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The talk of the continent


Euro crisis: Why Joseph Stiglitz is wrong

Mon, 12 Sep 2016 15:24:09 +0100

Alternatives économiques , Paris – In his latest book the American Nobel prize for ‘a smooth exit’ from the euro. Unfortunately, his stance reflects a deep misunderstanding of the realities of the old continent, says the editor-in-chief of Alternatives Economiques. See more.

Greek bailout: Washington Advised Greece in Bailout Negotiations

Wed, 30 Sep 2015 14:17:52 +0100

I Kathimerini, Athens – The US urged Athens to avoid attacks on Germany and to find allies. See more.

Greece gets third bailout: Back home

Thu, 13 Aug 2015 10:58:04 +0100

Trouw, Amsterdam – Cartoon. See more.

More austerity for Greece: Loading up the boat

Sat, 18 Jul 2015 16:34:32 +0100

I Kathimerini, Athens – Cartoon. See more.

After the agreement on the Greek debt: ‘Greece might no longer be a country by the end of this week’

Tue, 14 Jul 2015 14:09:03 +0100

This press review has been made with the contribution of euro|topics and for Internazionale. After a deal between Greek and eurozone leaders was hammered out following 17 hours of arduous negotiations, there is really nothing to cheer about, writes Michał Sutowski in Krytyka Polityczna. “With PM Tsipras’ back against the wall, the German government has pushed through nearly all its conditions; it’s a minor consolation for the Greeks that a ‘temporary Grexit’ turned out to be a negotiation stunt rather than a real proposal and that the restructuring fund will be located in Athens instead of Luxembourg”, writes Sutowski. He stresses that the negotiations have clearly shown the EU leaders’ goal was “to crush the Greeks’ resistance and not to reach a compromise” – Angela Merkel had a chance to join the pantheon of the great, in a way, of “progressive” European conservatives. Had she forced through, against the German press and her own finance minister, a civilized reform package in exchange for a partial debt restructuring, she would have been on the same footing with Otto von Bismarck and Benjamin Disraeli. It seems though that she decided to become a ‘thrifty housewife’ instead. “It may sound a bit dramatic, but there is no better and shorter way to describe the emergency situation”: Greece might not be a country anymore at the end of this week, writes Tine Peeters, journalist at De Morgen. Due to the new agreement the Greeks no longer have self-determination, both on political as well as economic and financial level — The growing chaos can be attributed to the European and Greek leaders. Alexis Tsipras hoped by organising the referendum he would have made Greece stronger against Europe. But he has gambled it away and lost Greece everything. Now pawnshop-Europe takes over, under strict conditions, ‘the state formerly known as Greece’. Larry Elliott criticises the latest bailout conditions, which, he claims, rely on dodgy economics. By stripping the Greek government of “automatic stabilizers” – the ability to increase the deficit in bad times to promote growth – Greece’s creditors have condemned the country to further pain. Elliott suggests two ways to end the crisis — The first is to write off a large chunk of [Greece’s] debts. The other is to allow it to grow at a pace that allows it to service its debts. This deal offers neither. [...] This is not a solution. It is a chink of light filtering through the bars of the debtors’ prison. Stephan-Andreas Gasdorff points out one German politician that lost during the negotiations over Greece: Social-Democratic vice-Chancellor Sigmar Gabriel. By flip-flopping his position on a temporary Grexit, Gasdorff writes, “Gabriel has failed his practical test” which required him being “trustworthy, value-driven, and consistent.” The drama around Greece has ended badly; but first and foremost for the SPD. Because the party lost a future candidate for Chancellor. […] And the worst part: everybody saw it; everybody knows it. Even Sigmar Gabriel himself – his political instinct will tell him this. Europe has deprived Greece of its sovereignty and is treating it like a little child, Lucio Caracciolo writes in anger in the centre-left daily La Repubblica: Greece has ceased to exist as an independent state. What remains are the Greeks, who are called on not only to make devastating economic sacrifices but also to suffer the humiliation of being treated like minors not allowed to take care of their own affairs. Custody is formally being handed to Brussels and Frankfurt, but effectively to Berlin. A strict father who was tempted not to recognise the child, but was eventually convinced that it would be better to act as if Greece retained a modicum of Hellenic sovereignty. At least for now, to prevent the declaration of the death of the state under its supervision from causing the colla[...]

Greek crisis towards a solution: ‘The confidence argument will end up going against those parties who betted on a Grexit’

Mon, 13 Jul 2015 11:28:41 +0100

Merkel is tougher than ever on Greece, writes De Volkskrant in an analysis. On Sunday afternoon she repeated the essence of her position on Greece: “A deal is still possible, but should not come at any price.” Merkel knows her fate is connected to what happens to Greece and has to take into account the fact she has to deal with both the German citizens – she promised more than once they wouldn’t have to pick up the check – the disagreement in her own party, the CDU-CSU, the “decomposing” French-German axis, the IMF, the threat of the opposition party AfD and the US. The field of forces in which she has to operate is a complex entity, consisting of partially conflicting domestic and foreign interests that she can’t possibly serve all at the same time. That is why she is cautious, as ever. “If this weekend’s discussions allow us to see more clearly each party’s position, the future they promise is not a happy one for Europe. For the very idea of Europe”, David Carzon writes in the French daily. For Carzon — The confidence argument will end up going against those parties who betted on a Grexit. How can we believe in a Europe that prioritises domestic political considerations above everything else? If we are not convinced of Greece’s ability to respect a repayment schedule, we should not start talking about its departure from the eurozone. But rather about what conditions will actually allow Greeks to get their heads above water and rediscover some of that famous confidence. And that along with our own confidence in the future of a Union for solidarity and democracy that is close to European citizens. Writing in the Monday edition, foreign editor Stefan Kornelius reminds us that Europe and the eurozone are a “political and legal community,” which “can only function if the laws and political boundaries of all partners are respected.” Both of which Greece did not do. He adds that the ESM asks for stricter rules than his predecessor the EFSF, but these do not come from Germany, but are the result of years of political consensus. Different rules for different countries would lead to the end of the euro as we know it. Greece is not failing because of Germany or the nearly dozen countries that have similar ideas than Germany. Greece is failing because of itself. But this is also true: if the eurozone invents a Lex Greece, it will need a Lex France and a Lex Italy. This would be the end of the euro. For a long time France and Germany have been the main engines of the EU integration. But as far as the Greek crisis is concerned, they stand on opposite sides of the barricades, writes Bartłomiej Niedziński in Dziennik Gazeta Prawna – Paris is the most willing to make concessions to Greece while Berlin is among the most intransigent [member states]. According to unofficial information, last week French advisors had even assisted Greece in drafting the newest proposals and when they were finally presented, president François Hollande called them ‘serious and credible’ […] As the French economy lags more and more behind the German one, France’s readiness to compromise results from its own anxieties and fears. Casimiro García-Abadillo, the editor of Spanish daily El Mundo, considers the negotiations on the Greek crisis to be centered on “an essentially political dilemma”, because — What does membership of the euro mean? Budgetary discipline. What is the essence of Syriza’s programme? An end to cuts, and so a refusal of budgetary discipline. What does membership of the EU mean? The progressive loss of sovereignty. What is one of the essential characteristics of Greece’s extreme left? Nationalism. The mistrust towards Tsipras is therefore not only supported by his own negotiating style, but also by the fact the the Greek Prime Minister cannot accept certain principles without betraying himself. Boris Johnson,[...]

