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Europe Channel: Latest Posts
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Europe
Flying to Ankara
By now all of us know about that Mediterranean island called Cyprus, forced to declare bankruptcy by its European brethren. Its Finance Minister, Michalis Sarris and President Nicos Anastasiades flew all over Europe including Russia for the best deal they could find to save their financial sector. That sector was built partially over the years on laundering ill-gotten gains by [...]
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The Kapali Carsi
Is the music about to stop again?
Yep, at least according to the Central Bank of Turkey: Jeremy Irons’ character in the movie Margin Call, the CEO of an investment bank, reveals at one point why he “earns the big bucks”: “I’m here for one reason and one reason alone. I’m here to guess what the music might do a week, a [...]
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Great Leap Forward
What Went Wrong in Cyprus: an MMT Perspective (updated)
Some readers have encouraged me to provide an MMT perspective on Cyprus. First a caveat: I have no special expertise on that country. However, as all of you know, MMTers have been warning about the fate of Euroland for almost two decades. As you watch one after another of those dominoes fall, you cannot help [...]
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Europe
Cyprus Reopens for Business: Now What?
The banks in Cyprus reopened today, with severe capital controls in place. Withdrawals by residents are limited to €300 per day; local businesses are limited to a maximum of €5,000 per day. Cross-border credit card transactions are limited to €5,000 per month, and border controls prevent travellers from taking more than €1,000 in bank notes [...]
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Europe
One Euro or Two?
There is a debate among market observers over whether the capital controls in Cyprus mean that there are, in effect, two euros now. It is argued by some investment banks and some economists that the capital controls create a Cypriot euro that is different from the euro elsewhere in the monetary union. While we understand the [...]
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Don't Shoot the Messenger
Does Emigration Put Spain’s Health and Pensions System At Risk?
According to the Economist’s Buttonwood, “desperate times require desperate measures”. I am sure this is right, times in Spain are certainly getting desperate and many of the measures being implemented in Brussels, far from representing radical and innovative solutions look much more like continually closing the barn door after the horse has bolted. The issue [...]
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The Kapali Carsi
What will the Central Bank of Turkey do at Tuesday’s rate-setting meeting?
Despite a lot of push from a world-renowned ornithologist friend, I never took up bird-watching. It seemed way too difficult to wait for hours to catch a glimpse of a small unidentified flying object and try to identify it. I was in Ankara on March 15 to, among other things, give a guest lecture at [...]
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Dan Alpert's Two Cents
A Short Note on Cyprus and its Aftermath: The “Euro A” and the “Euro B” – Giving the Eurocrats a “Time Out”
Europe needs a short term disaggregation plan—of the type suggested by myself and others over the past two years—pursuant to which the debtor nations beset with massive underemployment and failing economies—would withdraw from the Eurozone-proper and adopt a “Euro B” currency, administered by the ECB, with a pegged exchange into the existing “Euro A.” Such [...]
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Ed Dolan's Econ Blog
Follow-up: Further Program Notes for the Cyprus Banking Drama
Last Friday I sketched out some program notes for the Cyprus banking crisis. The notes explained the origin of the banks’ losses (Act 1) and the tools that regulators could choose from to resolve the crisis (Act 2). Now the curtain has gone up on Act 3. The government of Cyprus and the EU-ECB-IMF “Troika” [...]
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Europe
Do Capital Controls Mean Cyprus Has Already Left the Eurozone?
Cyprus is in a struggle to save itself, at least the European definition of “save itself,” and remain a Eurozone member. But will Cyrpus even use the same euro as the rest of Europe when all is said and done? After all, banks remain closed in Cyprus, which means a euro in a Cypriot bank [...]
