Category Archive: Europe

• Lending standards tight according to global loan officer surveys

  Rebecca Wilder February 16th, 2009

  Global lending standards are tight; and why shouldn’t they be when the unemployment rate is surging in most G7 economies?

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• Every Consensus Must End

  Simon Johnson February 16th, 2009

  The prevailing consensus on any economic policy is a fascinating beast.  For years it can stay put, seemingly immovable, and even – in some cases – becoming enshrined in legislation or central bank statute.  One day it begins to shake, ever so slightly; under the pressure of events, a wider range of serious opinion develops.  And then, all of a sudden, the consensus breaks and you are running hard to keep up.

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• Relaxation of Maastricht – not a good idea

  David F. Milleker February 15th, 2009

  As the financial crisis drags on, one of the big winners has certainly been euro membership. Being offered shelter from the storm of volatile exchange rates has lead to a surprising line of countries that would like to fast track EMU membership.   But while the potential short-term benefits for the applicants are clear (foremost [...]

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• The G7 Needs To Act, This Weekend, On Ireland

  Simon Johnson February 13th, 2009

  Look at the latest Credit Default Swap spreads for European sovereigns (these are the data from yesterday’s close).  As we’ve discussed here before, CDS are not a perfect measure of default probability but they tell you where things are going – and changes within an asset class (like European sovereigns) are often informative.European CDS have been relatively stable – albeit at dangerously high levels – for the past month or so.  But now Ireland has moved up sharply (the green line in the chart).  We’ve covered Ireland’s problems here before (banking, fiscal and – big time – real estate); type “Ireland” into our Search box for more.

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• Germany’s Incredible Shrinking Economy

  Edward Hugh February 13th, 2009

  The FT says this is worse than feared, and I say it is just what I was expecting (see here, I do hope that doesn’t make me one of those “visionaries” you are all so busy talking about).
  

  Germany’s economic slump in the final quarter of 2008 proved worse than feared, official figures showed on Friday, with the country posting the sharpest fall in gross domestic product since the country was reunified in 1990.The larger-than-expected 2.1 per cent plunge in GDP in the final three months of the year showed Europe’s largest economy contracting at a faster pace than the UK in the same period and threatening to drag down the performance of the 16-country eurozone.

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• Europe Is in Bigger Trouble than the U.S.

  James Kwak February 13th, 2009

  This is a theme that Simon in particularly has been sounding. Now, according to the Telegraph, a confidential European Commission memo confirms this. To review, the basic problems, relative to the U.S., are:

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• Eastern Europe: On Crisis Watch

  Mary Stokes February 12th, 2009

  There is no question that growth is deteriorating across Eastern Europe, but are these countries facing outright financial crises? Hungary and Latvia have already turned to the IMF for rescue packages, and other countries in the region exhibit similar vulnerabilities.

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• NIBC’s Extreme Makeover

  Ivo Arnold February 11th, 2009

  You may have watched on television how surgical and cosmetic treatments can quickly turn plain citizens into attractive eye catchers. Apparently this TV-show has inspired banks, although they have reversed the metamorphosis, from exciting to plain. In bank terms this is called a transformation from transaction banking to relationship banking.

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• Russian Debt And The Euro

  Edward Hugh February 10th, 2009

  Keynes’s genius – a very English one – was to insist we should approach an economic system not as a morality play but as a technical challenge. Martin Wolf, Financial Times

  The euro fell again yesterday, by 1.1 percent against the dollar (to $1.2860) and by 1.2 percent against the yen (to 117.52 yen). The change, even if quite large in a short space of time, is hardly dramatic, but what is of more interest is the why. Russian companies announced yesterday that they were thinking of opening negotiations to “restructure” their debt. Bloomberg:

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• Italy Needs EU Bonds And It Needs Them Now!

  Edward Hugh February 9th, 2009

  You see, this isn’t a brainstorming session — it’s a collision of fundamentally incompatible world views. Paul Krugman

  As a wise man recently said, failure to act effectively risks turning this slump into a catastrophe. Yet there’s a sense, watching the process so far, of low energy. What’s going on? Paul Krugman

  First, focus all attention on reversing the collapse in demand now, rather than on the global architecture. Second, employ overwhelming force. The time for “shock and awe” in economic policymaking is now. Martin Wolf

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