Greece and the rest: The map of the most indebted countries

Fri, 10 Jul 2015 10:27:06 +0100

Among the members of the European Union, Greece is by far the country with the highest level of public debt. This map, created by, is based on IMF estimates published in April. Since then, Greece's financial situation has worsened.

The map shows how the relation between public debt and GDP varies in EU countries. Seeing the differences between countries allows for a better understanding of the reasons for their different political orientations. Spain's serious situation helps explain the success of Podemos. On the other hand, the countries on the East of the eurozone are among the least indebted of the EU: this is why their governments are some of the most harsh when it comes to Greece.

European press review: ‘Everybody has begun to agree that the eurozone is not one, sacred and indivisible’

Wed, 08 Jul 2015 15:51:48 +0100

Ambrose Evans-Pritchard argues that Tsipras never expected to win Sunday’s vote, with Greece is now “hurtling” towards eurozone exit. This is in no small part due to the shortsightedness of Europe’s leaders. In spite of US pressure – 15 of the 18 governments now sitting in judgment on Greece either back Germany's uncompromising stand, or are leaning towards Grexit in one form or another. [...] [In the event of Grexit] it is hard to imagine what would remain of Franco-German condominium. Washington might start to turn its back on Nato in disgust [...] a condign punishment for such loss of strategic vision in Greece. Most in Brussels and in Berlin, writes Ulrich Schäfer, think that Varoufakis stepping down is a good thing. But despite “insulting” others, the former Greek finance minister “raised the right questions, the right subjects – but he used the wrong tone.” He raised questions about European crisis management, the sharing of social burdens, a debt write-off and the problem that a broken economy suffocates under more austerity. Varoufakis is not alone among economists for what he stood for. [...] But he disregarded the fact that to succeed in politics you need majorities – not only at home, in Greece, but also in 18 other countries of the eurozone. [...] But this should allow the EU to finally have the debate started by Varoufakis – and to go some way to correcting its policies. “An uncommon situation has occurred in Europe: everybody has started to agree that the eurozone is not one, sacred and indivisible”, writes Hubert Kozieł in Rzeczpospolita. As a result, top EU representatives are suggesting that “nothing terrible will happen” if the Greeks eventually leave the eurozone – Since nearly everybody agrees that the euro without Greece is possible, then maybe after the parliamentary elections in Spain everyone will suddenly admit that euro without Spain is also possible […]. And why not throw out the troublesome Italians, too? Or the Irish accused of tax dumping? Or Portugal and France, the latter often called the sick man of Europe? Indebted Belgium or Slovenia dealing with the banking crisis’ fallout? Maybe only Germany, the Netherlands, Austria, Finland, Slovakia and Luxembourg should stay in the Eurozone? Finally we would have some peace and quiet while Europe could calmly integrate. Milan Vodička points out that the eurozone is divided into three groups regarding Greece. While Germany and Eastern Europe, which underwent painful reforms and austerity, do not have sympathy for Greeks, others are less severe and still strive to keep the country in the eurozone. Such division helps Tsipras to play his dangerous game. It's like a game of chicken when two cars in a movie are heading towards each other and the one who gives way loses. But driver of one car is well aware that in the other car a bunch of people with a different view of the race are at the steering wheel. Bart Eeckhout, commentator at De Morgen, calls the negotiations between the EU and Greece a poker game with high stakes. “The fact this highly risky, ‘playful’ tactic has won out over a problem solving strategy is the fault of both parties”, he writes. Although the negotiations are taking too long, Eeckhout sees one big advantage, the game is now played by “the real chiefs”: They are also playing poker with a lot at stake: the historical responsibility for breaking the unbreakable currency union. Even with all the precautionary measures taken, nobody knows how this will end. For the moment, Merkel and Hollande are too afraid to play this part. And so they should be. The political scientist José Ignacio Torreblanca argues that “the set of values governing the eurozone has deteriorated and is no longer shared by all stakeholders”: The Gr[...]

After the referendum in Greece: ‘Eurozone leaders will face Grexit’

Tue, 07 Jul 2015 14:32:05 +0100

“This evening the 19 Eurozone countries leaders will face Grexit”, writes Jurek Kuczkiewicz in the Brussels daily: “they will have to decide whether Greece will remain in the eurozone and this will inevitably lead to questions about whether it should stay within the EU”. “Today”, adds Kuczkiewicz – It’s not VAT or the pension reform that are at stake. It’s not the debt nor the cult of financial austerity. It’s even not the morals according to which those who spent too much should pay back their debts. Greece is on the brink of financial collapse – and it could be inevitable at this point – that will trigger serious problems and will bring the Greek people’s resentment of Europe to a level hard to come back from. […] Tonight the nineteen European leaders – including Tsipras – will have to move beyond finger pointing about who is right and who is wrong, and will have to find the right words to say where the common good lies – if there still is any. And sometimes it exists only because true leaders have been able to locate it. Columnist Markus Bernath tries to answer the fundamental question of the moment: “How will things be, moving forward?” The most plausible outcome for him is that, given the deepening economic crisis, a new bailout would require more austerity than the one Tsipras could have had in June. Still, Bernath writes, “Tsipras still thinks he can have a better agreement": The Greek referendum is a confusing revolt against Europe. [The No-voices in Greece] want respect, equal treatment in the EU, economic help, no recession and to keep the Euro. But if there is no deal, some might not care; even the return to the Drachma isn’t scary anymore. Today the Greek PM Tsipras will meet his EU colleagues in Brussels. De Volkskrant wonders how both parties can reach out to each other. One of the options for the EU would be to oust the eurogroup president Jeroen Dijsselbloem – New brooms sweep clean. However for the European negotiators it is more difficult to sacrifice people than it is for the Greeks. The real fire-eater is the German finance minister Wolfgang Schäuble, but the euro countries can’t force national politicians to resign. Jean-Claude Juncker, who openly campaigned for a Greek yes, has only just become president of the European Commission. President Draghi of the European Central Bank isn’t politically responsible. That leaves Jeroen Dijsselbloem. [...] For many Greeks he is the bogeyman and the face of the unwillingness in Brussels to reach out to the Greeks. Columnist Enric Juliana echoes in the Barcelona daily the turmoil within European institutions, after the referendum in Greece and the possibility that Spanish Economy minister Luis De Guindos will replace Jeroen Dijsselbloem as Eurogroup chief –  The European leadership’s political defeat in the Greek referendum leaves the Eurogroup president, Dutchman Jeroen Dijsselbloem, badly hurt, as he was percieved as the hardliner’s voice. Spanish ministers have been aspiring to Dijsselbloem’s job for months – it was a promise made by Angela Merkel to Spanish PM Mariano Rajoy before the 2014 European elections – but Dijsselbloem refuses to quit. If the Greeks have sacrificed Yanis Varoufaikis, the Eurogroup could end up suggesting the Dutch Finance minister should leave. The European elites mishandled the Greek crisis which ended with a major defeat for Europe, writes political scientist Tomasz Grzegorz Grosse in Rzeczpospolita. In his opinion, the crisis undermined the EU’s geopolitical position and highlighted the structural imbalances in the eurozone ­– The Greek crisis has dismantled dreams about European power. The most important consequence of the current turmoil is a defeat of the monetary union as a geopoli[...]

