Why the optimists are wrong about the eurozone

By: Wolfgang Münchau

The optimists have not had a good crisis so far. This will not change.

The Stability and Growth Pact

The Stability and Growth Pact (SGP) forms part of the rules and procedures for fiscal policy of the member states of the euro area. The SGP has been subject to criticism long before it was officially agreed at the EU summit in Dublin in 1997 and ever since. The debate about the SGP reflects some of the deep ideological divisions that have accompanied the creation of economic and monetary union. The opponents of the SGP have criticised inter alia that it is pro-cyclical and anti-growth.

Euro back at $1.30

The euro is appreciating as investors get nervous about US prospects; The IMF wants to boost its lending resources to $1000bn to offer assistance for countries facing liquidity crisis; Greece start of the austerity programme earns compliments from the IMF; But challenges are still ahead, with looming protests and possible spending overruns in health care and social security; Martin Wolf kicks off a debate about the crucial policy question today whether to tighten fiscal policy or not; For the worst case scenario for sovereign bond defaults read the calculated risk blog; Francois Fillon and his comments on budget cuts keeps the French press wondering about the meaning of “rigueur”; Angela Merkel gets more support from La Tribune readers than at home; James Hamilton, meanwhile, looks at the possibility of deflation in the US.

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.

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.

Greek Competitiveness Is Not the Issue, Fiscal Discipline Is

By: Erik Jones

With all due respect to my colleagues in the economics profession, they have jumped the gun on Greek competitiveness within the eurozone. 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. Greece is not having a crisis of competitiveness. Hence joining the eurozone was not the problem; leaving it is not the solution.

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