government will not work in the long run. Reforms are needed. Yet, because they widen the democratic deficit, the [...]
Competitiveness through Cuts?
A standard piece of textbook economics is that if a country cannot devalue, it must cut real wages to increase labour productivity and make its exports more attractive. Indeed, it is argued quite plausibly that the main reasons for Germany’s successful export performance in the past decade is that real wages have remained flat, despite [...]
Germany’s Europe Deficit
Germany used to be at the heart of European integration. Its statesmen used to assert that Germany had no independent foreign policy, only a European policy. After the fall of the Berlin Wall, its leaders realized that German reunification was possible only in the context of a united Europe, and they were willing to make [...]
Eurozone Governance: What went wrong and how to repair it
The crisis has revealed deep flaws in the Eurozone’s governance regime. This essay argues that EU leaders should address fundamental questions about the operational principles upon which the euro is based. Key choices for Eurozone leaders are the nature of the economic policy framework, the optimal degree of decentralisation, and the identification of reforms that [...]
Tough Challenges Ahead as Austerity Measures Hit Europe
As Europe struggles to get to grips with the global financial crisis, we are seeing governments apparently determined to outdo each other in the severity of their austerity packages. Next in line will be the new British government, which later this month will set out what promises to be very harsh measures for cutting the [...]
The End of Social Europe?
As a further round of economic crisis unfolds, many European social democrats seem frozen like a hare in a car’s headlights. They have nothing new to say about how to deal with fiscal deficits – except that the cuts must not occur all at once and that the most vulnerable must be shielded. Otherwise, economists [...]
Europe’s Keynesian Turn?
The Euro-crisis is transforming the continent radically. One of the consequences of the decisions taken by the European Council on May 9 could be the end of the conservative ordo-liberal German model of social market economy. The European Central Bank may become the best ally of Europe’s left. As part of the €750 bn. rescue [...]