After the referendum in Greece: ‘The odyssey is far from over’

Mon, 06 Jul 2015 12:28:49 +0100

“The odyssey is far from over” headlines The Guardian, which economics editor Larry Elliott gives as a warning to eurozone leaders determined to impose austerity on Greece despite Sunday’s no vote. “Put simply,” Elliott argues, “they should try a bit less stick and a bit more carrot” through debt relief. Even if leaders come to a deal, the crisis has unsettling long-term implications — Greece has highlighted the structural weaknesses of the euro, a one-size-fits-all approach that doesn’t suit such a diverse set of countries. One solution would be to create a fiscal union to run alongside monetary union [...]. This, though, requires the sort of solidarity notable by its absence in recent weeks. The European project has stalled. The message of the Greeks is clear, writes Bart Sturtewagen, editor-in-chief of De Standaard. After a week of (almost entirely) closed banks and the considerable damage this caused to daily life business and the economy, “an unexpectedly large majority anyway chose to take the risk to say no to the bailout of the European Union and the IMF.” Although the price to pay will be incredibly high and the results will be a dramatic blow to the eurozone and the European Union as a whole, Sturtewagen says — The inclination to no longer support the Greeks is an understandable reaction. But this is pre-eminently the moment to keep our heads cool. It is the dialectic of crime and punishment that has brought us in this misery. This approach has proven its uselessness over and over again. The question of a debt rearrangement can no longer be avoided. Even the IMF knows that. If Tsipras really wants to do something with his victory, he needs to prove his country doesn’t only want to receive money, but also wants to change himself and his government. Voting no was provocative, but unfortunately also the easy part. Athens is on the brink of Grexit following a referendum in which Greek voters rejected the terms of the bailout, but “there is still flickering hope” that there will be no return to the drachma, writes Tomasz Bielecki in Gazeta Wyborcza. The Warsaw daily stresses that it is now up to Paris and Berlin to decide what comes next — New aid for Greece has to be accepted by 18 eurozone members and Germany is not the most hawkish of them. However, if chancellor Angela Merkel were to yield to the Greeks, she would have to allay the anger of the Dutch, Spanish and Lithuanians who are tired with the Greeks’ stubbornness. It is not certain whether she would succeed as emotions fly high on both sides and the situation could easily spin out of control. “The EU must minimize the debris caused by the Tsipras government,” writes Stefan Ulrich in the Süddeutsche Zeitung. The EU should, he argues, grant emergency aid to Greece; for any new big aid programme, Greece will have to make proposals for reforms or “the Euro could very well live without them.” He calls the result of the referendum a “no to compromise” — The Greeks are not the only people in Euro-Europe. They can decide their own destiny. But they cannot dictate anything to other people and their governments. And they especially cannot dictate terms to other eurozone members which would see Greece receive billions of euros from them with no conditions. Given the referendum’s outcome, SME’s Peter Schutz is sceptical about any deal on the Greek crisis and predicts a rather unpleasant future for the country. July 5 will enter the history books in a similar way to 9/11 or the Lehman Brothers, as the Greeks’ refusal of the creditors’ programme will start writing a new chapter in the history of Greece, the eurozone and even the EU, the liberal daily’s editorialist suggests. In his opinion, Greece could eventuall[...]

Greferendum: OXI!

Sun, 05 Jul 2015 22:31:50 +0100

To Ethnos, Athens – Cartoon. See more.

Referendum in Greece: Europe at its worst

Sat, 04 Jul 2015 15:53:17 +0100

eutopia, Rome – It could not have gone worse, says political scientist Piero Ignazi: the most pessimistic predictions have all turned out to be true. Worse than that, they are past every limit. There is, in fact, no limit to the worse. See more.

Greek Crisis: ‘Greece and euroland: A battle for credibility’

Thu, 02 Jul 2015 10:55:41 +0100

More billions of euros in aid is not the only thing Greece and the Eurozone are scuffling about as credibility is even more important, writes Rzeczpospolita. The Warsaw’s daily stresses that saving credibility is particularly essential for Chancellor Angela Merkel, the main advocate of the bailout plans offered so far to Greece –

Merkel has to defend her politics [towards Greece] in Germany as well as in Europe and must prove that euroland is alive and so are its rules. At this stage, it means resisting negotiations of any possible future compromises with the Greeks. At the other extreme of credibility is the Greek government. PM Alexis Tsipras is seen in Europe as totally unpredictable. He is sending new proposals to Brussels that nobody believes in. Maybe he is afraid of Greece entering unchartered waters of bankruptcy or maybe he fears for the result of the referendum in which distressed Greeks may not want to turn their backs on the euroland.

Referendum in Greece: Nobel laureate Joseph Stiglitz calls to vote ‘no’ to bailout plan

Thu, 02 Jul 2015 08:42:16 +0100

This weekend's referendum gives Greek voters a choice between two radically different futures, Joseph Stiglitz writes in Project Syndicate. Approval of the IMF-ECB-EU troika's terms will mean "depression almost without end" for the country, while a rejection leaves open the possibility of a "far more hopeful" outcome, even if Greece never regains its former prosperity.

Stiglitz notes that, when it comes to reducing a primary deficit, "few countries have achieved anything like what the Greeks have achieved in the last five years." But this has come at an unacceptably high human cost: austerity measures have so far been responsible for a 25% drop in Greece's GDP and a youth unemployment rate of 60%. That the troika is demanding further cuts is a sign that ideological motivations have trumped financial considerations.

The troika's demands on Greece, Stiglitz claims, are founded on "abysmal" economics. It wants a primary budget surplus (excluding interest payments) of 3.5% of GDP by 2018. "Economists around the world have condemned that target as punitive," he writes, "because aiming for it will inevitably result in a deeper downturn." The troika's current position has more to do with ideology than money: Greece must be forced into accepting not simply austerity, but punishment.

Stiglitz, a Nobel laureate in economics, calls attention to the real beneficiaries of the series of bail-outs so far issued to Greece —

We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there. It has gone to pay out private-sector creditors – including German and French banks. Greece has gotten but a pittance, but it has paid a high price to preserve these countries’ banking systems. The IMF and the other “official” creditors do not need the money that is being demanded. Under a business-as-usual scenario, the money received would most likely just be lent out again to Greece.

