2011

A decision tree on what the future of the euro would look like based on different policy responses

There have been several important developments over the weekend which are likely to support the euro at the start of the week, after falling for the past four consecutive weeks and recording a 7-week low before the weekend. However, I…

“It is categorically not true,” said a spokesman from the party, which is led by Mariano Rajoy. The spokesman was commenting on a report by Reuters on Friday that the PP had discussed plans to seek a rescue package. -Spain 'will not…

Foreign news links for 27 November 2011. We have a variety of links here today with most focused on the European sovereign debt crisis. Protest and terrorism are two other topics of great interest.

News links for 27 November 2011

According to Austrian daily Der Standard, Italy is to receive a 600 billion euro bailout courtesy of the IMF. Note: the article has what I assume to be a typo, referring to 600 million euros instead of 600 billion. I have fixed that in the…

Boxed in by the ever-worsening sovereign debt crisis, the Franco-German euro zone axis is trying to formulate a policy that both adheres to the German economic orthodoxy without worsening the crisis any further.

Almost exactly one year ago I wrote the following: In practice, you could have sovereigns conduct a ‘sovereign debt swap’ whereby the ECB buys an agreed-upon portion of the existing debt from the sovereigns and then uses these funds…

So here we are, with the ECB demanding deflationary austerity from the member nations in return for the limited bond buying that has been sustaining some semblance of national government solvency, not seeming to realize it can’t inflate…

As I have been saying at Credit Writedowns, the ECB’s opposition to monetising sovereign debt is not about inflation concerns but rather its resistance to moving into a politicised quasi-fiscal role.