The limits of the small-country mindset

By: Wolfgang Münchau

The tyranny of small countries is a good idea in general, but not in macroeconomic policy.

The MiFID Directive - This is Briefingnote is presented by EurActiv

The MiFID, a cornerstone of the Financial Services Action Plan, was proposed in November 2002 to update the existing Investment Services Directive (ISD) of 1993. It was designed to cope with, and to further enable, the increased level of cross-border investment transactions, which had shown an annual increase of 20-25% in the years from 1996.

Bundesbank says Ireland will destroy eurozone

The Bundesbank’s monthly report says that the tendency for Ireland, Spain, Portugal and Greece to run high deficit, constituted a source of danger for the eurozone; tells the Irish that they should take measures to improve the economy; the Bundesbank, however, has nothing to say about countries with current account surpluses; Hungary and the IMF break off talks, after the Hungarian government refuses further austerity measures; forint falls more than 3% on the news; Moody’s downgrades Irish debt in line with S&P’s rating; Brad DeLong says it is time for more stimulus spending, until the market tells us that it has to stop: this time won’t come for some time; Niall Ferguson says Keynesians – like the Bourbons – have learnt nothing and forgot nothing; Francesco Giavazzi and Alberto Giovannini, meanwhile, warn of a low interest trap that results from direct inflation targeting.

A wage rule against excessive trade imbalances

By: Fabian Fritzsche

When the French treasury secretary Christine Lagarde called on Germany to stimulate domestic demand and reduce net exports, she prompted a debate about surplus countries and fair competition. German media and politicians reacted with an outcry. The German consensus is that exports are strong not because of their price competitiveness, but because of their quality. Thus, other economies should make an equal effort to be similarly successful. This debate is dominated by emotional arguments rather than economic reasoning.

Is Germany egoistic? No, we all are

By: Laurence Boone

The Greek finance crisis and its handling by the EU expose the structural weakness of the eurozone, namely the lack of economic policy coordination, a design error that the member states neglected to fix. It is impossible to accuse Germany to be uncooperative without looking at the bigger picture of European governance.

Why an IMF solution is most likely

By: Laurence Boone

An assessment of the options available for the EU summit

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.