But it is for the eurozone that Stiglitz reserves particularly strong criticism. He argues that representatives of the eurozone are attempting to force a democratically elected government to go against the wishes of its voters. The eurozone, for Stiglitz the "antithesis of democracy", believes it can bring down Syriza "by bullying it into accepting an agreement that contravenes its mandate." Given the severity of these bail-out conditions, there is, for Stiglitz, only one viable option: Greeks should put democracy first by rejecting the troika's terms. While the outcome is far from certain, a no vote would allow Greece, "with its strong democratic tradition, [to] grasp its destiny in its own hands."

Greek crisis: Greece will need much more

Wed, 01 Jul 2015 11:06:35 +0100

According to Czech economic daily’s editor David Klimeš negotiations between the Eurozone and Greece are seemingly technical as both sides are throwing out numbers but in reality the outcome will be pure politics as no credible data on Greek economy are actually available and Greek proposals are impossible to verify and Greece will need more money it asks now.

At the moment, the bargaining between Greece and the Eurozone is purely political exercise that is not about billions but rather a political will to save Greece or let it down. Everyone knows that numbers don’t match and that Tsipras' commitments to reforms are not worth much. We are left with one certitude that has become unfortunately a tradition: Greece will need much more than it says today.

Greek crisis: Greece is now in bad company

Wed, 01 Jul 2015 10:49:16 +0100

The Standaard editor-in-chief Bart Sturtewagen writes that today Greece has joined the same circle as Zimbabwe, Somalia and Sudan. Although it isn’t the first time the country has gone bankrupt, the fact it is now part of the European currency union changes everything.

The fact that a member of the eurozone is on the brink of default is a disgraceful defeat for all leaders concerned. The euro is not a market instrument only in the hands of the principle of supply and demand. It is the most concrete manifestation of the desire of hundreds of millions of Europeans to throw their lot with one another. The way it was messed about the last months and years, harms the credibility of the entire European project.

Greek crisis: Greece and the EU are flexing their muscles

Wed, 01 Jul 2015 10:43:57 +0100

Marek Beylin, Gazeta Wyborcza’s commentator, is urging Greece and EU to make a last-ditch effort to reach an agreement which should be, however, more favourable to Greeks. In the absence of it, the Greek crisis may spill over into the rest of Europe, including Poland, destroy “European solidarity”, strengthen europhobes and undermine Europeans’ “faith in the EU”. According to Beylin, "Grexit" will also pose other serious threats –

Bankrupt and abandoned, Greece may permanently destabilise Europe and become a breeding ground for extreme forces – fascist and neocommunist – radiating across the continent. Compared to them, Prime minister Tsipras’ Syriza would look as a good-natured centrist party. Most probably, Greece would also form an alliance with Russia thus weakening Europe’s security.

Greek debt crisis: Tsipras played his last chips

Tue, 30 Jun 2015 09:39:18 +0100

I Kathimerini, Athens – By calling for a referendum on 5 July on on the series of austerity measures demanded by Greece's creditors in exchange for a bail-out plan, Greek prime minister spread distrust among Eurozone partners and put his country on the brink of economic disaster. See more.

Profile: Jeroen Dijsselbloem, the euro doc

Wed, 17 Jun 2015 10:31:13 +0100

Vrij Nederland, Amsterdam – Can he hold together the monetary union and prevent a Greek default? As Jeroen Dijsselbloem is likely to be reappointed as president of the Eurogroup, Vrij Nederland looks into the career and style of the Dutch Finance minister. See more.

You recommend: Advertising the EU

Fri, 22 May 2015 23:57:27 +0100

, – See more.

A reader suggests: Germany endangers eurozone stability

Mon, 18 May 2015 22:03:02 +0100

The Daily Telegraph, London – See more.

Investigating Germany’s new role in Europe: The Fourth Reich, really?

Wed, 01 Apr 2015 11:56:12 +0100

Where does Germany stand in Europe? And are its downtrodden southern neighbours justified in comparing its current dominance to the dark days of Nazi rule? These are the questions that a group of journalists attempt to answer in a special enquiry for German weekly Der Spiegel. They draw from Germany's troubled past to argue that Europe's “reluctant leader” paradoxically considers itself both too big and too small to fulfil its current role: The eurozone is clearly ruled by Germany, though Berlin is not unchallenged. It does, however, have a significant say in the fates of millions of people from other countries. Such power creates a significant amount of responsibility, but the [German] government and other policymakers nevertheless sometimes behave as though they were leading a small country. Germany has gained de facto political dominance through economic success, but is largely unprepared to take up real political leadership by compromising on its short-term interests, Der Spiegel's writers argue. Its diplomatic brashness is born out of an intransigent desire to see all eurozone members adhere to the German principles of thrift and efficiency. This is grist to the mill for the increasingly vocal opponents to German hegemony — For almost all critics of German policy, a single word has become the focus of their complaints: austerity. It refers to policies of thrift, a concept that has positive connotations in Germany. But in European countries hit hardest by the debt crisis, it stands for a bleak policy of externally-imposed deprivation. Germany isn't just exporting its goods anymore, it is also exporting its rules. Interviewing dissenting figures from Greece, Italy and France, Der Spiegel's team reports that the comparisons to the Third Reich stem from Germany's efforts to safeguard its own economic interests. While the newspaper discounts such comparisons, claiming "no one would actually associate Merkel with Nazism", it adds that "further reflection on the word "Reich," or empire, may not be entirely out of place." For Germany undoubtedly exerts a powerful influence well beyond its borders, imposing a politics of austerity on unwilling economic partners. Historical precedents provide unsettling lessons for the current masters of Europe. Germany's Second Reich, formed under Bismarck and lasting until defeat in the First World War, found itself in a precarious position: it had become Europe's leading power and yet was not strong enough to dominate the continent alone. Germany, the authors argue, is in a similar situation today. Its trade surplus now stands at €217 billion, while capital exports from German banks have spread its economic interests across Europe. But while Germany towers over its neighbours, it is uniquely vulnerable to economic collapse in Europe's south. Once again, it is both too big and too small to lead effectively — Creditors want to have power over their debtors because they are afraid. Afraid that they won't see their money again. Germany could pay Greece's debts, but not those of Italy and Spain. The question remains of how Germany could better take up the mantle as Europe's most powerful nation. Der Spiegel's writers conclude with the opinion of Hans Kundnani, a London-based specialist on German foreign policy. "A real hegemon like the US," Kundnani writes, "doesn't just establish norms. It also creates incentives for those it rules over so that they remain part of the system.[...]

Economic recovery: Looking within as a growth model for Europe

Fri, 13 Mar 2015 08:41:52 +0100

eutopia, Rome – The EU is the world’s largest and most elaborate internal market. If it is to survive, it has to look within to see its potential as a driving force to trigger growth, writes Italian economist Innocenzo Cipolletta. See more.

