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.

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.

When debt levels diverge

By: Wolfgang Munchau

France and Germany are heading into opposite directions in fiscal policy. An interesting experiment.

European Commission sees permanent decline in euro area’s potential output

Quarterly Report on the Euro Area presents gloomy long-term outlook, and contains a sharp indirect criticism of the bailout policies pursued by Germany and France; a disastrous employment report sends Wall Street 3% lower; ECB tells banks to lend, or else ECB will lend directly; European Commission reports supports central counterparty clearing for derivatives; an industry report, meanwhile, suggests that the future of the European car industry is even worse than we thought.

When debt levels diverge

By: Wolfgang Munchau

France and Germany are heading into opposite directions in fiscal policy. An interesting experiment.

The nightmare of a balanced budget

By: Wolfgang Munchau

Germany's constitutional law to get rid of budget deficits is both both popular and economically illiterate. And for the euro area, it is very dangerous.

Government debts are unsustainable and desirable

By: Paul de Grauwe, K.U. Leuven and CEPS

There is no doubt that government deficits are unsustainable. But this does not imply that they are undesirable today. The uncomfortable truth is that in order for private debt levels to become sustainable again, government debt must temporarily become unsustainable.

Nobody is prepared for a double-dip recession

By: Wolfgang Munchau

The green shoots look increasingly shriveled in the light of the latest economic data, which show that the world economy is still on the same trajetory as during 1930s. The strategy by governments to wait to the end of the recession to sort out all problems is not working.