Europe

It is apparent that adoption of a foreign currency is equivalent to running a very tight fixed exchange rate regime. It provides the least policy space of any exchange rate regime. This does not necessarily mean that it is a bad policy. But…

Here’s a good all-encompassing Bloomberg TV video with Morgan Stanley’s Stephen Roach from Friday. He is not impressed with the IMF plans that the Europeans are working on, calling the numbers “chump change”. Roach also talks about the US…

News links for 4 December 2011.

The probability of a German-led fiscal union in Europe is greater than the consensus suspects given its arguments that only an ECB backstop and a European bond will prevent the end of the greater experiment. In addition, the argument is…

News links for 3 December 2011

My takeaway from two days in DC is that Europe is headed to a blood in the streets outcome. While ECB funding remains ongoing even as it’s uncertain, in any case, the underlying theme remains austerity. There is no plan B.

The prevailing view amongst euro area policy makers seems to be that saving Italy from default is necessary and that the only politically justifiable way to effect this rescue is to move to fiscal integration. All of the statements by…

News links from 2 December 2011 include links on the European sovereign debt crisis, the UK economy, the latest on mortgages and technology as well as other stories.

The dollar is trading on an easier footing as risk improves ahead of payrolls and hope of EZ action. US private payrolls expected to come in at 150k; strong report likely to be supportive of sentiment. Merkel calls for treaty changes in…

European leaders will meet again on December 9th in an attempt to come up with the solution. The important point, though, is that the probable solution would call for European nations to surrender some sovereignty over fiscal policy to a…