The Greek crisis and the future of the Eurozone

By: Paul De Grauwe

Sorting out the Greek crisis remains the absolute priority in the short-term.

Greek Competitiveness Is Not the Issue, Fiscal Discipline Is

By: Erik Jones

The simple fact of the matter is that Greece is having a fiscal crisis. It would have had that crisis whether or not it was in the eurozone.

Europe in Dire Straits – don’t be Brothers in Arms.

By: Henrik Enderlein

The case against bailing out Greece.

How should the Eurozone handle Greece?

The political pros and cons for no support, a European rescue and a call for the IMF.

The Euro Area's political constraints

By: Wolfgang Münchau

Not all policy solutions are possible in a monetary union. There are severely constitutional constraints.

When Does It Hurt?

By: Ansgar Belke

The exchange rate “pain threshold” for German exports is at $1.55 to the euro.

Fiscal policy in Central and Eastern Europe

By: John Lewis

Countercyclical but deteriorating with EU membership.

Why the Euro will continue to weaken

By: Wolfgang Münchau

When you consolidate the fiscal position, either the private sector deteriorates, or the current account has to improve. This would either imply, or necessitate, a depreciation.

Eurozone Meltdown

This is the first in a new series of regular briefing notes on important issues facing the euro area. In this briefing note we are asking whether the euro area could ever break up. We think not. But we are not as certain as we used to be.

Germany and France call on a ban on speculative trading in CDS

Merkel and Fillon reach agreement over CDS; both ask Barroso to launch a full investigation into the role of CDS in sovereign bonds in the EU; FT says Europeans are deflecting from their inability to deal with the Greek debt crisis; Geithner warns EU of a regulatory transatlantic drift if it goes ahead with hedge fund regulation; The French political establishment is neutral to mildly sceptical on the idea of an EMF; Greece is breasting for further strikes today; A majority of Greece fear that the recession will last many years; Luis Garicano says Spain has the potential to avoid the Greek fate, but only if it undertakes serious reforms; credit market valuation, meanwhile, return to their long-term average after the girations of the last few years.

The Greek crisis and the future of the Eurozone

By: Paul De Grauwe

The crisis that started in Greece culminated into a crisis of the Eurozone as a whole. There is no doubt that the major responsibility rests with the Greek authorities who mismanaged their economy and deceived everybody about the true nature of their budgetary problems. The solution of the problem will therefore necessitate drastic changes in Greek economic and budgetary policies. This being said, there is more than one villain in the play. The financial markets and the eurozone authorities also bear part of the responsibility for letting this crisis degenerate into a systemic crisis of the eurozone.

'Swap Tango' – A Derivative Regulation Dance: Part 2

By: Satyajit Das

Banks and their lobbyists do not believe that there is a case for regulation. Banks argue that the complex nature of derivative trading dictates that self-regulation is the only feasible approach. If that fails, then banks seek to minimise scrutiny of major issues, such as the size of the market, speculative activity, pricing issues, complexity and mis-selling of derivatives to unsuitable clients. They argue that existing regulations already adequately cover some issues. Proposed regulations will be masterfully narrowed to minimise impediments to profitable activities.

'Swap Tango' – A Derivative Regulation Dance: Part 1

By: Satyajit Das

Politicians and regulators globally are currently busy drafting laws to regulate derivatives. A common theme underlying the activity is an absence of knowledge of the true operation of the industry and the matters that need to be addressed. As Goethe observed: "There is nothing more frightening than ignorance in action."

The case against naked CDS

By: Wolfgang Münchau

Credit defaut insurance without ownership of the underlying securities is seriously destabisling.