Essays
Europe’s Future is Not Up to the Bundesbank
Far from abating, the euro crisis has recently taken a turn for the worse. The European Central Bank relieved an incipient credit crunch through its longer-term refinancing operations. The resulting rally in financial markets hid an underlying deterioration; but that is unlikely to last much longer.Reversing Europe’s Renationalization
Far from abating, the euro crisis has taken a turn for the worse in recent months. The European Central Bank managed to relieve an incipient credit crunch through its long-term refinancing operation (LTRO), which lent over a trillion euros to eurozone banks at one percent.Angela Merkel is Leading Europe in the Wrong Direction
SPIEGEL: German Chancellor Angela Merkel is praised globally as “Mrs. Europe” and popular at home – partly thanks to her strong refusal to pledge more German money to the Euro rescue effort. You, however, are highly critical of Merkel’s leadership. Why?New Year, Same Crisis
The measures introduced by the European Central Bank last December, especially the Long Term Refinancing Operation (LTRO), have relieved the liquidity problems of European banks, but have not cured the financing disadvantage of the highly indebted member states. Since high-risk premiums on government bonds endanger the capital adequacy of banks, half a solution is not enough.Remarks delivered at the World Economic Forum
I have just published a book which tries to explain and, to the extent possible, predict the outcome of the euro crisis. It follows the same pattern as my other books: it contains an updated version of my conceptual approach, the application of that approach to a particular situation and some kind of real time experiment to test the validity of my argument.How to Save the Euro
My new book, Financial Turmoil in Europe and the United States, tries to explain and, to the extent possible, predict the outcome of the euro crisis. It follows the same pattern as my other books: it contains an updated version of my conceptual approach and the application of that approach to a particular situation, and it presents a real-time experiment to test the validity of my interpretation.Europe’s Year of Indecision
The dire economic situation in which most of the rich world found itself in 2011 was not merely the result of impersonal economic forces, but was largely created by the policies pursued, or not pursued, by world leaders. Indeed, the remarkable unanimity that prevailed in the first phase of the financial crisis that began in 2008, and which culminated in the $1 trillion rescue package put together for the London G-20 meeting in April 2009, dissipated long ago.Only Way to Stop the Run on Eurozone Debt
The current turmoil in the eurozone bonds markets shows striking parallels to the situation in autumn 2008. Then, bank depositors had lost confidence in the stability of the institutions holding their assets, and the threat of a bank-run could only be avoided by comprehensive government guarantees for all banks.My Seven Point Plan to Save the Eurozone
1) Member states of the eurozone agree on the need for a new treaty creating a common treasury in due course. They appeal to European Central Bank to co-operate with the European financial stability facility in dealing with the financial crisis in the interim - the ECB to provide liquidity; the EFSF to accept the solvency risks.