Out of control: credit

By: Casper de Vries, Erasmus University Rotterdam

The Fed deliberately ignored traditional indicators that provided early warning about the credit crisis to come.

Ben's depression

By: Wolfgang Münchau

A return to a monetary policy to stabilise prices ended the Great Depression in the 1930s. This time it will work the other way round. Once the Fed is forced back onto a path of price stability, our depression will begin.

Juncker to remain as eurogroup chief

Luxembourg premier under pressure to accept eurogroup secretariat as a price for his renomination; Commerzbank buys Dresdner as Germany secures a second national banking champion; the French Socialists remain confused about their future strategy; Germany’s Left Party, meanwhile, is ready to support the SPD, as new political alliances are building up in Germany.

Eurozone breakup would trigger the mother of all financial crises

By: Barry Eichengreen

Households and firms would shift deposits to other euro-area banks producing a system-wide bank run. Investors would create a bond-market crisis. Here is what the train wreck would look like.

Some thougths about the future of the euro

By: Susanne Mundschenk and Wolfgang Münchau

Forget Italy, or Spain. The real danger to the long-term sustainability of the euro are the continued ideological differences between France and Germany, which have widened since the start of the EMU in 1999.

EMU and inequality: The facts

By: Giuseppe Bertola, University of Turin

Empirical research shows that EMU improves economic performance, but is also associated with higher inequality and lower social spending. This casts doubt on the political sustainability of EMU without social-policy integration and much deeper financial market development. Thinking about EMU’s future, it would be wrong and dangerous to disregard the implications for income inequality and its remedies.

How to make the euro more sustainable

By: Mike Wickens, University of York

The euro area faces two problems, one for the long term and one for the short term. The long-term problem is that, sooner or later, the divergence of price and output levels will threaten the sustainability of the euro. The short-term problem is that, having given up two of their three macroeconomic policy instruments, countries have only their social instrument left to stabilise their economies. This suggests that the euro area countries require greater social policy flexibility and not less.