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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.
Austerity and the End of the European Model
I've been doing some work on gaining a better understanding of the root causes of eurozone (EZ) debt crisis. As a point of departure, let's take a couple of dueling quotes. First, Wolfgang Schäuble, Germany’s finance minister, from his recent piece in the Financial Times : Whatever role the markets have played in catalysing the sovereign debt crisis, it is an undisputable fact that excessive state spending has led to unsustainable levels of debt and deficits that now threaten our economic welfare.
What Really Caused the Eurozone Crisis? (Part 1)
Germany: between and rock and a hard place | Prospect Magazine
The eurozone's strongest economy—but is it strong enough to save the rest? Greece and the other countries in the troubled “PIGS” quartet—Portugal, Ireland and Spain—have been the focus of recent debate about the eurozone’s survival. It was, after all, the relative weakness of their economies that exposed the eurozone’s limitations. But the future of Europe will be determined by Germany, not the PIGS.
By Simon Johnson The news from Europe, particularly from within the eurozone, seems all bad. Interest rates on Italian government debt continue to rise. Attempts to put together a “rescue package” at the pan-European level repeatedly fall behind events. And the lack of leadership from Germany and France is palpable – where is the vision or the clarity of thought we would have had from Charles de Gaulle or Konrad Adenauer?
Is Europe On The Verge Of Another Great Depression – Or A Great Inflation? « The Baseline Scenario
The repeated waves of fresh crisis and temporary hope in Europe are starting to look a lot like the Hokey Pokey. Last week, Italy briefly put its right foot in. Then, thanks to purchases of Italian debt by the European Central Bank, it put its right foot out. Meanwhile, everyone is calling on Germany to turn itself around, and Greece is still just shaking all about.
Hussman Funds - Weekly Market Comment: Hokey Pokey - November 14, 2011
Creditors can huff but they need debtors - FT.com
It's quick, easy and you'll be able to read up to 8 articles per 30 days. Plus you can use these tools: News by Email Get the latest headlines and industry sector-specific briefings direct to your inbox.Just Another Goldman Sachs Take Over » Counterpunch: Tells the Facts, Names the Names
On November 25, two days after a failed German government bond auction in which Germany was unable to sell 35 per cent of its offerings of 10-year bonds, the German finance minister, Wolfgang Schaeuble said that Germany might retreat from its demands that the private banks that hold the troubled sovereign debt from Greece, Italy, and Spain must accept part of the cost of their bailout by writing off some of the debt. The private banks want to avoid any losses, either by forcing the Greek, Italian, and Spanish governments to make good on the bonds by imposing extreme austerity on their citizens, or by having the European Central Bank print euros with which to buy the sovereign debt from the private banks. Printing money to make good on debt is contrary to the ECB’s charter and especially frightens Germans, because of the Weimar experience with hyperinflation. Obviously, the German government got the message from the orchestrated failed bond auction.
Last week we wrote a lot about what's rapidly becoming the hottest question in Europe: Did the ECB pull off a backdoor bailout of the various governments by making it super-cheap for banks to borrow money, with which they can then turn around and buy sovereign debt at juicy yields? Some people think a corner has turned. Economist Tyler Cowen wrote a post on this headlined: It is finally being recognized that the eurozone made a major policy breakthrough.
Why The European Debt Crisis Might Actually Be Over...
The fall of Eurozone's countries 2-year bonds has been spectacular after the last European summit. by Dec 18
Eurozone Crisis / European Sovereign Debt