From the Financial Times (originally published on June 8, 2012): Is it one minute to midnight in Europe? We fear that the German government’s policy of doing “too little too late” risks a repeat of precisely the crisis of the mid-20th century that European integration was designed to avoid. We find it extraordinary that it … Read more
On 11 April 2011, then Spanish Finance Minister Elena Salgado stated: “I do not see any risk of contagion. We are totally out of this.” A little over a year later, Ms Salgado and her party are no longer in power and Spain is well and truly in it. After weeks of prevarication, Spain will … Read more
So why did the founders of the euro fail to establish an exit mechanism for the weaker constituent parts of the eurozone? For the most cogent explanation, let’s turn to our friend, Greek economist Yanis Varoufakis: “The lack of a constitutional (or Treaty-enabled) process for exiting the Eurozone has a solid logic behind it. The … Read more
Editor’s Note: The following is the text of recent remarks on the European sovereign debt crisis made by legendary investor George Soros at the Festival of Economics in Trento, Italy. Ever since the Crash of 2008 there has been a widespread recognition, both among economists and the general public, that economic theory has failed. But … Read more
We kick off another week with some thoughts from the EconoMonitor community. Here is what’s on the minds of the EconoMonitor bloggers. We would love to hear what’s on your mind. Challenge to Austerity Deepens, the Handwriting is on the Wall -Daniel Alpert (Dan Alpert’s Two Cents) This weekend marked the culmination of the anti-austerian … Read more
These days the “fiscal cliff” dominates the discussion of U.S. budget policy. The cliff is the package of tax increases and spending cuts baked into current law that will come into effect at the end of the year if Congress does not act. What is less widely recognized is that the U.S. economy is already … Read more
This months manufacturing PMI data only confirm what several months of prior surveys (and now the latest US jobs report) have been telling us, namely that growth in the developed economies is getting scarcer and scarcer, and harder and harder to come by. Following a brief brief period of stabilisation, which lasted roughly from November last … Read more
Summary: Previous posts have discussed our perilous situation and how we got into this predicament. Let’s take a step back and ask why we are here. It says much about where we’re going. From National Geographic Jan 2008 Contents We’re living on a volcano Let’s look at the volcano How big an eruption might we … Read more
I like Karl Whelan’s take on what this Target2 chart means (underlining added): My assessment, as argued in this article is that the Bundesbank losing its Target2 credit would be no more than a minor inconvenience to Germany. We now live in a world of fiat currencies. The man that accepted that euro for your … Read more
I was on BBC Monday, talking about the latest trade spats developing between the U.S. and China. Over the past few weeks, the U.S. imposed two distinct sets of retaliatory tariffs on Chinese-made solar panels (and just today, followed up with similar sanctions on Chinese-made wind-turbine towers). Last Friday, China struck back by asking the … Read more