The Great Debate UK

from The Great Debate:

Without coordinated leadership, Europe will falter

March 11, 2013

There is an increasing probability that financial markets will respond negatively to the unfolding economic and political drama unfolding across Europe. So far, the European Central Bank has pumped out cash and calmed the nerves of investors, but it needs to do more. A cut in interest rates by the ECB is crucial to contribute to a revival of growth across the euro zone. On its own, however, that is not enough. Europe’s political authorities need to counter the increasingly widespread perception that they lack the will to confront the zone’s economic ailments and promote a clear path to growth – austerity policies alone will not work.

Capitalism in the West and other myths…

June 19, 2012

The West’s claim to be a capitalist society has been eroded throughout the European sovereign debt crisis. If we were truly capitalist then the markets wouldn’t expect Germany to step in to solve the euro zone’s problems or to eradicate the excess debts of Europe’s periphery. The prospect of this safety cushion provided by Berlin has kept the euro propped up even though Spanish bond yields are hovering around 7%, even after it received the go-ahead to get a bailout for its banks.

Governments, not central banks, must act

June 11, 2012

–Michala Marcussen is global head of economics at Société Générale Corporate and Investment Bank. The opinions expressed are her own.–

A German debt purchase is a bet on euro zone break-up

June 1, 2012

Wednesday’s panic in the bond markets drove yields down to unprecedented lows in U.S., UK and Germany. The stampede into British and American debt is no surprise, since both countries represent a rock-solid guarantee of repayment in their own currency (though heaven knows how much lenders will be able to buy with the money in ten or twenty years’ time), but why the rush into Bunds?

from MacroScope:

The Law of Diminishing Greeks

April 13, 2012

The Law of Diminishing Returns  states that a continuing push towards a given goal tends to  decline in effectiveness after a certain amount of effort has been expended. If this weren't the case, Usain Bolt would be able to run the mile in  less than 2-1/2 minutes.

Germany should be happy to let Greece go

February 21, 2012

When the Greek crisis began, there was much talk of contagion as the greatest short-term risk. In my view, this worry is almost irrelevant because bondholders are in any case facing a haircut of over 70%, so the question of default or bailout is now merely a technical detail.

from Lawrence Summers:

It’s time for the IMF to step up in Europe

December 8, 2011

By Lawrence Summers
The opinions expressed are his own.

European leaders will meet today for yet another “historic” summit at which the fate of Europe is said to hang in the balance. Yet it is clear that this will not be the last convened to deal with the financial crisis.

Why stasis on Capitol Hill should worry investors

November 23, 2011

By Kathleen Brooks. The opinions expressed are her own.

The markets have had to – grudgingly – get used to pricing in political risk in recent months. Instead of being moved by economic data and fundamental or technical factors, a large amount of recent price action has been driven by politicians, and that always spells bad news.

from The Great Debate:

The G20 summit should commit to growth

November 2, 2011

By Gordon Brown
The views expressed are his own.

The build-up to the G20 summit has been dominated by the euro's failings. With Europe now the epicenter of the global crisis, its continued weakness will dominate the G20 discussions. Even now, uncertainties about Greece’s future -- and about the real strength of Europe’s commitment to its new stability fund -- has left little opportunity for a focus on the global economy as a whole.

A 6-1 defeat is not a draw

October 26, 2011

Michael Gove trying to laugh off Monday’s rebellion by 81 backbenchers sounds like a United supporter arguing that 6-1 was more or less a draw. For all the excuses, he can’t hide the fact that the government’s position is full of contradictions.