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Europe Channel: Latest Posts
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The Wilder View
Unfounded Obsession With the Greek Minimum Wage
The Greek minimum wage is apparently a point of contention between the Troika (ECB/EU/IMF) and the Greek government. The NY Times cites competitiveness gains as a rationale for the minimum wage cut: The goal of any pay cuts would be to help make Greek workers, who are generally less productive than workers elsewhere in Europe, [...]
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RGE Analysts
Will the Euro Survive the Debt Crisis?
Restoring confidence in the eurozone (EZ) rests on its ability to generate growth and reduce the competitiveness gap in the periphery. As fiscal austerity is bound to deepen the recession, the possibility of debt restructurings, exits and the eventual breakup of the EZ must be taken into account. The financial crisis has exposed the institutional [...]
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Europe
The Elephant in the Room Is Spain, Not Italy
Another day and the markets remain fixated on whether Greece comes to a “voluntary” arrangement with its creditors. The key word is “voluntary” because the myth of “voluntary compliance has to be sustained so that those deadly credit default swaps avoid being triggered. But let’s face it: Greece is a pimple. If the rest of [...]
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Europe
Greece – Cutting Out the Middle Man
It seems that central bankers and politicians are endlessly resourceful when it comes to innovating ways to profit themselves and bankers at everyone else’s expense. Where I had thought Greek default inevitable just two weeks ago, I no longer think so today. It appears that Sarkozy, Merkel and the Troika have decided to prevent a [...]
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Dan Alpert's Two Cents
Tinkerbell Economics – The Confidence Fairy, Pixie Dust and a Sleeping Dragon
While we may be hours away from a partial (and certainly a stopgap) agreement in the talks among the Greek government, the troika and private sector creditors, it is doubtful that a deal will emerge in a fully constructed fashion that will survive its application in the real economy. It is likely that the only common view amongst [...]
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Europe
Another Experiment?
In the fall of 2008, US authorities conducted a financial market experiment. They allowed a large and heavily interconnected firm, Lehman Brothers, to file for bankruptcy, apparently under the belief that the consequences should be limited as everyone knew this was coming. I think that, in retrospect, US policymakers wished they had pursued an alternative [...]
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Peterson Institute for International Economics
How Euro Brinkmanship Is Beginning to Succeed
European Union leaders had the umpteenth euro crisis summit at the end of January. Indeed the EU Council meets so often that the descriptions of these gatherings should be changed from “yet another summit” to “back in session.” The slide to near-permanent policymaking has occurred as the EU Council begins to resemble a sitting parliament. [...]
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The Wilder View
Temporary Employment: A New Ugly Rearing its Head in Europe?
Last week Clive Crook opined on some fallacies of labor reform, specifically related to the unions and through the Spanish experience. Labor reform is a highly contentious subject, given its close ties to welfare and politics. Based on Clive Crook’s article, I delved into global temporary employment using OECD data and noticed two things: (1) [...]
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Europe
UK: To QE or Not to QE? That Is the Question
The ducks, it seems, are all lined up in a row. Gross domestic product fell in the final quarter of last year, inflation is falling and the money supply is weak. Sir Mervyn King gave a broad hint in his first big speech of the year that he and colleagues on the Bank of England’s [...]
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Europe
How This Gets Even Uglier
At this risk of beating a dead horse, I reiterate that I don’t see how the European situation comes to a happy conclusion. Conditions in Greece appear to be deteriorating rapidly. Via Athens News, retail sales are in freefall: Retail sales by volume fell 8.9 percent year-on-year in November after a 10.8 percent drop in [...]