Debt crisis: Black sheep Berlin

Fri, 06 Mar 2015 15:37:29 +0100

Greek newspaper Avgi, close to the Syriza party of Prime Minister Alexis Tsipras, has published a cartoon of German Finance Minister Wolfgang Schäuble “dressed in a uniform of the Wehrmacht, the army of the Third Reich, with a war cross around his neck”, observes Brussels correspondent Jean Quatremer of French newspaper Libération. Tsipras did not condemn the cartoon until two days after it was published. The Greek prime minister, writes Quatremer, was in fact the first to “open the floodgates of anti-German sentiment” by asking Germany for compensation for damage suffered by Greece during the Second World War. With the crisis, anti-German sentiment is creeping around the continent, and Berlin “is starting to worry”. In the United Kingdom, “part of the political class […] and the popular press are upset to see the loser of the two world wars impose itself as the uncontested master of the eurozone,” writes Quatremer, adding the hostility towards Germany is growing in France as well. Right-wing sovereigntist Nicolas Dupont-Aignan qualifies the European Union as the “Fourth Reich”, Left Front leader Jean-Luc Mélenchon says “the attitude of Germany is arrogant, domineering, and leading Europe to chaos”, and the leader of the National Front, Marine Le Pen, has denounced “Greece’s capitulation to Berlin’s blackmail”. The journalist notes anti-German discourse is even gaining ground with the centre-right UMP and ruling Socialist Party, due to divergences in the handling of the euro crisis. “The Germans work according to the rules. It’s only afterwards that they consider the context, while we and the Anglo-Saxons are much more pragmatic,” a French government minister tells Quatremer, who explains that — it is enough [for Berlin] to follow the agreed rules and to not get into creative interpretation or adapt to the circumstances. As such, their “neins” become repetitive: no to a European plan to rescue the banks, no to a European recovery plan, no to financial aid for Greece, no to a soft interpretation of the rules. However, the Bundestag endorsed the result of the most recent negotiations with Greece, “which was not a foregone conclusion”. German tabloid Bild campaigned against extending aid to Greece, and the plan was far from winning wide public support. Quatremer writes that — Each time, Germany has accepted what it initially rejected: keeping Greece in the eurozone, financial solidarity with countries in difficulty, banking union, relaxing the terms of the Stability Pact, the European Central Bank’s new expansionist monetary policy, the agreement given to a partial recognition of the reforms sought by Athens, and so on. The journalist asks whether France is responsible for these anti-German sentiments, since “the waning influence of [France] on the European political scene reinforces the impression of brutal domination by Berlin.”[...]

Debt crisis: Let’s kick Germany out of the Eurozone

Tue, 03 Mar 2015 11:11:38 +0100

Germany's towering trade surplus is the key force behind Europe's economic malaise, writes Patrick Chovanec in Foreign Policy. And Berlin’s departure from the Eurozone would help rebalance both the European and the global economy. Chovanec deploys the ideas of nineteenth-century economist David Ricardo to argue that Europe's trade imbalance must be reduced by increasing Germany's domestic demand – and therefore its borrowing. Historically, Germany's surplus income has been lent back its neighbours, resulting in Europe's current debt crisis

It’s hard to argue that Germany’s excess savings, which its banks often struggled to put to use, were well invested. Instead, they gave Germans the illusion of prosperity, trading real work (reflected in GDP) for paper IOUs [debt acknowledgement] that might never be repaid.

Under normal circumstances, Chovanec continues, exchange rates would narrow the gap by boosting the competitiveness of Germany's trading partners. But the fixed rates of the eurozone do not allow for this re-adjustment. The zone's debtor nations are forced to move "in lock step" with the German economy, so their trade imbalance can be reduced only by decreasing demand for imported German goods. This requires a plunge in overall consumer demand. The eurozone's southern members have reduced their deficit with Germany, but at the expense of growth.

For Chovanec, it is not a question of Europe's economies becoming more like Germany, but rather of re-thinking what Germany does with its surplus —

The excess savings are already there; the only question is where to lend it all. Borrowing it domestically to drive a genuine European recovery might be preferable to (once again) throwing it at foreigners to buy things they really can’t afford.

A German exit from the euro would give a competitive advantage back to its debtors, increasing domestic borrowing and allowing the surplus to be spent at home. This would relieve pressure in Europe and globally, since Germany's reliance on the American market – "the world’s consumer of last resort" – has also led to ever more debt, and to fears that it may never be repaid.

Elections in Greece — Seen from Europe: ‘Athens has no interest in losing the support of the EU’

Mon, 26 Jan 2015 13:05:21 +0100

Syriza, led by 40-year-old Alexis Tsipras, won 36.3 per cent of the vote, gaining 149 of the 300 seats in Parliament. The party has announced it will form a coalition government with the right-wing populist Independent Greeks. “Greece moves to the left,” headlines German left-wing paper Die Tageszeitung, illustrating its front page with a map of the Mediterranean with Greece moving west of Italy. “Greece voted democratically; the result deserves respect,” writes Klaus Hillenbrand, adding it “bears opportunities and risks” — [The victory] is a chance for Greece to get rid of corruption and nepotism. [...] Syriza can not circumvent negociations with European creditors; Greece would be bankrupt in a few months. [...] But Europe should take those negociations seriously. Headlining on the “Historical shift to the left in Greece”, German conservative daily Die Welt writes that “Greece urgently needs a functioning government.” A meeting of eurozone finance ministers is scheduled in Brussels today — Experts believe that Syriza will not remain on a collision course with the lenders. [...] Analysts of the Commerzbank believe that Athens has no interest in losing the support of the EU, thus making an exit from the euro unlikely. In Spain, El Periódico headlines “The Greece has had enough,” emphasising the fact that “Greeks have said ‘no’ to austerity, loud and clear.” In Brussels, “after having sounded all sorts of alarm bells, they have prepared for Syriza’s victory, without wanting to go back to the bargaining table, as Tsipras’s party wishes,” writes the Barcelona daily, according to which — No one wants Athens to abandon the euro. The debt level is undeniably high, but there are ways to extend deadlines and negotiate reductions, as long as they are not to be confused with cancellations. The EU knows how to be pragmatic, and Tsipras has also shown he is capable of toning down his rhetoric. [...] Only time will tell if this is the change that both Greece and Europe need. For the moment, indignation has given way to hope. “Greece and Europe on collision course after election win for left,” headlines The Independent, which adds that conflict appears inevitable due to the unprecedented situation of an anti-austerity party coming power, and that Syriza and the European Union may be quite capable of finding common ground — In theory, a radical party like Syriza is in a far better position to introduce structural reforms than that of [former New Democracy Prime Minister Antonis] Samaras representing the political and economic establishment. One of the problems for the Troika is that it is the very fact change was being imposed by abroad, and most notably by Germany, which delegitimised necessary reforms. Compromise between Greece and the EU should be possible, but the problem remains that the EU leaders hold all the high cards and may be tempted to impose their will regardless of whom the Greeks vote for. Paraphrasing Tsipras, Bucharest daily Adevărul writes Syriza’s victory “is for all the people of Europe”. However, the paper asks “when will we see the populism?” — Tsipras, a star of the socialist, anarchist and populist political scene in Greece, now has his chance to give Europe a fright. There are many Tsiprases in Europe, on the l[...]

