Political Economy

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

“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…

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.

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.

This week’s New Yorker magazine features Ian Frazier on Theo Jansen, a Dutch artist who makes kinetic sculptures called Strandbeests that walk along the beach. In the video below, Frazier discusses the sculptures and how they fit into…

Those that call for the ECB to substantially increase its sovereign bond purchases, or for Germany to agree to euro bonds, want the opposition to unilaterally disarm. They insist on putting the cart before the horse. In effect, under…

Neither the current governing coalition nor the German populace is anywhere close to getting where Schröder is. The most Germany will deliver is what’s on the table now: EU fiscal oversight with penalties and potentially expulsion for…

A headline says that an investment bank survey found almost half the respondents expect at least one country to drop out of the euro zone next year. This is twice the percentage of a couple of months ago. While such a scenario cannot be…

Many observers are confused. They cry for the ECB to "man up" and "do what it is supposed to do" and be the lender of last resort. It does have that function for banks, not for sovereigns. The lender of last resort to sovereigns is the…