eurozone – Page 12 – Slugger O'Toole

Euro crisis: “Germany and France have to be of one opinion, otherwise Europe is sick”

Pete Baker on June 15, 2010, 2:56 pm

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German Chancellor Angela Merkel and French President Nicolas Sarkozy are presenting a united front in public, and pointing at a global bank levy. But, as the Irish Times reports, behind the scenes things are not well with the European leaders In an hurried show of unity, the two leaders penned a joint letter to the European Commission, urging it to speed up efforts to regulate EU financial markets. Ahead of yesterday’s meeting, French finance minister Christine Lagarde insisted that a new …

Euro crisis: Paradigm Lost

Pete Baker on June 11, 2010, 1:50 pm

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The BBC’s Europe editor, Gavin Hewitt, has been examining “an in-depth analysis of the crisis in the eurozone” by the Carnegie Endowment for International Peace – “Paradigm Lost – the Euro in Crisis”. From Gavin Hewitt’s blog So what’s to be done? According to the economists in the Carnegie report, the PIIGS will have to reduce their debts, which most are attempting to do with austerity packages. The debt-to-GDP ratio needs to be on a firm, downward path and to be …

Euro crisis: a “strong convergence of views”

Pete Baker on June 8, 2010, 1:20 pm

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The Irish Times’ Arthur Beesley reports that EU Finance Ministers “have resolved to submit draft budgets for the approval of their counterparts and the EU Commission before unveiling them in national parliaments.” European Council president Herman Van Rompuy, who chaired the meeting on economic governance, said there was a “strong convergence of views” on the measures required to strengthen how the EU polices and enforces budgetary rules. The meeting followed a separate gathering here of ministers whose countries share the …

Euro breakup : Why Morgan Stanley is wrong

Mack on May 28, 2010, 10:36 am

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A few months back Morgan Stanley analyst Joachim Fels produced a set of warning signs that would indicate the Eurozone was at increased risk of breakup. He’s back today with a new research note – To be clear, we neither advocate a EUR break-up nor is this our main scenario. However, the risk that it happens is far from negligible and the consequences for financial markets would be severe. Given recent developments, a break-up scenario has clearly become more likely, …

Euro crisis : Timelines

Mack on May 26, 2010, 10:07 pm

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October 2009 New Greek government elected. 5th November 2009 New Greek government ‘fess up. The budget deficit is 12.7% not 6%, as claimed by their predecessors! 20th November 2009 The European Central Bank tightened the rules for the collateral it accepts against loans, the new rules will come into force on March 1st 2010 December 2009 ECB says plans will not be delayed to help Greeks And Ratings agencies downgrade Greek debt And Greek Government begins undertaking first round of …

“everyone in Ireland is an economist now”

Pete Baker on May 26, 2010, 3:32 pm

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Mack referred in passing to the Guardian’s G2 feature on Ireland at the start of the crisis in the Eurozone, but it deserves a bigger mention. Here’s a key extract “There were very few of us in the boom who suggested what was going on was nonsense. If you’re against consensus in Ireland, the first phase is ridicule, then it’s violent opposition, and the third phase is universal truth – where everyone pretends they agreed with you all along,” [David] …

Euro crisis: “there is no unity at present in the euro zone about what needs to be done”

Pete Baker on May 22, 2010, 6:01 pm

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A couple of reports in the Irish Times to emphasise a point made recently by Tim Garton Ash. First up a quote from the German Chancellor, Angela Merkel. “We are at the start of this work and there is no unity at present in the euro zone about what needs to be done,” she said. “We have to stabilise things first, exchange views and at a later point say what needs to be done and how, and where we have …

Euro crisis: “Here endeth the lesson from the voice of calm.”

Pete Baker on May 21, 2010, 5:29 pm

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Even though the EU Finance Ministers meeting in Brussels didn’t have the details of that special vehicle for bailing out eurozone governments to sign off on, the BBC’s Stephanie Flanders still believes in “the voice of calm”. Me? I’m still sceptical. As Stephanomics admits In the end, these imbalances always come home to roost – the private-sector bubble that was causing them bursts, and one way or another the borrowing is shifted onto the public sector. And governments have to do …

Euro crisis : Euro as we know it is dead – plus – Stiglitz and Hendry head to head.

Mack on May 21, 2010, 12:50 pm

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Jeff Randall in the Telegraph proclaims the Euro as we know it to be dead, despite the valiant rearguard action currently being fought by Angela Merkel In one respect, Mrs Merkel is right: “The euro is in danger… if the euro fails, then Europe fails.” What she has not yet admitted publicly is that the main cause of the single currency’s peril appears beyond her control and therefore her impetuous response to its crisis of confidence is doomed to fail. …

Euro crisis: “The crisis of the eurozone has only just begun.”

Pete Baker on May 20, 2010, 3:28 pm

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I hope it wasn’t something I said… At the Guardian’s Comment is Free, Timothy Garton Ash feels “more depressed about the state of the European project than [he has] for decades.” The crisis of the eurozone has only just begun. The bond markets have not been convinced even by last week’s giant “shock and awe” bailout of Greece. The one thing that moved them was the European Central Bank’s readiness to start buying eurozone government bonds, but it still costs …

Euro crisis: “None of Europe’s leaders are yet spelling out the cultural revolution that is to come.”

