The euro crisis: An ever-deeper democratic deficit. The Worst and the Best of Austerity - Jean Pisani-Ferry. Exit from comment view mode. Click to hide this space BRUSSELS – In June, it was Greece. In August, it was France, Italy, Spain, and Portugal. In September, it was Greece again – and Spain. In November, France took another turn, before Italy again in December, this time in a major way. In other words, while all indicators point to a severe economic downturn in Europe, the eurozone’s current interest-rate spreads are provoking a shift to austerity.
First, while indiscriminate austerity may be the only option for those eurozone countries that no longer have access to capital markets, others have more choice of policy options. Second, a sound fiscal strategy requires establishing, on the basis of prudent economic assumptions, an ambitious budgetary target for the medium term, determining what mix of taxation and expenditure cuts are required in order to achieve it, and then sticking to the plan throughout economic fluctuations.
Governments know this only too well. Restoring European Growth - Jim Leitner, Nuno Monteiro and Ian Shapiro. Exit from comment view mode. Click to hide this space NEW YORK – Europe’s sovereign-debt crisis has rumbled on for so long that some people are beginning to take it for granted that eurozone leaders can continue to stumble from one non-solution to the next without risk of cataclysm.
But if any troubled southern European economy fails to roll over its debt in the coming months, the resulting contagion will spread quickly from the eurozone throughout the global financial system, with consequences far more grave than what followed Lehman Brothers’ collapse in September 2008. Despite the new agreement reached at the European Union’s summit in December, strengthening financial markets’ confidence in the eurozone remains an elusive goal.
Hollande was right. Since the crisis began, the need for economic growth in Europe’s debt-distressed countries has been portrayed as their problem. Merkel’s strategy ignores a second link between Germany and the eurozone’s highly indebted countries. Stephen King: A thousand years on,an updated Silk Road will bypass the West - Stephen King - Business Comment. Yet, over the last few days, there was a surprising lack of big picture thinking. Inevitably, there was a lot of talk about the euro. Many discussed the progress made already towards an eventual resolution – the bailout fund, the austerity commitments, the European Central Bank's recent actions in the money markets – but there was a strong sense that more work had to be done. Then again, no one needed to go to the top of a mountain to reach that particular conclusion.
There was growing confidence in the US economic outlook. The same, however, was true a year ago, yet the nascent recovery at that time quickly turned to seed. No one seemed willing to explain how the US was going to get to grips with its rapidly deteriorating fiscal position: it is, after all, in a worse budgetary position than Spain. As is typically the case with Davos, soundbites trumped careful analysis. There was something missing.
State capitalism is, in many ways, a throwback to the capitalism of empire. Capturing the ECB - Joseph E. Stiglitz. Exit from comment view mode. Click to hide this space NEW YORK – Nothing illustrates better the political crosscurrents, special interests, and shortsighted economics now at play in Europe than the debate over the restructuring of Greece’s sovereign debt. Germany insists on a deep restructuring – at least a 50% “haircut” for bondholders – whereas the European Central Bank insists that any debt restructuring must be voluntary. In the old days – think of the 1980’s Latin American debt crisis – one could get creditors, mostly large banks, in a small room, and hammer out a deal, aided by some cajoling, or even arm-twisting, by governments and regulators eager for things to go smoothly.
But, with the advent of debt securitization, creditors have become far more numerous, and include hedge funds and other investors over whom regulators and governments have little sway. The ECB’s stance is peculiar. The final oddity of the ECB’s stance concerns democratic governance. The Road to Serfdom. A Financial Coup d'etat in the Making? Habermas, the Last European: A Philosopher's Mission to Save the EU - SPIEGEL ONLINE - News - International. Jürgen Habermas is angry. He's really angry. He is nothing short of furious -- because he takes it all personally. He leans forward. He leans backward. He arranges his fidgety hands to illustrate his tirades before allowing them to fall back to his lap. He bangs on the table and yells: "Enough already! " He simply has no desire to see Europe consigned to the dustbin of world history. "I'm speaking here as a citizen," he says.
Enough already! Jürgen Habermas, 82, wants to get the word out. Usually he says clever things like: "In this crisis, functional and systematic imperatives collide" -- referring to sovereign debts and the pressure of the markets. Sometimes he shakes his head in consternation and says: "It's simply unacceptable, simply unacceptable" -- referring to the EU diktat and Greece's loss of national sovereignty. 'No Convictions' And then he's really angry again: "I condemn the political parties.
Habermas wants to get his message out. A Quiet Coup d'État A Rare Phenomenon. Austerity and the End of the European Model. A May Day demonstration in central Madrid. (Susana Vera / Courtesy Reuters) Since the onset of the European sovereign debt crisis in 2010, countries across the continent have responded by imposing fiscal austerity. From Greece to Ireland, governments have cut spending by double digits. Spain, which is in the midst of a recession and has an unemployment rate nearing 25 percent, slashed its budget by eight percent and plans to shrink its deficit by an additional 27 billion euros this year. Even Germany, whose economy is considered the healthiest in Europe, has pledged to eliminate 80 billion euros in spending by 2014.
These national austerity policies will be reinforced across the continent by the EU fiscal compact, a treaty slated to go into effect next year that will require European countries to maintain balanced budgets. It is unclear if these efforts will quell market contagion or stabilize European economies in the short term. "The Crises of Summer" by Harold James. Exit from comment view mode. Click to hide this space PRINCETON – Europe’s crisis is now poised at the moment that divides recovery and renewal from decline and death.
Whereas a few weeks ago, commentators and financial analysts argued that only a few months remained to rescue Europe, leading politicians, lurching from summit to summit, have recently talked in terms of days. Summer crises are a familiar feature of European history – and of financial history. Indeed, the twentieth century was shaped by three summer crises, whose seriousness was heightened in each case by the absence of major policymakers, who were on vacation. In two years, Europeans will commemorate the centennial of the assassination of Archduke Franz Ferdinand on June 28, 1914, and the subsequent “July crisis” that triggered World War I that August. Each of these crises involved a highly technical issue, but also a much broader set of political problems.
Consider the European crises that produced good outcomes. "A European New Deal" by Daniel Halberstam and Miguel P. Maduro. Exit from comment view mode. Click to hide this space FLORENCE/ANN ARBOR – The eurozone has reached a crossroads. European policy prescriptions have proven inadequate, and there is no consensus on the right balance of fiscal consolidation and economic stimulus – or on how much fiscal solidarity a functioning monetary union requires. Disagreement over Eurobonds exemplifies the European Union’s current dilemma. Overstretched sovereign borrowers on the eurozone periphery argue that issuing government securities backed by all eurozone countries is the only way out of their “debt trap.”
But, without common economic governance, northern Europeans contend, mutualization of debt would encourage free-riding by debtor countries. In fact, both sides are right. But, even if fiscal discipline is achieved, it will not be enough to fortify the monetary union. German Chancellor Angela Merkel is correct that “more Europe, not less” is the only solution.