ECB’s quantitative easing: ‘One trillion to boost Europe’

Fri, 23 Jan 2015 15:16:45 +0100

“ECB floods Europe with more then one trillion Euros”, headlines conservative daily Die Welt in Berlin. The ECB council did “not unanimously approve” the immediate launch of the program, Die Welt writes, adding that Germany will stick to its policy of “economy and reform.” The daily adds that — Critics say that the money will not reach borrowers but will rather be invested in shares or the housing market. This could lead to a new price bubble. Additionally, some fear the ECB might slow the will of reform in some countries by buying their bonds. ‘ECB, a 1,000-billion shake-up’, headlines La Stampa. The ECB’s quantitative easing is “positive by its amount and lasting, negative, since it leaves much of the risk’s burden on Central and national banks”, says Italian economist Marcello Messori in Turin daily. Among other economists, banking experts and funds managers — the reaction is almost unanimous. The decision has been taken within the ECB mandate, which weakens any legal issue that could be raised in Germany. […] Ayway, as Draghi repeated in his press conference, monetary policy alone is not sufficient. Reforms, reforms and reforms again is also the experts’ mantra. “One trillion to boost Europe”, headlines ABC. Recalling Mario Draghi’s declaration he was ready to do “everything that was necessary” to save the euro, the paper writes that “the Italian banker has been accompanied by an image of power, almost infallibility”. He is, for the Spanish daily — the only man capable of dealing with an insatiable market. Mario Draghi has spent two years experimenting measures to first end the sovereign debt crisis and then put Europe back on the road to recovery. But everything indicates that this recovery is not as strong as hoped, and Draghi has had to act again. The main fear of the markets is that the effort of the ECB would not be accompanied by additional measures of national governments. Because Draghi can not do everything. For the Financial Times, even though “it has taken far too long” for the ECB to begin quantitative easing, “its belated action is no less welcome.” The paper praises Draghi for taking action on weak growth and underlying inflation in the eurozone, but also warns that it now falls on national governments to do their part for recovery — To escape years of enervating weakness the eurozone needs not just a shot in the arm but a long course of treatment. This must include structural reform, not only of the sclerotic labour markets of France and Italy but also of Germany’s product markets, which is as overdue as QE. Neither the markets nor his critics think Mr Draghi has the tools to finish this job. To help prove them wrong, EU governments will need to show as much resolve as he has. [...]

ECB’s quantitative easing: Hard pressure

Thu, 22 Jan 2015 15:04:05 +0100

De Groene Amsterdammer, Amsterdam – Cartoon. See more.

Early elections in Greece: ‘On Tuesdays the euro, on Fridays the drachma’

Tue, 06 Jan 2015 15:49:24 +0100

Less than three weeks from general elections in Greece, Der Spiegel wonders about the intentions of Alexis Tsipras, the leader of the left-wing Syriza party and frontrunner in the campaign to form the next government. The German magazine sees mixed messages that leave observers across Europe “at times anxious and at others baffled” —

“Our party as a whole wants to see the country in the euro,” Tsipras has said, for example. But he qualified that statement by adding: “on the condition that social cohesion isn’t threatened.” On another occasion, he said the euro was “not a fetish” and that Greece was “nobody’s hostage,” whatever that might mean. […] Members of the current conservative government have joked that Tsipras’ positions are indeed clear. “On Tuesdays, Thursdays and Saturdays he wants to stay in the euro zone, but on Mondays, Wednesdays and Fridays we’re back on the drachma, and on Sundays he wants a referendum,” they say.

In any case, the magazine predicts a Tsipras-led government would be one of compromises, as Syriza is unlikely to win a parliamentary majority

The aid programs for Greece from the EU and the International Monetary Fund expire at the end of February. Negotiations to form a coalition government will likely take longer than that. And in Brussels, high-level diplomats are hopeful that the economic and political reality will catch up to the leftist ideologues in Athens.

2014 in Review: Angela Merkel, person of the year

Fri, 26 Dec 2014 10:44:57 +0100

British newspaper The Times has named German Chancellor Angela Merkel its person of the year for her “central role in preserving European stability at a time of resurgent Russian aggression”. In a leader article, the paper praises the German leader’s “refusal to be rushed and sense of what matters in a dangerous world” —

Increasingly clumsy postwar institutions including Nato, the EU and the United Nations Security Council failed to adapt to the swirling crises […]. In many hours of direct conversations with [Russian President] Vladimir Putin she has sought to set limits to his ambition and in so doing has helped to focus the west on what it values most, and what is worth fighting for. She is the pre-eminent European politician, the world’s most powerful woman.

The paper also looks to the challenges facing Merkel in 2015, when she enters her tenth year in power. These include renewing EU sanctions against Moscow when “several EU members, dependent on Russian energy, want to lift at least some of the punitive measures.” But The Times warns Merkel not to become “too distracted to play the central role expected of her management in the EU” —

It would be a terrible irony if by concentrating on healing the wounds in the east-west relationship Mrs Merkel neglects the gangrene afflicting north-south relations in the eurozone. Much ­depends now on her finding an imaginative solution that addresses British concerns on immigration and welfare and then persuading the rest of the union of the validity of the British cause.

Greek Presidential Election: Leaders raise fears over euro membership

Fri, 12 Dec 2014 11:27:57 +0100

Greek and European Union leaders are sounding alarm bells over the presidential elections to be held in Parliament on 17 December, whose failure to secure a majority would trigger the fall of the country’s coalition government and shake up its EU-brokered bailout deal.

Ekathimerini writes that Prime Minister Antonis Samaras, whose “coalition cannot yet count on the support of the 180 lawmakers it needs” to secure the presidency, has warned independent and opposition MPs that their votes could be a boon for the left-wing Syriza party, which he accuses “of scaring investors and threatening Greece’s position within the eurozone”.

The Economist observes that Syriza — which wants to cancel Greece’s debt and end austerity policies — would win more seats than any other party in the event of a general election, but adds it is not clear how its economic policies would be financed or “made compatible with Greece’s euro membership”.

In Brussels, EUobserver notes European Commission President Jean-Claude Juncker has weighed in on the election, saying he would prefer “known faces” to “extreme forces” and for the country “to be ruled by people who have an eye and a heart for the many little people in Greece and who also understand the necessity of European processes”.

Eurozone: ‘Europe stops; Draghi’s push’

Fri, 05 Dec 2014 10:31:45 +0100

European Central Bank president Mario Draghi announced that “projections for real GDP growth have been revised substantially downwards” for the coming years during a 4 December press conference. The GDP of the eurozone “is expected to grow by 0.8 per cent in 2014 (from 0.9 per cent three months ago), by 1 per cent in 2015 (from 1.6 per cent) and by 1.5 per cent in 2016 (from 1.9 per cent)”, reports Corriere della Sera.

“This is not the only bad news”, adds the Milan daily: “Draghi has once again cut the eurozone’s inflation forecast” over “fears of the deflation precipice coming closer – a risk the ECB would like to avoid.”

