Skip to main content

Home/ Global Economy/ Group items tagged wolf

Rss Feed Group items tagged

Gene Ellis

The pain in Spain will test the euro - FT.com - 1 views

  •  
    Extremely good Martin Wolf article of March 6, 2012
Gene Ellis

Ireland got 'stuffed' on banking debt - Martin Wolf - Yahoo News UK - 0 views

  • Ireland got ‘stuffed’ on banking debt – Martin Wolf
  • I feel that the eurozone is being run for the benefit of the creditors, so you got stuffed as a result, and I don’t see that changing.
  • However, he argues that “people would only leave the single currency when they’re in the middle of a crisis so terrible they can’t imagine anything worse…if there was a chance of that it’s passed, and for Ireland it’s passed durably.”
  • ...1 more annotation...
  • Ultimately, Wolf’s outlook is not optimistic. With stasis in Frankfurt, the only thing that will kick the ECB into action will be another crisis, this time a deflationary one. Pre-emptive action seems off the cards. “This ‘Waiting for Godot’ kind of policy strikes me as wrong conceptually and wrong practically, but I can’t envisage anything else happening.”
Gene Ellis

Ways to accelerate private-sector deleveraging | Martin Wolf's Exchange - 0 views

  •  
    The difficulties in financial de-leveraging.  Excellent piece.
Gene Ellis

Seven ways to clean up a banking stench | Martin Wolf, Financial Times | Commentary | B... - 0 views

  • As Per Kurowski, a former executive director of the World Bank, reminds me regularly, crises occur when what was thought to be low risk turns out to be very high risk.
  • Not least, I would do everything I can to eliminate the idea that the state stands behind investment banking. That is an insane idea.
Gene Ellis

The emerging risks of ticking time bonds - FT.com - 0 views

  • The emerging risks of ticking time bonds By Martin Wolf
  • These borrowers are speculating on their domestic currencies.
Gene Ellis

Europe has to do whatever it takes - FT.com - 0 views

  • Europe has to do whatever it takes By Martin Wolf
  • Astonishingly, yields on Italian and Spanish 10-year debt have fallen from 6.3 per cent and 7.0 per cent, respectively, at the beginning of August 2012, to a mere 2.3 and 2.1 per cent early this month. That is below the yield on UK gilts.
  • Fiscal policy also continues to tighten, even though interest rates are at the zero bound: the OECD has forecast that the cyclically adjusted fiscal deficit of the eurozone would shrink from a mere 1.4 per cent in 2013 to an even more austere 0.9 per cent in 2014.
  • ...8 more annotations...
  • Huge divergences in competitiveness remain
  • This is forcing vulnerable countries into deflation, which raises the real level of their debt.
  • this year Germany’s current account surplus might be as big as 8 per cent of gross domestic product.
  • It also hopes that, through this and other programmes it has announced, it will be able to expand its balance sheet
  • back to where it was two years ago.
  • Moreover, the range of measures taken reinforce the ECB’s forward guidance. It has locked itself into ultra-accommodative monetary policies for years, as it should.
  • Furthermore, it is clear that the ECB would be taking on credit risk. It would be charged with monetary financing of governments. I believe it should go ahead. But the row between northern and southern Europe would surely be deafening.
  • What else is left? One possibility, suggested in Mr Draghi’s speech, is active use of fiscal policy.
Gene Ellis

The delicate balance of fixing the eurozone | Martin Wolf's Exchange - 0 views

  • The euro itself was a leading cause of this crisis by ushering in a remarkably swift convergence in interest rates, which had the effect of directing too much capital into countries that formerly had had to pay high interest rates. This undermined the competitiveness of these countries through inflation and gave rise to huge deficits in their current accounts.
  • The euro is not suffering from a mere confidence crisis that can be resolved by assuaging the markets; it is experiencing a profound balance‐of‐payment crisis that is being prolonged by the expansion of public financial aid.
  • Since autumn 2007, long before the official bail‐out initiatives began, some of the crisis‐hit countries have replaced dwindling private capital imports and capital flight with their money‐printing presses (Target credits).
  • ...11 more annotations...
  • 5. Export surpluses create no real value if they translate into claims vis‐à‐vis countries which ultimately cannot pay their debts,
  • 6. The ECB Council overstepped its mandate when it transferred to Eurozone national central banks, primarily the Bundesbank, the task of financing the public and private deficits of other countries.
  • 7. Germany’s liability for the bail‐out initiatives does not total 211 billion euros, as often cited, but is actually now close to 600 billion euros if the far larger bailout initiatives of the ECB are included in this figure.
  • 8. The Target credits and the purchase of government bonds by the ECB system transfer the investment risk of private investors and banks to the taxpayers of economically sound countries, posing a threat to the euro because they offer debtor countries incentives to advocate inflationary policies at the ECB Council which would help them defer their obligation to repay their foreign debts.
  • 9. Eurobonds would undermine debt discipline, lead to much higher interest burdens for the German state, and anew induce capital flows in Europe that would exacerbate the external imbalances.
  • ) Target debts are to be settled on an annual basis with interest‐bearing, marketable assets as in the US.
  • g) Countries that are not competitive enough to repay their foreign debts should, in their own interest, leave the Monetary Union.”
  • I also appreciate the fact that the declaration envisages a credit boom in Germany that would ultimately rebalance the eurozone economy. Nevertheless, this rebalancing is likely to prove painfully slow and certainly requires a prolonged period of relatively high inflation in Germany, to offset relatively low inflation in the vulnerable countries. It is far from clear that German public opinion is prepared for such an outcome.
  • More important, I do not believe a currency union that takes for granted the possibility of sovereign defaults and even exit would prove workable. It is a recipe for extreme financial instability, with huge runs on credit to banks, private non-banks and governments built in.
  • mechanisms of financing and adjustment. Permanent transfers from some countries to others, merely to offset a lack of
  • competitiveness (rather than accelerate income convergence), are indeed undesirable. Nevertheless, financing needs to be sufficiently large and generous to give vulnerable countries some chance of managing the adjustment to shocks, without sovereign default, mass private bankruptcies and implosion of financial systems.
  •  
    The second major article on Professor Hans-Werner Sinn's attack on the premises of the eurozone. TARGET 2 analysis, plus...
Gene Ellis

Germany is a weight on the world - FT.com - 0 views

  • Germany is a weight on the world
1 - 17 of 17
Showing 20 items per page