debating progressive politics in Europe and beyond
It is generally agreed that the crisis of 2008-2009 was caused by excessive bank lending, and that the failure to recover adequately from it stems from banks’ refusal to lend, owing to their “broken” balance sheets. A typical story, much favored by followers of Friedrich von Hayek and the Austrian School of economics, goes like [...]
The European Commission presented their plan for a single EZ bank supervisor this weekend. While it is a good start, this column argues that it avoids the hard truth driving the process: the Eurozone needs a lender of last resort and the ECB is the only one that can play the role. Admitting this truth [...]
Last week the President of the European Central Bank (ECB), Mario Draghi, announced that the ECB would become the Eurozone’s lender of last resort by starting to purchase the sovereign bonds of the area’s stricken economies. Paul de Grauwe addresses two major criticisms of the plan, saying that while this intervention was absolutely necessary, it alone is [...]
The ECB has now committed to purchasing unlimited amounts of sovereign debt from Southern Europe. The structure of conditionality proposed by the ECB in return for this new entitlement to unlimited borrowing is, however, unusual. While the ECB will provide the funds that underpin continued membership of the Euro by Southern Europe, the ECB itself [...]
Government bond markets in Europe remain volatile, with Spanish and Italian bond rates at near unsustainable levels. Paul De Grauwe argues that the only institution that can stabilize these markets by buying government bonds is the European Central Bank (ECB). The ECB must now overcome its risk averse nature and take advantage of its virtually infinite resources [...]
Since December 2011 the European Central Bank (ECB) has pumped two waves of extra liquidity into the European banking system, in an effort to keep it afloat – and persuade backs to invest in sovereign debt. Yet Paul De Grauwe argues that these banks are still wracked with uncertainty, which may lead to further sell-offs of this [...]
The end seems nay. Banks and businesses are setting up contingency plans for the break up of the euro. After the euro, the single market and in time the European Union will follow. Depression, unemployment, mass poverty and social unrest will sweep over Europe. Merkozy have now produced the nth exit plan for the crisis. [...]
The euro has a matter of weeks to save itself, with several institutions now preparing for its collapse. Given this, why does the ECB still refuse to bail out Europe’s heavily indebted countries? This column provides an explanation. It says that the ECB may well be behaving rationally but adds that such behaviour is also [...]
The UK is learning that contractionary fiscal policy is contractionary. A new study United Kingdom Outlook Update – Getting Dimmer – September 19 2011 by Roubini Global Economics shows the UK economy remaining depressed throughout the remainder of this and the coming year. It has downgraded its forecasts for real GDP growth to just 1.1% [...]
With the Eurozone crisis casting doubt over the solvency of Spain and Italy, the ECB has once again intervened to provide liquidity in the government bond markets. This column asks the question: Is there such a role for the ECB as a lender of last resort? In October 2008 the ECB discovered that there is [...]
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