Greek Crisis: Ending (at last) the Trojan War

By: Jacques Delpla

A peace initiative with Turkey could reduce Greece´s expenditures by 3pp of GDP.

Towards Default

By: Wolfgang Münchau

The European response to the Greek crisis is at least in part to blame.

The Systemic Risk Board: A return to the EMS

By: Casper de Vries

The board has no clear goal, no instruments or any power; at best it can collect and disseminate information on systemic risk.

The banking crisis - a rational interpretation

By: Patrick Minford

An unfashionable defense of rational expectation models.

Inflationary pressures to remain low

By: KOF Swiss Economic Institute

The KOF MPC indicator measures the risks to future price stability as communicated by the ECB.

The case against naked CDS

By: Wolfgang Münchau

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

This is a Test Only

Testing

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.

Germany’s Chinese New Year and What to Do About It

By: Adam S. Posen

In 2009, China displaced Germany as the world’s largest exporter. But Germany starts 2010 sharing a common dilemma with China: how to sustain growth, when those markets locked into a fixed exchange rate with it need real adjustment

Why I worry more about Spain than about Greece

By: Wolfgang Münchau

After a decade of not always constructive ambiguity, the European Union now has a bailout rule. It goes as follows: A bailout shall be granted to any country that subsequently complies with a brutal adjustment programme, dictated by the EU. I suspect that Greece, being the first country in trouble, being small and sufficiently scared, will comply with all the conditions. Maybe Greece will not need a bailout. I still suspect that it might. But in any case, we have established a new principle. Whereas previously nobody was really sure what would happen in such a case, we now know that there are specific cases in which a bailout is likely.

Greek Crisis: Ending (at last) the Trojan War

By: Jacques Delpla

A peace initiative with Turkey could reduce Greece´s expenditures by 3pp of GDP.

Greek Crisis: Ending (at last) the Trojan War

By: Jacques Delpla

The solution to the Greek fiscal crisis will need a return to Homer’s Iliad: ending at last the Trojan War. Despite markets’ fears, Greece will not default on its debt. Why? Because, with some diplomatic impetus, Greece could easily reduce its military spending by 3 points of GDP, if a multilateral peace initiative is launched between Greece, Turkey and Cyprus, with the help of the US and of the Europeans. Unlike Portugal or Ireland, Greece could benefit from significant peace dividends to reduce its titanic deficits.