The developed world seems to be moving toward a long-term zero-interest-rate environment. Though the United States, the United Kingdom, Japan, and the eurozone have kept central-bank policy rates at zero for several years already, the perception that this was a temporary aberration meant that medium- to long-term rates remained substantial. But this may be changing, especially […]
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The Eurozone’s False Recovery
At first glance, the eurozone economy seems like it might finally be on the mend. Stock markets are rallying. Consumer confidence has picked up. Lower oil prices, a cheaper euro, and quantitative easing by the European Central Bank are all expected to boost growth. ECB President Mario Draghi claims that “a sustained recovery is taking hold,” while […]
Excessive Austerity Not A Lack Of Structural Reform Is Holding Back Investment In Greece
A while ago I participated in a TV debate on Greece (German speakers can follow this link). One of the points of contention was whether investment in Greece has been structurally weak, hampered by overregulation or corruption – in short: it’s the supply side, stupid – or whether the country’s economic problems are primarily derived […]
The Eurozone Has Become A Glorified Debtors’ Prison
With no lasting solution yet found for dealing with Greek debt, and economies in the Eurozone continuing to suffer from weak growth, how can Europe finally solve the problems brought on by the financial crisis? In an interview with EUROPP’s editor Stuart Brown, Philippe Legrain discusses the policy failures at the root of the crisis, the need […]
European Economic Governance And Flawed Analysis
Getting Stupid Capital Flows Off The Hook The analytical note on the next steps for better economic governance that was published mid- February during the informal European Council reopens the discussion on how to obtain a strict coordination of national economic policy making in the Euro Area. Or, to put it more bluntly, how to […]
The Tale Of Lazy Greeks
Angela Merkel proclaimed at an early stage that the Greeks could not retire earlier and have longer holidays than the Germans. Der Spiegel’s interpretation was: “We aren’t going to give our hard-earned German money to lazy southern Europeans.” Sweden’s Minister of Finance, Anders Borg, echoed this whilst on the way to an EU meeting: “Obviously, Swedes […]
Eurozone Fiscal Policy – Still Not Getting It
The impact of fiscal austerity on the Eurozone as a whole has been immense. In my recent Vox piece, I did a back of the envelope calculation which said that GDP in 2013 might be around 4% lower as a result of cuts in government consumption and investment alone. This seemed to accord with some model […]
This is Recovery? Germany, ‘Powerhouse’ In Need Of A Jump-Start
The German government has been a strong supporter of austerity programmes, arguing that the associated goals of deficit and debt reduction provide the best, if not the only, route to economic recovery in Europe. Some writers reach back to the hyper-inflation of the 1920s to explain this faith in the virtues of belt-tightening. Recent release […]
The Varoufakis vs Schäuble Endgame
As many analysts and observers previously predicted (myself included on Social Europe), the eurozone crisis not only is not over, as some European leaders had boasted, but it has returned in a more virulent form. The possibility of a Greek exit – Grexit – from the eurozone is closer than ever. The current standoff between Greece […]
Reforming Greek Reform
Greece’s new government, led by the anti-austerity Syriza party, presents the eurozone with a challenge that it has not yet had to face: dealing with national officials who are outside the traditional European mainstream. Syriza is in many ways a radical party, and its views on economic policy are often described as hard left; but […]
Has Barack Obama Prevented Grexit?
Will Greece default and leave the euro? On this compound-question market opinion has swung back and forth, particularly since last Wednesday’s announcement by the ECB that it would no longer accept Greek Central Bank Bonds as collateral for regular funding replenishments (although the ECB’s more expensive ELA funding window remains open). This was the ‘nuclear […]
The ECB Has Shaken The Eurozone’s Utopian Foundations
The 4th February late-night decision by the European Central Bank to reject Greek bank collateral for monetary policy operations will, I confidently predict, precipitate not just a run on Greek banks; not just greater price instability across the Eurozone – but ultimately, the collapse of the fantastic machinery that is the ‘self-regulating’ economy of the […]
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