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Just a few months ago I was feeling some hope about Europe. You may recall that late last fall Europe appeared to be on the verge of financial meltdown; but the European Central Bank, Europe’s counterpart to the Fed, came to the Continent’s rescue. It offered Europe’s banks open-ended credit lines as long as they put up the bonds of European governments as collateral; this directly supported the banks and indirectly supported the governments, and put an end to the panic. The question then was whether this brave and effective action would be the start of a broader rethink, whether European leaders would use the breathing space the bank had created to reconsider the policies that brought matters to a head in the first place. But they didn’t. Instead, they doubled down on their failed policies and ideas.
Europe’s Economic Suicide - NYTimes.com
BBC News - Viewpoint: Greece should default and abandon the euro
Jeffrey Miron argues that a default imposes the losses on those who profited in the good times Jeffrey Miron, senior lecturer in economics at Harvard University, believes that the consequences of a Greek default are overstated. Not only would a default be better for Athens, it would have benefits for Europe too, he argues. The Greek parliament has adopted new austerity measures - civil service layoffs, higher taxes, and reduced bargaining rights for unions - in the hope of generating further bailouts from the European Union. The Greek populace responded with violent protests and strikes. It remains to be seen how the European Union will respond.
Papandreou announced on Monday that he would put a hard-fought rescue deal to a referendum I say "while it lasts" because the opposition is mobilising a parliamentary manoeuvre to bring down the government, which may succeed - returning Europe to its status quo of containable trauma. If Greeks reject the 50% controlled default on the debts they owe to the banking sector, then the arithmetic I revealed on Newsnight on the eve of the Euro summit comes into play - without a 50% haircut, and a further 130bn euro bailout, on top of 110bn, Greek debt spirals out of control and the country goes bust.
BBC News - Greek referendum is coin-flip on euro exit
Before the modern Greek state assumed its present day contours in the aftermath of the first world war, communities in the trading cities of Alexandria, Odessa, Salonika, Smyrna, and Trieste, already had a long history of running their own school systems, hospitals, and orphanages. This was partly a legacy of Ottoman rule. With the exception of political stability, the Ottomans were not in the habit of providing public goods so, when it came to public health and economic development, citizens had to fend for themselves.
The Origins of the Greek Financial Crisis | Foreign Affairs
3 November 2011 Last updated at 15:13 GMT Mark the date: 3 November 2011. In Oakland, California, protesters - including workers - have blocked the operation of a major US port; in New York, one of the world's top stockbrokers is bust; in Europe the Greek government is on the brink of collapse, the Italian government in disarray and speculators are short-selling French sovereign debt in the expectation of a domino effect. In Cannes, amid torrential rain, many of the leaders have adopted the Gallic shrug: what can you do?
BBC News - Il Pleut. Greece has poured vinegar on the G20's frites.
Commentary: Greece's Default Dilemma | The National Interest
In the January 18, 2002, issue of the Spanish newspaper El Pais , Anne Krueger, then the first deputy managing director at the IMF, pointed out that more than ninety sovereign defaults had occurred over the last two centuries. She added that “defaults are always painful . . . but when a country’s debts become truly unsustainable, it is in everyone’s interest that the problem [be] addressed promptly and in an orderly way.” Inevitably, given Greece’s inability to service its sovereign debt, increasing numbers of observers are asking whether its debts have become “truly unsustainable” and, if so, whether the problem should be addressed under terms of what Krueger called “in an orderly way”—meaning default. Some have pointed to Argentina’s default on its loans in 2001 and the result—no particularly high price for not honoring its debts. If Argentina could do it, goes the refrain, why not Greece?
The Greek Haircut and Europe's Shared Responsibility | Foreign Affairs
Snapshot The national election turned over Spain's government, but the remedy on the way -- fiscal austerity as pushed by Berlin and the European Central Bank -- will only make Madrid's problems worse. Cutting will not save the euro. Since the outbreak of the financial crisis in 2008, the German government has been fixated on the dangers of moral hazard: Berlin has resisted calls to foot the bill for the reckless spending of its profligate counterparts in Athens, Rome, and elsewhere. However sensible it might sound, this outlook has fed the German public’s opposition to bailouts of weaker EU countries, precluded a robust European response to the crisis, and fanned bond market contagion. Just look at the collapse of Italy’s government over the weekend.
