English Essays

The ECB's expensive folly: A new Maginot Line

Behind the scenes the European Central Bank (ECB) is struggling to construct a barrier that will prevent the firestorm which started in Greece from breaching the Iberian defences and, eventually, from turning to Italy. It is only right and proper that the ECB should try to accomplish this. The only trouble is that the barrier […]

English Essays Politics and Economics

Cutting our noses to spite our faces

The trouble with austerian logic is that it is grossly illogical. It does not even make sense in terms of the logic of microeconomics, let alone that of macroeconomics. Consider the current conundrum facing Greece and Ireland, the eurozone’s set of failed states (so far): Both countries have been forced to slice 10% off government […]

English Essays

Stiffen your lip Wolfgang!

In today’s Financial Times, Wolfgang Munchau identifies correctly the problem with the current EU strategy for arresting the euro crisis (click here for his article). His proposed solution is also on the ball. Indeed, it is, in substance, very, very similar to our Modest Proposal. However, though he identifies the problem and the essence of […]

English Essays

Empty threats

25th April 2010: Traders “will Lose Their Shirts’ Betting Against Us.” George Papakonstantinou, Greece’s Finance Minister a week before Greece declared effective bankruptcy and ran for cover into the steely bosom of the IMF-EU loan agreement. 26th November 201: “I should warn those investors who are short selling Spain that they are going to be […]

English Essays

What will it take to stop the domino effect on its tracks before it reaches Spain and Italy?

Richard Milne asks in today’s FT (click here for the article): What will it take to stop the domino effect on its tracks before it reaches Spain and Italy? He considers two ideas: One is a form of ECB “quantitative easing” under which the ECB massively accelerates its purchases of Spanish and Italian bonds in […]

English Essays

Unilateral default vs negotiated debt reduction

Michael Burke took me to task for writing, in our Modest Proposal, that it is “utopian to expect member states to default and remain within the eurozone.” Michael asks: “Why? Local, county and state authorities have all defaulted in the US, without having to flee the US Dollar area. Surely default, partial or otherwise, is an […]

English Essays

The idea of a wholesale attack on private and public European debt is catching on.

It seems that our idea of a multilateral negotiation for reducing the total size of state debt and bank losses is catching on. Here is what  Gerald Holtman wrote in the FT today: The problem is that if you force investors to shoulder some of the losses you cannot move one country at a time. […]

English Essays

A New Versailles Treaty Haunts Europe. (And this time it is not just me thinking so…)

Last May, when the ‘rescue’ package was imposed by the EU and the IMF on Greece, all commentators were talking of a ‘bail out’ for Greece, differing only on whether it was deserved or not. A minority protested that the supposed rescue was bad for Greece, in that it came with some many strings attached […]

English Essays

Gavan Butler links the East Asian collapse of the late 1990s to the current euro crisis

I just received the following email from my friend and colleague Gavan Butler, in response to my piece on the euro crisis. I think it makes for interesting reading: Dear Yanis. I enjoyed your contribution. It took me back to the debates in the period 2001 to 2003 about what differently might have been done […]