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“What I am proposing is a guaranteed yet conditional [lender of last resort] which can reconcile moral hazard concerns with the need to protect sovereign borrowers from the kind of solvency issues we have witnessed since the onset of the economic crisis,” he said

McDonnell also called for a full banking union within the eurozone, saying a deposit insurance corporation should be established to fill this gap.

Bruce Rockowitz, the group president and chief executive at Hong Kong-based Li & Fung, one of the world’s largest sourcing companies,

excessive and chaotic deleveraging by lenders to emerging Europe – and the ensuing credit crunch – would destabilize this economically and institutionally fragile region.

the highest-paid European Union officials paid taxes equivalent to about 25 percent of their gross salary.

Unlike European Union officials, the 27 members of the European Commission are political appointees. Their salaries are much closer to those of national leaders like Ms. Merkel, and in some cases may exceed them.

But figures released in 2010, disputed by Malawi’s ministry of agriculture, suggest that the harvest was only 2.1m tonnes. If maize production had risen as much as claimed, Malawians should have have had a surplus of maize and prices should have dropped. That did not happen, says Mr Jerven.

Further complicating the picture, the Venezuelan government has not allowed companies to repatriate profits for the last five years.

The government has also failed to pay companies the hard currency it had promised them for imports bought on credit from suppliers, and in many cases suppliers are now refusing to ship more goods to Venezuela until they receive payment.

In addition, observed GDP growth tends to be revised until several years after the first estimate

Our work is based on a simple Solow growth-accounting methodology.

Damages to trend growth are notoriously difficult to assess,

In the event that investment fails to recover quickly

A downside risk is that investment growth does not recover fully (for example, because banks fail to provide the necessary funding). In this case, we assume investment growth is only half what it was before the onset of economic turmoil.

We also estimate productivity through a convergence equation, which would slightly lift productivity in peripheral countries in the future.

This exercise suggests that in the absence of policy reforms, trend growth will have been damaged significantly, by at least one percentage point, post-crisis, compared with pre-crisis levels,

The additional effect of ageing.

 or unemployment levels take longer to fall than in previous recovery episodes, then trend growth would be significantly lower for longer. Trend growth might well remain negative in Spain and Italy, and may fail to increase for Germany or France.

this exercise shows the damage will indeed be long lasting, permanently impairing growth in a context of an ageing population that needs higher growth capacity than ever before.

“Right now, the name of Bangladesh just gives a bad rep to a company,”

Instead, the Fed has kindled speculation.

Investors are desperate for yield and are paying up for riskier assets.

There are more reliable measures of stock market value, and they look frothy. One gauge, the price of stocks based on the past decade of earnings, is named after the Yale economist Robert J. Shiller. Using that, stocks are too expensive by 65 percent.

It is deeply troubling that it took Europe’s leaders so long to see something so obvious

What is now proposed is recapitalization of the European Investment Bank, part of a growth package of some $150 billion. But politicians are good at repackaging, and, by some accounts, the new money is a small fraction of that amount, and even that will not get into the system immediately. In short: the remedies – far too little and too late – are based on a misdiagnosis of the problem and flawed economics.

The euro was flawed from the outset, but it was clear that the consequences would become apparent only in a crisis.

Workers may leave Ireland or Greece not because their productivity there is lower, but because, by leaving, they can escape the debt burden incurred by their parents.

Germany worries that, without strict supervision of banks and budgets, it will be left holding the bag for its more profligate neighbors. But that misses the key point: Spain, Ireland, and many other distressed countries ran budget surpluses before the crisis. The down

turn caused the deficits, not the other way around.CommentsView/Create comment on this paragraph

More importantly and less known to German taxpayers, Greece will also default on 155 billion euros directly owed to the euro system (comprised of the ECB and the 17 national central banks in the euro area). This includes 110 billion euros provided automatically to Greece through the Target2 payments system—which handles settlements between central banks for countries using the euro. As depositors and lenders flee Greek banks, someone needs to finance that capital flight, otherwise Greek banks would fail. This role is taken on by other euro area central banks, which have quietly lent large funds, with the balances reported in the Target2 account. The vast bulk of this lending is, in practice, done by the Bundesbank since capital flight mostly goes to Germany, although all members of the euro system share the losses if there are defaults.

No responsible bank would claim these sums are minor risks to its capital or to taxpayers. These claims also amount to 43 percent of German Gross Domestic Product,

Despite the suddenly easier terms under which Ireland and other recovering euro zone countries can borrow, the fact remains: These countries are still mired in stagnation.