Pete Baker on May 19, 2010, 6:35 pm

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I missed this at the time, but the BBC’s Europe editor Gavin Hewitt’s thoughts on “one of the fundamental dilemmas in political leadership” being faced by eurozone politicians caught in a manifestation of “the political trilemma of the world economy” are worth reading. Within the EU there is tension, and at its heart is the role of Germany. The Germans never wanted to join the euro if it meant it would have to bankroll the weaker countries. That is what has happened. …

Euro crisis: “We all know what to do, but we don’t know how to get re-elected once we have done it.”

Pete Baker on May 18, 2010, 7:19 pm

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In the Irish Times, Arthur Beesley identifies “one of the fundamental dilemmas in political leadership” being faced by eurozone politicians caught in a manifestation of “the political trilemma of the world economy” This presents a cocktail of nasty choices for EU leaders, many of whom seem more comfortable in the local arena than in the European amphitheatre. Previously, they were free to do as they pleased in a currency system that did not hold debt-addiction to be any great sin. Now, national …

Euro crisis: Wages in the periphery need to fall 20-30% relative to Germany.

Mack on May 18, 2010, 5:08 pm

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Paul Krugman isn’t pulling any punches on what restoring competitiveness within the Euro will mean for the peripheral countries. Neither does David McWilliams’ on Ireland’s future inside or out of a currency union with Germany.

Euro crisis: The shrinkage of politics?

Pete Baker on May 17, 2010, 9:16 pm

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Via a post by Crooked Timber’s Chris Bertram. Here’s a point worth considering from Dani Rodrik on the growing crisis in the Eurozone. Deep down, the crisis is yet another manifestation of what I call “the political trilemma of the world economy”: economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time. Democracy is compatible with national sovereignty only if we restrict globalization. If we push for globalization while retaining the nation-state, we …

Euro crisis: “decision to create a single currency in Europe was an eminently political decision.”

Pete Baker on May 15, 2010, 5:20 pm

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At the Cedar Lounge, WorldbyStorm has a lengthy post detailing his increasing scepticism as a pro-EU[ropean] over the EU Commission’s proposals to “co-ordinate fiscal policy in advance”. But more importantly to me, however pro-EU I am, as noted above I have to admit that I am becoming more and more dubious about the very notion of an EU polity that transcends national divisions. It seems to me that the distinctions between nations within the EU is so great as to …

EU Commission: “essential cornerstone of reinforced economic governance is to coordinate fiscal policy in advance”

Pete Baker on May 13, 2010, 3:22 pm

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The EU Commission’s proposals for in-advance peer-review of proposed national budgets has provoked a heated political reaction in the Dáil. As Miriam Lord wryly notes, the a vice-president of the European People’s Party, Fine Gael’s Enda Kenny is being accused of Euroscepticism. However Taoiseach Brian Cowen doesn’t seem as opposed to the proposals as, say, the Swedish Prime Minister, Fredrik Reinfeldt. In Germany, despite a difficult week, Chancellor Angela Merkel welcomed the proposals Chancellor Angela Merkel praised the EU’s attempts to crackdown on irresponsible spending, and said …

Stephanomics: “That is getting very close to a fiscal union…”

Pete Baker on May 12, 2010, 12:45 pm

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While our focus was on the Prime Ministerial negotiations, the European Commission was moving to shore up the eurozone – agreeing emergency measures worth €750billion ($975bn, £650bn). That’s on top of the earlier € 110billion three-year bail-out package to rescue Greece’s economy agreed with the IMF. Ireland’s contribution to that earlier plan, providing for bilateral loans up to € 1.312 billion from Ireland to Greece, is due to go before the Dáil next week. As, still everyone’s hero, Robert Peston warned …

Roubini: “In A Few Days Time, There Might Not Be A Eurozone For Us To Discuss”

Mack on April 28, 2010, 11:55 am

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Via Business Insider – Reuters blogger – Felix Salmon writes up a Nouriel Roubini panel on “The Eurozone: Still One for All and All for One?” Nouriel, of course, takes that kind of thinking to its logical conclusion, and kicked off the panel by announcing that it was just in time: “in a few days,” he said, “there might not be a eurozone for us to discuss.” There’s no way that Greece can implement the 10% spending cut it needs …

Greece hammered by the markets

Mack on April 28, 2010, 10:23 am

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Constantin Gurdgiev interprets the 2 year Greek bond yields – This is it, folks. No where else to run. Greek interest on public debt would swallow over 19 percent of their GDP annually! Ouch! FWIW, that is almost half what a normal country would take in tax revenues, being used to meet unproductive interest payments.. In The Telegraph Ambrose Evans-Pritchard argues that the ECB will have to intervene soon and begin purchasing sovereign government debt. The European Central Bank may …

Roubini sceptical on Eurozone debt

Mack on April 21, 2010, 2:08 pm

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Known as Doctor Doom because he correctly identified the imbalances that led to the credit crunch, Nouriel Roubini appears to be unimpressed with attempts to solve the emerging sovereign debt crisis in the Eurozone. Over at RGE monitor he warns – A Modern Greek Tragedy May Soon Turn Into a Broader PIIGS Disaster These issues within the eurozone stem primarily from a loss of competiveness, high wage growth and labor costs which outstripped productivity, undisciplined fiscal policies and, crucially, the …