The Economist (May 18th 2011) continues the presentation of subsequent acts of lasting Greek financial drama… Accordingly, there are supposed to be five options, although only the last one – “serious haircut on the value of the Greek debt” – seems to be a way out of the deep fiscal crisis. This is what I’ve … Read more
The potential inclusion of Morocco and Jordan in the GCC fold should be taken for what it is – a political move by the Gulf states to widen their sphere of influence in the region. There is, of course, nothing wrong with it. The United States has done it with NAFTA, the EU has been … Read more
After the BRICS, came the PIGS. Now a new acronym is being born, that of the BELLS. These particular “ding-dongs”, however, are not a set of hollow cast-metal instruments suspended from the vertex and rung by the strokes of a clapper, they are countries, countries which may, like those unfortunate WWI British soldiers whose love … Read more
The Berlusconi debacle in the recent municipal elections in Milan, Naples, Turin and Bologna has been a veritable political earthquake that will destabilize the system of alliances that has governed Italy almost continuously from 1994. Simply put, there are two camps within the government: the party of rigor-despite-the crisis epitomized by the Minister of the … Read more
EXECUTIVE SUMMARY The ECB and other commentators have raised the specter that a debt restructuring in Greece would lead to massive and destructive contagion to financial markets, banks and financial institutions and other EZ sovereigns that would in turn lead to financial disaster. Those fears have now led to increasingly shrill warnings, despite their empirical … Read more
On May 9, Standard & Poors downgraded the Greek debt by reducing its ratings from BB-to B, for the long term, and from B to C, for the short term. The downgrade reflects a) the fact that the fiscal target (a reduction of the fiscal deficit to 9.6% of GDP) was not met (the deficit … Read more
It seems appropriate to start off our new home at EconoMonitor with a post rapture “tip of the hat” to the weekend that was (or was not). As we sit pondering another bout with the East Coast deluge of rain, we are wondering if the Arc metaphors of last week are not about to have … Read more
Looking through the latest round of EU GDP data, one thing is becoming increasingly obvious: when it comes to future monetary policy decisions at the ECB, and to exactly how many more interest rate hikes we are going to see, then the performance of the Italian economy is going to be critical. The growth pattern … Read more
As recently as last December, the coalition backing U.S. ethanol subsidies appeared to be alive and well, despite the fact that everyone knew they were bad for the environment, bad for energy efficiency, and bad for the budget. The largest subsidy, a tax credit for blending ethanol into gasoline, was set to expire at the … Read more
Is China currently rebalancing? The currency has been appreciating, the PBoC has hiked interest rates four times, and wages have been surging. Because of all of this I am often asked if China has finally begun the long-waited rebalancing process and whether we have yet seen an improvement in the underlying economy caused by a … Read more