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Category Archive: Europe
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Is Social Unrest Coming to Europe? If Not, Why Not?
Summary: Five years of crisis in Europe, yet its streets remain mostly calm. What accounts for this? How long will it continue? “At the heart of the crisis, there is the challenge of redefining the social contract to safeguard the sustainability of Europe’s social model.” — Speech by Benoit Coeure (Executive Board of the ECB), 2 March [...]
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Nowakowski on CNBC to Discuss Cyprus
RGE’s Senior Director of Research David Nowakowski appeared on CNBC to discuss the evolving situation in Cyprus, where depositors are moving out, Russian investors are cautious and bank runs have returned. View the videos below, or go to CNBC for clips here, here and here.
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Professor Monti and the Bubble
Who saved Italy? This column argues that the crisis began with Silvio Berlusconi and ended with Mario Monti. Evidence suggests that restoring a sense of credibility to Italian policymaking was difficult to earn but may be very easy to lose (as the recent run on Italian debt suggests). New and old Italian politicians cannot afford [...]
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Cyprus: What’s Next?
It now appears that the Cypriot Parliament will reject the government’s amended plan for haircutting deposits. The revised proposal, which reportedly exempted depositors under €20,ooo, satisfies almost no one – Cypriot depositors, the Russians, nor European creditors (including their increasingly agitated banking regulators). The government looks ready to try and renegotiate the bailout, but no [...]
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Beyond Cyprus: Implications of the Latest ‘Unique Solution’
Call it sequestration, expropriation, default or a bank levy. All of these ring true in economic terms but legally speaking, the latest move by the troika and Cyprus designed to top up a Eur10 bn bail-out package for its banks is merely a tax. And not a particularly onerous one at that: 6.75% (or less) [...]
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The Cyprus File
It seems ironic that Cyprus, one the smallest countries in Europe with little over 1 million people and about 0.5% of the European Union (“EU”) economically, may prove a key inflexion point in the crisis. Historically minded commentators have pointed to the precedent of the collapse of the 1931 Austrian bank Creditanstalt which precipitated a [...]
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The War on Common Sense Continues
This weekend, European policymakers opened up a new front in their ongoing war on common sense. The details of the Cyprus bailout included a bail-in of bank depositors, small and large alike. As should have been expected, chaos ensued as Cypriots rushed to ATMs in a desperate attempt to withdraw their savings, the initial stages [...]
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Italian Austerity in the Polls: The Results
In my previous post before Italy’s general elections, I argued that the economic legacy of the Monti government was problematic, not so much in reason of the doses of austerity inflicted on the country as to the poor deliverables regarding the promises of “more equity and growth” and a reasonable perspective of recovery. Now we [...]
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Why Cyprus Matters
Cyprus measures 0.2 percent of the Eurozone economy. A proposed rescue package is only €17 billion, of which perhaps €9 billion will be used to recapitalize banks weighed down by bad loans and losses on the Greek government debt. A new government has signaled its commitment to reform, and creditors want to get a deal [...]
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Italy: The Dragon and the Cricket
The difficulty in making sense of the results of the Italian election has produced the common imagery of a clown to capture the comic Grillo, who appears to be the most unlikely politician since Lech Walesa, the unemployed electrician that led Solidarity in Poland, helping to bring the fatal crisis upon the Soviet Union, and [...]