Exit from comment view mode. Click to hide this space Comments View/Create comment on this paragraph BERKELEY – Via a circuitous Internet chain – Paul Krugman of Princeton University quoting Mark Thoma of the University of Oregon reading the Journal of Economic Perspectives – I got a copy of an article written by Emmanuel Saez, whose office is 50 feet from mine, on the same corridor, and the Nobel laureate economist Peter Diamond.
The 70% Solution - J. Bradford DeLong - Project Syndicate
To Euro! | Greek Economists for Reform.com
The article below, written by Yannis Ioannides and Chris Pissarides, is part of the ongoing discussion on this blog about the costs and benefits for Greece to continue being part of the Eurozone. The authors argue that Greece has a strong interest to stay in the Euro. There have been calls recently for Greece’s (and probably some other countries’) exit from the euro. High profile among these is one by Nouriel Rοubini, and one from our friend Costas Azariadis. If Greece were outside the euro, the argument goes, it would have a powerful tool in its ineffective arsenal, the exchange rate.
Snapshot The euro crisis is not a simple story of Greek sinners and German saints. In fact, imposing austerity on the eurozone's periphery alone will accomplish little.
Spain's Election is Set to Worsen the Crisis in Europe | Foreign Affairs
In the past 30 years, the UK's manufacturing sector has shrunk by two-thirds, the greatest de-industrialisation of any major nation. It was done in the name of economic modernisation – but what has replaced it? Before moving to Yale and becoming a bestselling historian, Paul Kennedy grew up on Tyneside in the 50s and 60s. "A world of great noise and much dirt," is how he remembers it, where the chief industry was building ships and his father and uncles were boilermakers in Wallsend.
Why doesn't Britain make things any more? | Business | The Guardian
BBC News - 29/11 2011 - A turning point in British history
30 November 2011 Last updated at 12:38 GMT Yesterday will be seen as a landmark in British economic history, and in British politics. It will relegate George Osborne's emergency budget of June 2010 to a footnote and elevate Robert Chote's happy-go-lucky assessment of our economic prospects in November 2010 to the status of a case study in predictive failure. Because yesterday's Autumn Statement will set the political tone of the decade: it will tie the hands of future governments; and it has already brought a philosophical debate on the British right to an abrupt end. Within six hours of their tight-lipped ordeal on the government benches, Lib Dem MPs heard Danny Alexander pledge them to go into the 2015 election fully committed to £30bn more austerity than they signed up for in the Coalition Agreement. "You've bagged a tiger there," a stunned editor of the FT told my stunned colleague Jeremy Paxman.London vs. the Eurozone - Howard Davies - Project Syndicate
Exit from comment view mode. Click to hide this space LONDON – Ever since the United Kingdom joined the European Economic Community in 1973, after the French withdrew Charles de Gaulle’s veto of its membership, Britain’s relationship with the European integration process has been strained.The Euro in a Shrinking Zone - Robert Skidelsky - Project Syndicate
Exit from comment view mode. Click to hide this space LONDON – The recent European Union summit was a disaster.With the euro zone on the brink of breaking up, it is easy to overlook events across the English Channel, but what is happening to the U.K. arguably has more important lessons for the U.S. In continental Europe, we are witnessing the crisis of a poorly designed monetary system that is very different from our own. In the U.K., we are seeing the results of monumental policy blunders that could well be repeated here if Republican budget hawks seize power next November. During the past eighteen months, a callow and arrogant Chancellor of the Exchequer, empowered by a hands-off Prime Minister and backed by the bulk of the country’s financial and media establishment, has needlessly brought Britain to the brink of another recession by embracing draconian spending cuts that hark back to the early nineteen-thirties.