For the Corriere, the announcement marks —

the end of an era, that of the ECB president’s verbal guarantees regarding the eurozone. In the past two years, Mario Draghi’s ECB has built some trust in the single currency and, in the same time, bought some time for the eurozone’s politicians to implement the promised reforms and for banks to adapt their internal processes under Frankfurt’s supervision. […] Words are not sufficient any more, now that the figures show how anemic the eurozone really is.

Juncker’s investment plan: ‘The last chance to overcome the crisis’

Fri, 28 Nov 2014 11:00:17 +0100

The EU budget will provide €16bn, and another €5bn will come from the European Investment Bank. The rest will be financed by private investors. This press review has been made thanks to euro|topics. “Brussels is taking action. This is a signal, a wake-up call,” writes Die Welt. The German conservative daily believes Juncker's investment programme is the right measure for helping the crisis-ridden EU countries. However, it adds — The EU is setting up a fund with relatively little money that will cover a significant part of the risk for private investors in a bid to make them less wary and thus prompt new investments. However, it's unclear whether Brussels’s scheme for boosting investments will work to the full extent, as there’s a risk that simply not enough projects will find investors. Because the bottom line is that money is only invested in infrastructure, energy and digital technology when the returns on investments are attractive and the conditions are right in the respective country. “The European Commission is playing for a lot of money, but with low stakes,” comments La Libre Belgique, according to which — The game is a risky one, because failure would destroy trust in the Commission and hurt the European project, which will be further weakened if hopes are dashed. Member states still have to save and sometimes introduce painful reforms. They’re still paying a high price to recover from the crisis. The private sector must now shoulder its share of the responsibility. Austrian daily Die Presse is rather sceptical and does not believe Juncker’s investment package will revive the weak EU economy, in particular because of the bad shape of some countries’ budgets —  If businesses fear that growing debt levels will force them to pay more taxes and duties, this too will prompt them to invest less. For that reason, an incentive that uses new borrowed money seems rather counter-productive. Juncker’s investment plan is the last chance to save the EU, believes the Spanish left-liberal daily El Periódico, which wishes to “wait and see” if the private sector will be willing to invest in the fund — It wouldn’t be the first time such a programme is announced without ever bearing fruit. And the planned duration of three years seems too short to produce results, given the sluggishness of EU bureaucracy. But Juncker was right when he said this was the last chance to overcome the crisis. If this scheme doesn’t work, it would symbolise not only the failure of Europe, but of the EU itself. [...]

Banks: ‘Italy under pressure as nine banks fail stress tests’

Mon, 27 Oct 2014 08:44:46 +0100

The European Central Bank [ECB] published the results of its assessment of the 130 largest banks in the eurozone on 26 October, setting 11 of those banks a two-week deadline to explain how they would take remedial action to improve their balance sheets.

At the end of the test, which was conducted over the past year, “some 25 banks emerged with capital shortfalls,” writes the Financial Times, adding that Italy’s banking sector “emerged as the standout loser” of the ECB assessment, with Banca Monte dei Paschi di Siena standing as the “biggest failure”, with 9 banks falling short, followed by Greece and Cyprus (3 banks each), Slovenia and Belgium (2 banks each), Germany, France, Spain, Portugal, Ireland and Austria (one bank each).

Reacting to the publication, —

officials at the Bank of Italy criticised parameters in regulatory stress tests as unrealistically harsh on Italian banks and disputed the exact number of failures.

Eurozone: The seven fears of the markets

Fri, 17 Oct 2014 10:51:46 +0100

“For two years it seemed to be getting better, but pessimism has returned to the financial markets”, writes Dutch newspaper De Volkskrant after the Amsterdam Exchange Index (AEX) closed at the lowest point in a year on 16 October: 376.27 points, a drop of 0.9 percent. The CAC 40 (Paris) and FTSE 100 (London) both lost 0.5 percent.

As De Volkskrant explains —

Share prices went up 17 percent last year, and continued to rise in the first six months of this year. Shareholders took an advance on economic recovery. But their anticipations have reached a dead end due to a report by the IMF [International Monetary Fund] that showed a third recession had to be taken into account. [...] The pessimistic expectations of the IMF were immediately backed up by poor results in the German economy.

The Dutch newspaper attributes the pessimism to seven factors: possible recession in the eurozone, deflation, the threat of Ebola, fears of a new euro crisis, divisions in the eurozone over the policy of the European Central Bank, financial unrest in the United States and China and “the most trivial reason: when the autumn leaves fall down, the financial markets are often in a crisis. The historical crashes of the financial markets of 1929 and 1987 took place in the month October.”

Eurozone: ‘Fear of another recession in the EU makes stock market sink’

Thu, 16 Oct 2014 20:02:21 +0100

“The ghost of a new recession in the EU clearly materialised in the financial markets yesterday [15 October], as European stocks suffered their most severe drop in recent months,” writes El Mundo.

“Germany rang the alarm bells on earlier this week by drastically lowering its growth forecast, which resulted in German bond yields falling to record lows yesterday,” adds the Spanish daily. Moreover —

the IMF has warned about major European economies slowing down. The risk of a potential general stagnation in the eurozone is aggravated by France and Italy, which are in difficulty. Past French governments failed to change the course: the French economy is unable to regain competitveness and [prime minister] Manuel Valls’s government is fighting to implement its reform program.

European Central Bank: Can Mario Draghi save the eurozone alone?

Wed, 03 Sep 2014 12:19:47 +0100

For Le Monde, Mario Draghi is “the useful man of Europe”. The French daily explains in its editorial, “the man guiding the European Central Bank [ECB] knows how to weather the storm: he sends orthodoxy on its way.”

The paper says Draghi broke with consensus in September 2012 by announcing he was prepared to buy massive amounts of public debt, following a policy “destined to facilitate the distribution of credit”. And then, during August’s forum of central bankers at Jackson Hole in the United States, he called on governments to apply budgetary regulations with “flexibility”, estimating the ECB’s actions alone were not enough.

For Le Monde, it is important —

for a man like the president of the ECB to take such a line [on the need for an emergency economic policy].

In Geneva, Le Temps writes that “pressure is mounting” on Draghi as the threat of recession looms, and asks whether he will use his monthly ECB press conference on 4 September to announce a plan of quantitative easing, in which the central bank would buy astronomic amounts of assets. Whatever happens, says the Swiss daily, “the ECB alone will not save Europe” —

If the ECB can still provide a boost, it will not be a matter, as has been the case in recent years, of putting out fires in the short term. As Mario Draghi has already pointed out, the ball today is in the court of governments. That of Germany, in particular, whose public finances are among the healthiest, and which could launch a stimulus package that would benefit the entire zone. Other governments have their share of the work to do, as well, by beginning or continuing structural reforms.

Stagnating growth: ‘Eurozone recovery shudders to a halt’

Fri, 15 Aug 2014 09:08:29 +0100

Lacklustre performances from the eurozone’s three biggest economies resulted in stagnating growth in the second quarter of 2014, writes the Financial Times.

France registered zero growth, leading its government to announce it would fail to meet its deficit reduction target this year, while Italy went into recession for the third time since 2008.

