Klaus Kastner suggests that Germans cannot sympathise with my analogy of the Greek Bailout as a new Versailles Treaty because many, in Germany, feel that Maastricht was another Versailles Treaty imposed, by France, upon them. While there is no doubt that France tried, and failed, to adopt a predatory attitude toward Germany (and toward the Bundesbank in particular), the Maastricht-Versailles analogy is unsustainable and patently incorrect – in sharp contrast to the Greek Bailout-Versailles parallelism which is spot on. Continue reading
Tim Geithner is now on the public record, confirming that which we have always known: In February 2010, clueless as to the Euro Crisis that was about to engulf them, Northern European leaders decided to crush Greece. Collectively to punish (against even the Geneva Convention) a nation for having gone bankrupt within a Eurozone whose architecture never took into consideration the possibility that a member-state could become insolvent.
“We’re going to teach the Greeks a lesson. They are really terrible. They lied to us. They suck and they were profligate and took advantage of the whole basic thing and we’re going to crush them.’ [That] was their basic attitude, all of them.”
Geithner’s reaction, to such talk, was not concern over the Greeks’ impending ‘crushing’ but that the Northern Europeans were, in the process of crushing the Greeks, about to shoot themselves in the foot. As I was writing in 2010 (in an article entitled ‘A New Versailles Haunts Europe’):… Continue reading
The Global Minotaur: America, Europe and the future of the world economy is about to be published in French, as Le Minotaure Planétaire, by newly established, progressive publishing house LES ÉDITIONS DU CERCLE. Read on for a draft of the Preface I composed for this French edition (which is now added to the German, Spanish, Italian, Czech, Finnish and Greek editions)… Continue reading
This talk was delivered to the PhD Colloquium of the LBJ School of Public Affairs, on 6th November 2014. It was based on this article and is part of my research for my next book EUROPE UNHINGED: The next phase of the global crisis.
In this fascinating interview, published in Corriere della Sera on 29th October 2014 and reproduced here in English, Professor Giuseppe Guarino, a former finance minister of Italy, argues that the Fiscal Compact never had a legal leg to stand on. Additionally, he also claims that, legally, the 3% deficit limit (in the Maastricht and later the Lisbon Treaties) was merely a ‘reference value’ and, under no circumstances, a ‘rule’. Professor Guarino suggests that European leaders have a unique opportunity to remove this ‘noose’ around our nations’ necks by revealing the Fiscal Compact’s, and the 3% so-called rule’s, true legal status (or absence thereof). Continue reading
- Theme: “Why is Europe not ‘Coming Together’ in Response to the Euro Crisis?”
- Where: SRH 3.316/3.350. LBJ School of Public Affairs (3rd floor)
- When: 12:15 to 1:30pm, Thursday 6th November
Abstract: Almost everyone agrees that the Eurozone was a one-legged giant; a monetary union lacking a political ‘leg’ to stabilise it. Moreover, both opponents of monetary union (e.g. Mrs Margaret Thatcher) and its chief designers (e.g. Mr Jacques Delors) had argued, or at least intimated, that the euro was only a first, tentative step toward a fully-fledged European Federation. If so, why has the Euro Crisis (which surely strengthened the arguments in favour of federation) not strengthened the federalists’ hand? Of those who were, supposedly, waiting to pounce upon any opportunity to create a United States of Europe? In this talk, we shall seek answers in the history of the European Economic Community, in the manner that the latter was destabilised by the collapse of the Bretton Woods system, in the economic and political forces spearheading monetary union since 1971, and in the context of America’s pivotal role in putting, and keeping, Europe together from 1944 to 2008.
On 30th October I was invited to address a meeting of German, Austrian and Swiss pension fund managers on how they should make sense of the Eurozone’s current state of play. In this keynote (click below for the audio and the accompanying slides) I present an explanation of the causes underlying the impossible dilemmas pension fund and fixed income managers are facing in Europe today. Plus a proposal of what the ECB ought to do to make a substantial difference.
For the keynote’s audio click below and, once its starts, open Zurich Powerpoint (and click to change slides when you hear the gong in the background)
Klaus Kastner is a former banker from Austria who is also ‘afflicted’ with a deep concern for Greece; witness his excellent blog ObservingGreece. He has commented many times on this blog and, on the occasion of the ECB’s recent stress tests (and in response to this post) he sent me the following comment. His first hand experience of European banks renders is both useful and interesting. Read on… Continue reading
Last Sunday the ECB published its quality assurance results, its stress tests of our systemic banks. It was, from where I am standing, a sad day.
The ECB’s recent dalliance with QE-light is macro-economically irrelevant. For a long while we have been arguing (see Policy 3 of the Modest Proposal) that it is high time that the ECB buys en masse EIB bonds, thus enabling the EIB to issue new bonds as part of a European Recovery Program; an investment drive that will mobilise the glut of idle savings, neither adding to public debt nor inflating financial assets (or, indeed, the fear of fiscal transfers from the core to the periphery). It is the optimal strategy for defeating deflation and whipping up growth without inflating asset prices. It was with pleasure that we recently read Guntram Wolff’s article which seems to endorse this proposal. Continue reading
Now that the bubble of the Greek success story has, thankfully, burst, it is perhaps apt to take a good look at the track record of Greece’s finance minister: the talented Mr Gikas Hardouvelis. Readers that harboured hopes of a Greek turn-around (against this blog’s repeated warnings) ought to brace themselves – the finance minister’s story is not recommended reading for the faint hearted…
The spectre of Greek contagion seems to be returning to the Eurozone. At least this is the fear that I sense by talking to financial journalists across Europe. In this interview with Jorge Nascimento Rodrigues (for EXPRESSO) I argue that: “The Euro Crisis never went away. What happened was that Mr Draghi’s skillful interventions in the summer of 2012 suppressed the crisis in the bond markets but, at the same time, pushed it deeper into the foundations of the real economy. It was inevitable that, as the crisis was wrecking these foundations (with deflationary forces, desperately low levels of private and public investment and increasing debt to GDP ratios in the Periphery), it would resurface in the bond and equity markets. It does not matter whether the trigger was Greece, Portugal or Italy. What matters is its inevitability.”
[This post was later published by Open Democracy]
Behind the European Union’s official ‘line’ that the worst of the Euro Crisis is behind us, a flurry of proposals for institutional changes reveal a deep-seated anxiety about the Eurozone. Indeed, in recent weeks, even the German finance minister, Mr Wolfgang Schäuble, went public with an op-ed in the Financial Times (1st September 2014, co-authored with Karl Lamers), presenting a proposal for a Eurozone Parliamentary chamber that would legitimise, and stand behind, a new office of Euro ‘Czar’ with the capacity to veto member-states’ budgets.