How abnormal was the stock market in October 2008?

By: Paul De Grauwe, Leonardo Iania, Pablo Rovira Kaltwasser

Last month saw a stock market move with a probability of occurring only once in 73,357,946,799,753,

900,000,000 years. What does this tell us about modern finance?

The depression of 2009

Wrong government policies on both sides of the Atlantic are turning a crisis into a catastrophe.

Is the euro challenging the dollar's role as a global currency?

When the Euro was launched in 1999, there was much speculation among academics and policy makers about whether the euro could challenge, over even overtake, the dollar as an international currency. Toward the end 2006, the euro has indeed become a big international currency, but has so far failed to challenge the dollar’s predominance in the main categories that define it as the world’s premier currency.

Why a stimulus package must be part of any effective rescue plan

This crisis is not over by a long shot. Numerous feed-back loops between the financial system and the real economy will ensure that this crisis will continue for quite some time. In particular, these feedback loops also suggest that the optimal policy response consists of simultaneous financial and economic stabilisation.

No, this is not going to work

I respectfully disagree with the financial markets. These plans, in the way they have been drafted, raise serious issues for long term financial and monetary stability.

The case for a European rescue plan

The case for an EU wide rescue plan is overwhelming: to prevent dangerous spillovers, to ensure adequate funding, and to prevent a collapse of EMU.

Two transatlantic policy lessons for crisis management

This crisis holds two transatlantic lessons. The first, from Sweden, is that governments should recapitalise some, but not all, failing banks. The second is that you need to have a policy in place, and not rely on ad-hoc rescues. This is the euro area's specific problem.