The Greek Stand-off: A Proper Sense Of Perspective Is Urgently Needed

Andrew Watt

Media reports indicate that the stand-off between the new Greek government and its creditors is going to the wire. At stake is Greece’s continued membership of the euro area. Much has been written on the lack of progress and understanding between the two sides. In many cases reports are based on little more than gossip, […]

Dramatic News On QE – ECB Takes Steps To Fulfil Its Price Stability Mandate

Andrew Watt

Speculation in the media had been building for weeks concerning the adoption of quantitative easing – the purchase of sovereign bonds or other financial securities using central bank money – by the European Central Bank. In the run-up to today’s decision, commentators and policymakers had been reaching for the superlatives. Unprecedented action. Opening the monetary […]

The Euro Area – Back To Open Crisis In 2015?

Andrew Watt

With the government having failed to gain the necessary support for its presidential candidate, Greece will hold new elections on the 25th January 2015. Syriza, the leftist umbrella party led by Alexis Tsipras, will very probably emerge as the largest party, although it is not clear whether it will be able to form a government. […]

Yesterday’s Rubbish: Or Why Is A Minimum Wage Different From Free Trade?

Andrew Watt

Germany’s first post-war Chancellor Konrad Adenauer is usually held to be the origin of an often-quoted phrase „Was kümmert mich mein Geschwätz von gestern?“. Roughly: why should I be concerned about the rubbish I talked yesterday? Whatever the rights and wrongs of this attribution, the phrase – used to draw attention to someone who places […]

The ECB’s Problem Is Not Arithmetic But Politics

Andrew Watt

Francesco Papadia, a distinguished monetary policy expert, has written an unfortunately potentially misleading piece on quantitative easing (QE) by the ECB. Entitled Some unpleasant Quantitative Easing Arithmetic, the author argues, in essence, that “arithmetics” militate against the use of QE because of the following three facts: the sums needed are large, the only asset classes that […]

Hope For The Best Prepare For The Worst: The European Economy Spring 2014

Andrew Watt

The main message for European policymakers from the IMK economic forecast last week – available in German here – is that while there are strong grounds to hope for the best, concrete steps need to be taken to avoid the worst. Let us start with the good news and then ponder the risks, before recommending […]

The core problem of the ECB’s dangerous asymmetry

Andrew Watt

The ECB has once again failed to take action to boost the European economy, either by cutting rates (from their already very low level of 0.25%) or, more effectively, by adopting one or more direct measures to inject liquidity into the economy. This is despite the fact that inflation, at 0.8%, is well below target […]

Karlsruhe’s Campaign Against European Integration Continues

Andrew Watt

Update: For a little EP-electoral maths, see the added last 2 paragraphs Karlsruhe does it again. After sawing away at the main prop that is keeping the euro area together, it has now decided – once again on a narrow majority – that what is good enough for the German Parliament is too good for […]