The financial daily also notes German 10-year bond yields dipped below 1 per cent for the first time, which it says is due to anticipation that the European Central Bank (ECB) would —

follow the lead of the US Federal Reserve and the Bank of England by introducing a programme of large-scale bond purchases to boost the region’s economy. Expectations of action by the ECB also pushed down the cost of borrowing across the eurozone. […] However, monetary policy makers are not expected to act until the end of this year at the earliest.

ECB and interest Rates: ‘The Rate Shock’

Fri, 06 Jun 2014 11:07:46 +0100

As expected, the European Central Bank announced on 5 June it would lower its main refinancing rate to 0.15 per cent, down from the 0.25 per cent it has been up until now. The Governing Council also made the long-anticipated and controversial move to drop the ECB’s deposit facility rate below zero. From now on, banks can make us of the option at an annual 0.10 per cent interest rate. The measure aims to encourage banks to circulate liquidities instead of letting them rest within the ECB.

“German savers are the victims once again,” writes Die Welt, wondering —

What happens if the ECB’s long-term policy of extremely cheap money leads to nothing? [...] [Savers] will have to get used to the fact that saving is out of date – and this has already been the case for several years due to extremely low interest rates and the depreciation of annual inflation.

For British daily The Financial Times, Draghi “moved as far as he could” to steer the eurozone away from deflation, but doubts monetary policy alone can turn around the eurozone economy:

National governments must also look to their responsibilities. Many eurozone states, notably France, and Italy, need to complete structural reforms to boost competitiveness. Mr Draghi’s able stewardship has lowered bond yields, but this cannot excuse governments from taking the necessary medicine.

Monetary Policy: ‘Eurozone deflation fears add to pressure on Draghi’

Wed, 04 Jun 2014 12:04:51 +0100

In the run-up to a much anticipated announcement by the ECB on Thursday 5 June, the Financial Times reports that falling inflation, which dwindled to 0.5 per cent in April, will intensify pressure on ECB President Mario Draghi to adopt a looser monetary policy that could include cutting key interest rates to below zero and other radical measures.

The daily remarks that —

Large-scale asset purchases, known as quantitative easing, are not expected this month. But with the ECB set to exhaust all of its conventional tools to fight deflation, analysts are asking whether Mr Draghi will signal that the central bank is prepared to go further.

European Central Bank: “Mario Caesar Draghi”

Fri, 23 May 2014 10:59:25 +0100

For the German economic daily, the European Central Bank president is "a man buying time". He has "neutralized the euro crisis for the moment, and even the most stinging criticisms from within the Bundesbank recognize that the Italian's recipes are working. But at what price?" asks the paper.

Banking Union: A major leap forward

Thu, 19 Dec 2013 16:45:23 +0100

Le Monde, Paris – The agreement concluded by European Finance Ministers on December 18 provides for a single resolution mechanism for banks and will pave the way for a single resolution fund. As such it amounts to an important step towards a real monetary union, but not a definitive one. See more.

Bailout: ‘ECB assumes Portugal will have a new programme’

Tue, 17 Dec 2013 11:58:35 +0100

ECB President Mario Draghi warned Portugal on December 16 that the country will likely be subject to a “transitional period” austerity programme to ease its return to the markets when its current programme ends in June 2014, writes Público.

The Portuguese government has not officially ruled out a “clean exit”, such as that undertaken by Ireland, but will likely have to choose between a new troika bailout programme, or a return to the markets with a “precautionary credit line”.

In its editorial, Público writes that "Mario Draghi has pulled the rug from under Portugal" and accuses him of triggering a problem:

By ignoring ‘an Irish’ exit scenario at this early stage, Mario Draghi is sending a bad signal to the markets. It means that even he seems to doubt that in six months Portuguese interest rates will be at levels that will ensure the country’s peaceful return to the markets.

Ireland: Different day, same old austerity story

Mon, 16 Dec 2013 16:52:05 +0100

Irish Independent, Dublin – Ireland awoke on December 16 finally free of three years of crippling troika economic planning. However, despite financial sovereignty returning to Dublin, the country will find that just as events drove much of the crisis, so too will they drive policy in the post-troika era. See more.

Ireland: ‘Noonan signals early move to cut income tax as State exits bailout’

Fri, 13 Dec 2013 11:44:05 +0100

Irish Finance Minister Michael Noonan revealed the government is considering cutting income tax for some groups in 2015 or 2016 in an effort to grow the economy and boost job creation, as Ireland prepares to exit the bailout programme on December 15.

Pointing to positive signs in the Irish economy, Noonan told The Irish Times that creating new jobs was the government’s “absolute priority”, but refused to be drawn on details of any such tax cut.

He also criticised unnamed figures within the EU-IMF-ECB troika for for a lack of wisdom in their handling of the rescue and complained that former European Central Bank chief Jean-Claude Trichet’s uncompromising approach had made his role as finance minister more difficult.

Banking: ‘ECB to get tough on sovereign bond risks’

Thu, 12 Dec 2013 10:42:11 +0100

The European Central Bank (ECB) is to push Eurozone banks to hold capital reserves against their sovereign bond holdings, as it seeks to prevent weak lenders from buying up the debts of countries left vulnerable by the euro crisis.

Sovereign bonds are often thought of as risk free, however, the new drive would force banks to hold capital reserves as a proportion of their sovereign bond holdings.

The shift would be introduced as part of the ECB’s “health check” of the Eurozone’s largest 130 banks, writes the Financial Times, adding –

The vicious cycle that has seen banks use central bank cash to buy government bonds has been partly blamed for prolonging the Eurozone financial crisis.

Greece: Frosty outlook

Wed, 11 Dec 2013 17:04:39 +0100

I Kathimerini, Athens – Cartoon. See more.

Banking Union: Eurozone edges towards key goal

Wed, 11 Dec 2013 14:21:16 +0100

“Remarkable progress on banking union,” announces La Vanguardia. On December 10, an initial agreement was concluded by Eurozone finance ministers for the creation of a European authority with the power to decide whether to close or grant assistance to banks in difficulty. For the daily, this decision amounts to a “decisive step” towards banking union —

This progress is very important, because the union could become a decisive factor in the normalisation of lending to businesses and families, and thus offer a notable means of support for recovery in Europe. [...] Progress has been made on the acceptance of the European Commission as a the overseer of a mechanism to restructure and liquidate banks, a very delicate task that it will share with member states.

This point is one of the three pillars of the banking union, along with the supervision of banks by the ECB, which has already been launched, and the deposit guarantee fund. This last measure is still under discussion, but “giant steps forward” have been achieved in reconciling opposing positions, and a “mixed solution” has been found that will make use of form of umbrella fund to which national funds will “be attached” during a 10 year transition period.

The final details will be ironed out at the European Council meeting on December 19 and 20.

Latvia: The euro steams in against nostalgic backdrop

Wed, 11 Dec 2013 14:16:05 +0100

Eesti Päevaleht, Tallinn – On January 1, the Latvians will shift to the single currency. Latvians have been able to buy their new coins since December 10, amid an atmosphere of excitement tinged with concern. See more.