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Europe Channel: Latest Posts
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Europe
What Next For Italy?
Italy is getting closer to putting together a grand coalition government. This has always seemed to us the most likely scenario, but the route to it has been circuitously torturous. Three considerations have led to President Napolitano granting the prerogative of forming a government to the deputy leader of the center-left, Letta. First, the unprecedented [...]
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Europe
The Future of Europe-Wide Stress Testing
The recent IMF (2013a) assessment of Europe’s financial sector found that much has been achieved to address the recent financial crisis in Europe, but vulnerabilities remain, and intensified efforts are needed across a wide front [1]. This column focuses on the role played by Europe-wide stress tests. Selective asset quality reviews, and a high degree of transparency [...]
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Europe
Borrowing Scrapes Lower – Treasury Warns Scotland on Sterling
Nobody would describe the latest figures for the public finances as good but the fact that for 2012-13 public sector net borrowing scraped in at £120.6 billion (after many adjustments), just below 2011-12′s outturn of £120.9 billion, was better than it might have been. Even relatively recently it looked likely that borrowing in 2012-13 would [...]
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Europe
Italy, Europe: Please Do Something!
by Biagio Bossone, Chairman of the Group of Lecce [1] The crisis is deepening After fifty or more days from general elections, Italy is still ensnared in big political uncertainties and its economic recession is worsening. Negative fiscal space and private sector retrenchment in the country continue to squeeze aggregate demand, amongst persistent indications of declining [...]
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Europe
A Litmus Test for Banking Union
Among economists a wide consensus exists that a transfer of supervisory powers to the ECB needs to be accompanied by increased risk sharing at the euro area level, through the establishment of a European resolution mechanism and a joint deposit guarantee scheme. This line of argument is based on the accountability principle, according to which [...]
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Europe
Not to be Bitten by Same Dog Twice: Slovenia Update
Since the Greek private sector debt restructuring, many understood that Cyprus was vulnerable. The timing and policy response is that took most by surprise. The experience spurred investors to look for the next potential candidate for aid and many have settled on Slovenia. The general story is now well appreciated. It is a small economy. [...]
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Europe
When Can We All Admit the Euro is an Economic Failure?
The last month of data flow from Europe is nothing short of depressing. It seems that the history of the Eurocrisis can be summed up as a repeated effort to snatch failure from the jaws of defeat. The Euro and the policy framework that supports it is now clearly inconsistent with anything but sustained recession. [...]
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Europe
Crisis Management Lessons from the Cyprus Crisis
The Cyprus crisis has produced a large number of negative comments about governance in the eurozone, especially with respect to the predominant influence of Germany in the negotiations, the ultimatum issued by the European Central Bank (ECB) and the weakness of the European Commission, which was unable to block the proposal that bank deposits of [...]
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Europe
Troika Demands Another €6 Billion from Cyprus, Making ‘Rescue’ Bigger Than GDP
Nothing like dramatic proof that austerity is a failure. Less than one month forcing Cyprus to take a “bailout” (which in reality was paid for entirely by the Cypriots) under the threat of effectively throwing them out of the Eurozone, a leaked Debt Sustainability Report shows that that the Troika will demand another €6 billion from Cyprus, increasing the total [...]
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Great Leap Forward
The End of an Era: The Reagan-Thatcher Years, Goodbye and Good Riddance
With the recent death of Margaret Thatcher, the Iron Lady, it is time for a quick retrospective. Here’s the conventional narrative. The Keynesians took over policy-making in the UK and the US in the 1960s. They coddled Big Labor, allowing unions to ramp up wages. They coddled the poor with generous welfare. They coddled Big [...]
