The Greek drama has entered its endgame. The Greek government has to repay loans to the IMF and other public institutions in the near future but does not have the cash to do so. The lenders refuse to come forward in providing liquidity as long as the Greek government does not accept the conditions they […]
The Greek debt crisis that erupted in 2010 is back and again threatens the stability of the Eurozone. That crisis was the result of two factors. First, an unbridled spending drift of both the private and the public sectors in Greece during the boom years of 2000-2010, which led to unsustainable levels of debt. Second, […]
Slow growth in the Eurozone has become endemic since the start of the sovereign debt crisis in 2010. This is made very clear in Figure 1, which contrasts the growth experience of the Eurozone with the non-Eurozone EU-member countries since the start of the financial crisis in 2007. What is striking is that up to […]
Despite having a positive effect on the economic situation within the Eurozone, the European Central Bank’s Outright Monetary Transactions (OMT) program has proved controversial, with the German Constitutional Court in Karlsruhe recently deeming it illegal under EU law. Paul De Grauwe argues that the ruling reflects a serious misunderstanding of central banking on the part of the […]
Since the 1970’s, economists have warned that a monetary union could not be sustained without a fiscal union. But the eurozone’s leaders have not heeded their advice – and the consequences are becoming increasingly apparent. Europe now faces a difficult choice: either fix this fundamental design flaw and move toward fiscal union, or abandon the […]
This month the eurozone returned to recession, three years after it emerged from the deep recession of 2008-09. Paul De Grauwe argues that the current situation has been produced by policy failures at the beginning of the crisis. The best initial policy would have been for the eurozone’s creditor countries to increase spending, while the struggling periphery […]
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 […]
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 […]
This was the nth summit meeting of European leaders billed as finally solving the Eurozone crisis. Yet there were a number of important and useful decisions taken at last week’s summit: A new banking union with a European supervisor that has some teeth; and the possibility of organising recapitalisations of banks at the European level. These […]
The seeds of the current crisis were sown nearly twenty years ago when European leaders agreed to create a currency without a country. Now, the Eurozone is split in two, with the creditor countries of the north able to borrow at next to zero interest rates, and those of the south facing massive deficits and […]
Professor Paul De Grauwe, London School of Economics and Political Science, discusses the European growth agenda with Social Europe Journal. This interview is part of the European growth strategy expert sourcing jointly organised by Social Europe Journal, the Friedrich-Ebert-Stiftung, the Bertelsmann Stiftung, the IMK of the Hans Boeckler Stiftung and the European Trade Union Institute (ETUI).
Professor Paul De Grauwe, London School of Economics and Political Science, discusses the Eurozone crisis and austerity with Social Europe Journal.