Political Economy

Two things I have written recently stand out as I contemplate what will happen in Greece. The first is that the institutions formerly known as the Troika had accepted Greece’s reform list sooner than I expected and that was positive. The…

I want to riff off a David Beckworth post in thinking about the problem in Europe and extend the discussion with some comments on the meltdown in Greece. The gist of what I intend to say is that the eurozone, as constructed, can never work…

It is hard to watch the Greek drama unfold without a sense of foreboding. If it is possible for the Greek economy partially to revive in spite of its tremendous debt burden, with a lot of hard work and even more good luck we can posit…

I am positive about European assets on a cyclical basis. European shares are cheaper than their American counterparts and European QE provides an underpinning for European sovereign debt. As long as Europe continues to muddle through,…

Yesterday, I ended my analysis writing that, “there is enough flexibility in this deal that both sides can declare victory”, and that “from a market perspective, I expect risk-on mood to re-assert itself now. And with the tailwind of lower…

Yesterday, Greece received an agreement in principal to extend its existing bailout program for another four months from the institutions administering that program. I believe this deal is a good basis for further work down the line. But…

Ever the optimist, I ended yesterday’s post writing that a deal remains the base case outcome. But unfortunately, this does not mean a deal gets done. And so we should look again at what could happen if no deal gets done. My sense is that…

Actually I had intended to write a different post but just now Germany has rejected a letter from Greek finance minister Yanis Varoufakis that looked to extend the Greek bailout program. The German rejection changes the complexion of…

This is a short post to update you on Greece. I continue to believe a deal can get done. Recent events demonstrate this is so. Nevertheless, the potential for policy error remains high. Brief thoughts below using a decision tree model…

The recent election of an explicitly anti-austerity party in Greece has upset the prevailing policy consensus in the eurozone, and raised a number of issues that have remained ignored or suppressed in policy circles. Expansionary fiscal…