VoteWatch Europe: European Parliament, Council of the EU. Europäischer Stabilitätspakt (ESM) ist Machtergreifung der EU-Diktatoren.f4v. Europe’s Economic Suicide. 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. And it’s getting harder and harder to believe that anything will get them to change course. Consider the state of affairs in , which is now the epicenter of the crisis. "In Europe We Distrust" by Ana Palacio. Exit from comment view mode. Click to hide this space MADRID – For decades, critics of the European Union have spoken about a democratic deficit. I never accepted that reproach of the EU and its institutions, but I do see a new and dangerous deficit within the Union – a trust deficit, both among governments, and among the citizens of various member countries.
Indeed, if today’s euro banknotes included a motto, as dollars do, it could well be, “In Europe We Distrust.” This lack of trust has brought the eurozone to the cusp of implosion, and is calling into question the very future of European unity. But few official pronouncements, let alone policies, are addressing Europe’s deficit of trust and credibility. Indeed, a dangerous emotional discourse has emerged, reflecting – and feeding – the worst stereotypes of the “lazy South” and the “despotic North.” But restoring trust and credibility requires more than southern discipline. And yet Europe is facing a calamity. Viewpoint: Greece should default and abandon the euro.
26 October 2011Last updated at 00:06 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. If Greece defaults, the country gets immediate relief from the crushing interest payments on its debt, leaving it with a relatively modest primary deficit which excludes the big interest payments Greece is faced with now. In such a scenario, the pressure for austerity would therefore diminish.
“Start Quote. Greek referendum is coin-flip on euro exit. 1 November 2011Last updated at 12:48 The Greek referendum call is, while it lasts, effectively a plebiscite on euro membership. 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.
At this point, the value of the debt falls to maybe 10% of its face value and Greece has broken all the rules of euro membership. But events are moving fast. What caused Mr Papandreou's sudden move? Another potential reason is capital flight. The Origins of the Greek Financial Crisis. 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. That system worked. Through local and communal organization, by the mid to late nineteenth century, the Greeks were one of the most prosperous and dynamic groups in Southeast Europe. Once the Greek state was fully formed, however, a central administrative structure took over communal institutions.
So, as the Greek state expanded territorially it also expanded its responsibilities, undercutting old traditions of localism and community action. Don't have an account? Il Pleut. Greece has poured vinegar on the G20's frites. 3 November 2011Last updated at 15:13 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? They had come to work on the fine points of a tactical adjustment to the crumbling world order - but instead, as one markets contact put it to me - all the stories on the news are merging into one big story.
Here is the big story: there is a crisis of globalisation. You can see it in the gait of the politicians and their officials as they march through the deserted secure zone between the big hotels: the only confident body language comes from people with money. Greece's Default Dilemma. 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? Argentina did not seem to suffer much from the experience, at least over the medium run. The Greek Haircut and Europe's Shared Responsibility. 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. German Chancellor Angela Merkel sorely needs a new agenda, one that allows her both to satisfy the demands of her reluctant electorate and salvage the eurozone by containing the sovereign debt crisis. The recent “Greek haircut,” in which eurozone officials brokered a deal to cut bondholder claims on Greek debt as part of a bailout package, offers just such an opportunity to shift the political climate. To continue reading, please log in. Don't have an account?
Register. The 70% Solution - J. Bradford DeLong. Exit from comment view mode. Click to hide this space 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.
Saez and Diamond argue that the right marginal tax rate for North Atlantic societies to impose on their richest citizens is 70%. It is an arresting assertion, given the tax-cut mania that has prevailed in these societies for the past 30 years, but Diamond and Saez’s logic is clear. The unavoidable implication of this argument is that when we calculate what the tax rate for the superrich will be, we should not consider the effect of changing their tax rate on their happiness, for we know that it is zero. The utilitarian economic logic is clear. The first reason applies to the idle rich. 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. A shorter version of this article in Greek was published by Kathimerini, November 27, 2011. The full article of Yannis Ioannides and Chris Pissarides 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. Our main disagreement is with the vision that such writings have of Europe’s single currency. Britain remained outside the euro and it is likely to continue outside, but its prime minister understands well this role of the Eurozone. Spain's Election is Set to Worsen the Crisis in Europe. For Europe, it turns out that November is the cruelest month: The debt crisis will claim at least three eurozone governments before it is over.
Yet, unlike in Greece, where Prime Minister George Papandreou resigned last week, and in Italy, where Prime Minister Silvio Berlusconi stepped down over the weekend, the political crisis upending Spain is toppling the government in slow motion. Facing dwindling public support, an unemployment rate of more than 20 percent, and the increasing cost of Spanish debt, the country's Socialist Prime Minister José Luis Rodríguez Zapatero threw in the towel last July and called for early elections to be held on November 20, four months ahead of schedule.
By all accounts, the election is expected to be a landslide. The current deputy prime minister of the Spanish Socialist Workers' Party (PSOE), Alfredo Pérez Rubalcaba, will face the seemingly perennial candidate of the conservative Popular Party (PP), Mariano Rajoy. To continue reading, please log in. Why doesn't Britain make things any more? | Business. 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. Last year the academic gave a lecture that reminisced a little about those days. "There was a deep satisfaction about making things," he said.
"A deep satisfaction among all of those that had supplied the services, whether it was the local bankers with credit; whether it was the local design firms. Wandering around Wallsend a couple of weeks ago, I didn't spot any ships being launched, or even built. You still find industrial estates, of course, and they look the part: overalled men milling about, passing lorries. The biggest unit on one estate is a dry cleaner; on another, a warehouse for loft insulation dwarfs all else. At his firm, Pearson Engineering, Clark introduces me to a plater called Billy Day. 29/11 2011 - A turning point in British history. 30 November 2011Last updated at 12:38 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. And there are more tigers and more stunning events to come. First, to recap the main points. London vs. the Eurozone - Howard Davies. 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 British are reluctant Europeans, for historical and cultural reasons. For centuries, British foreign policy strove to avoid permanent European entanglements; but, most importantly, it aimed to prevent a single continental power from achieving dominance – especially if that power happened to be France. In recent years, having opted-out of the single currency and the Schengen area (which allows Europeans to cross borders without passports), the UK has distanced itself from important EU initiatives. These points are not entirely insignificant, but I would not care to explain them to a meeting of ordinary voters puzzled about Britain’s new European policy. The explanation is partly political. The Euro in a Shrinking Zone - Robert Skidelsky. Exit from comment view mode. Click to hide this space LONDON – The recent European Union summit was a disaster. Both Britain and Germany played the wrong game: British Prime Minister David Cameron isolated Britain from Europe, while German Chancellor Angela Merkel isolated the eurozone from reality.
Had Cameron brought an economic-growth agenda to the summit, he would have been fighting for something real, and would not have lacked allies. As it was, he fully accepted Merkel’s austerity agenda – which his own government is implementing independently – and chose to veto proposals for a new European treaty to protect the City of London. The agreement reached in Brussels forecloses any possibility of Keynesian demand management to fight recession. This is the wrong cure for the eurozone crisis. But Merkel’s analysis is utterly wrong. More immediately important is the failure of the proposed “fiscal union” to do anything for European recovery. So, will the single currency survive?
Rational Irrationality: The Message from Britain: A Failed Experiment in Austerity Policies. European Union website, the official EU website. Front Page | vox. The End of Berlusconi and the Future of Italy. Technocrats: Minds like machines. Can Italy Be Saved? - Michael Spence. How Italy's Democracy Leads to Financial Crisis. Despite Its Troubles, the Euro Area Is Making Progress. Bernanke bails out Europe.