It may come as some surprise to the German public, media and political class, but the Eurozone crisis hasn’t cost them a single cent to date.
If anything the crisis has boosted German exporters, by keeping the Euro itself weaker than it would otherwise be, while Germany can now borrow at record low rates because the crisis has given rise to a ‘flight to safety’ in the sovereign bond market.
Posted in Euro
These are my initial thoughts on the promissory notes ‘deal’ announced today by Minister Noonan.
As always, UCD Professor Karl Whelan is the go-to guy on all things promissory note related.
And Constantin Gurdgiev gives his thoughts here.
‘You Can’t Always Get What You Want’ sang the Rolling Stones in 1969. Jagger wasn’t singing about economic policy, but it’s a sentiment felt keenly by policy-makers the world over. They often face difficult choices between conflicting objectives.
Dani Rodrik, political economy professor at Harvard, has described an ‘inescapable trilemma’ at the heart of the world economy: we can have two of democracy, national sovereignty and open markets – but not all three fully and simultaneously.
As Europe’s elite desperately searches for a solution to stave off economic Armageddon, they face a similar trilemma. Technocrats’ assumption of power in Greece and Italy are cases in point. Continue reading
Writing in this column two months ago, I suggested that Treaty change would be needed to save the Euro. Where once such talk was taboo, it is now clear that we are faced with such constitutional change, irrespective of the UK position. A real fiscal union would involve transfers to those regions for whom a one-size-fits-all monetary policy is inappropriate. What is in prospect is not a fiscal union, however, but an austerity club.
European leaders have finally realized the need for bold reform, but they’ve completely missed the point. The Eurozone crisis is less about members’ debts, and more about their competitiveness. Continue reading
Posted in Articles for SIPTU's Liberty, Euro, Uncategorized
Yes, it can.
The real question is whether there is a coalition of the willing to move beyond rhetoric and do what it takes. A related question is whether those with the power to save the euro have the democratic mandate to do so.
Events this summer laid to rest any remaining doubts that the European monetary model is flawed, and ultimately unsustainable in its current form.
There is a broadening consensus forming around the need for deeper economic and fiscal integration to steady the ship. ‘Eurobonds’ have been the rallying call of the left as a means of effectively cross-subsidising weaker eurozone members, and there is certainly much of merit in this idea. ‘More Europe’ may be part of the answer. Continue reading
Much of the orthodox analysis of the West’s recent economic travails puts the blame squarely on a failure of political leadership.
Reality requires a more complex narrative.
Yes, the US came inexcusably close to committing hari kari by failing to lift its debt ceiling with a balanced, timely, comprehensive programme for long term fiscal sustainability.
Yes, the European Union struggles to deal with the fallout from the inherent contradictions at the heart of its monetary union.
Certainly, political failure doesn’t help lift the pervading sense of crisis, and the uncertainty it breeds contributes to financial market volatility, but it is market failure, not political failure, that is at the root of our economic malaise.
In short, the West’s growth model is broken. Continue reading
Posted in Articles for SIPTU's Liberty, Euro, United States
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