The ECB and the Fed

By: Charles Wyplosz, Graduate Institute of International Studies

Facing different situations, the Fed and the ECB muddle through, each in its own way.

The case against a Grand Coalition in 2009

By: Wolfgang Münchau

Forget all this hogwash about the responsibility of the cenrtre. Grand coalitions are undemocratic.

German economy close to recession

The Ifo index crash for the third successive month, raising fears that the euro area's largest economy is about to fall into a recession; Allianz is edging towards merging its Dresdner Bank unit with Commerzbank to create a giant national champion as a deal with the China Development Bank is running into political opposition; in the US, meanwhile, real house prices are now 25% down from their peak, and falling further.

New collateral rules to drive up financing costs for euro area banks

A change in the ECB’s refinancing rules is intended to reign in excessive use of ABS as collateral; Ireland’s Europe minister says a second referendum was the only way to solve the Lisbon crisis; German economists warn of a serious increase in recession risk; the French budget and economy ministers, meanwhile, appear divided over the 2009 economic forecast.

All well in Jackson Hole

Complacency rules at the world’s annual junket of central bankers – interrupted only by a rancorous intervention of a European economist; Robert Mundell calls for a global conference to stabilise exchange rates; Jean Peyrelevade criticises Nicholas Sarkozy of repeating the economic policy errors of Francois Mitterrand; the ECB, meanwhile, is considering to tighten its liquidity rules.

EU Commission plans desposit insurance directive

Plans to raise minimum protection level to €40,000; the oil price dropped below $125pb, and other commodities have also fallen sharply; Almunia criticises Sarkozy’s plans for the ECB; and Jose Manuel Barroso, meanwhile, says he wants to stay president of the European Commission beyond next year.

Serbia's big step towards EU membership

Arrest of Radovan Karadzic a big step towards pre-accession treaty entering into force; IMF says global imbalances are there to stay; Greece might be forced to revise its fiscal goals; housing crisis might wipe out most of US financial sector capital; the latest constitutional changes in France, meanwhile, still make a referendum on Turkish EU membership highly likely.