Stiglitz: “Can the Euro Be Saved?”

by Joseph Stiglitz The euro may be approaching another crisis. Italy, the eurozone’s third largest economy, has chosen what can at best be described as a Euroskeptic government. This should surprise no one. The backlash in Italy is another predictable (and predicted) episode in the long saga of a poorly designed currency arrangement, in which […]

Europe, Merkel, the ESM and a possible asymmetric shock

Much of the French and German press was preoccupied with analysing what Angela Merkel meant when she made her proposals on the eurozone. The consensus is similar to ours – there is not much change from what we knew already. What we do sense, however, is that some of the commentators underestimate the difficulty to […]

Solidarity in euro zone should not lead to debt union, Merkel says

* Solidarity should be helping others to help themselves – Merkel * ESM should become EMF with national oversight – Merkel * Merkel invites new Italian PM to Berlin   BERLIN, June 2 (Reuters) – German Chancellor Angela Merkel appeared on Saturday to rule out debt relief for Italy, saying in a newspaper interview that […]

French banks are by far the most exposed to Italian debt

With political developments in Italy keeping up tension in the financial markets, the German press has taken a look at the various eurozone countries’ exposures to Italian debt, public and private. Data from the Bank for International Settlements shows that French banks are by far the most exposed to Italian debt. Whether Germany comes second at […]

Italy may trigger new global crisis

In choosing this moment to heighten trade tensions with Europe, Donald Trump is ignoring major economic and political upheaval in Rome. Trouble in Italy, the euro area’s third largest economy, has the potential to trigger a global economic disaster on the scale of the 2008 financial crisis. Before enforcing restrictive trade measures that might blacken […]

Germany’s important Target-2 €902 bn debate. What happenes if a country leaves euro

Europe and the rest of the world should be examining the debate among German economists about what would happen to the Target-2 intra-euro area imbalances if a member country left Europe’s economic and monetary union. Target-2, an operating arm of the European financial system set up in the 1990s to regulate interbank credit, has grown […]

Germany, EU’s future threat: the ordoliberal utopia of a debt-free state

The observation that the eurozone is unsustainable does not lead ineluctably to a forecast that it will necessarily break apart. But there are events that greatly increase the likelihood of that outcome. Last week’s German budget is one of them. Olaf Scholz, Germany’s new Social Democratic finance minister, has proposed a budget with the following […]

Greenspan: truculent view on Target-2 points to ‘destabilising’ euro

Rising creditor-debtor central bank balances in the euro area under the Target-2 overdraft system underline the ‘destabilising potential’ of the European single currency, according to Alan Greenspan, former chairman of the Federal Reserve board. Greenspan, a sprightly yet wistful 92, used a New York dinner organised by the World Gold Council and NYU Stern Business […]