Opinion

Paul Taylor

Euro zone crisis: it’s the politics, stupid!

Paul Taylor
May 31, 2010 14:12 UTC

PARIS (Reuters) – Bill Clinton famously won the U.S. presidential election in 1992 with the motto “It’s the economy, stupid.” But when it comes to the future of the euro, “It’s the politics, stupid!” is the more appropriate slogan.

Since its inception, the single European currency has always been as much a political as an economic project.

The euro has come under attack on financial markets this year because of debt and deficit problems in its weaker southern members, most acutely in Greece but also in Portugal and Spain, and growing economic imbalances among its 16 nations.

But the history of the 1990s shows that investors who bet against European monetary union can get their fingers burned.

While political mistakes could yet undo the 11-year-old monetary union, it is far more likely that Franco-German political leadership will save it.

Euro survival requires less budget sovereignty

Paul Taylor
May 17, 2010 05:52 UTC

PARIS (Reuters) – Euro zone member states will have to forego some of their national budget sovereignty if Europe’s single currency is to survive in the long term.

That conviction is driving European Commission proposals for prior surveillance and peer review of national budget plans after the Greek debt crisis forced governments into a $1 trillion emergency package to stabilize the euro last week.

The trouble is that there is little or no political appetite in member states to cede more power to Brussels.

ECB independence, succession in question

Paul Taylor
May 11, 2010 16:59 UTC

PARIS (Reuters) – The European Central Bank’s role in a $1 trillion emergency plan to stabilize the euro has raised doubts about its prized independence from political influence and cast uncertainty over its future leadership.

The front-runner to succeed Jean-Claude Trichet as ECB president, Axel Weber of Germany, openly dissented on Monday from the crucial decision to purchase euro zone government bonds to steady markets, warning that it could raise inflation risks.

Less than 24 hours after he was apparently outvoted, the standard-bearer of Bundesbank monetary orthodoxy told Boersen- Zeitung: “Buying government bonds entails considerable stability policy risks, and thus I regard this part of the ECB council’s decision critically even in this exceptional situation.”

Monti to propose grand bargain to revive EU market

Paul Taylor
May 9, 2010 15:46 UTC

DUBLIN (Reuters) – European Union elder statesman Mario Monti will propose a grand bargain on Monday to reverse an erosion of the bloc’s single market due to the financial crisis that is now shaking the euro common currency.

The internal market of nearly 500 million consumers, built on the principle of free movement of capital, goods, people and services, is the cornerstone of EU prosperity. But economic nationalism and emergency rescue measures taken since 2008 to protect banks and car makers risk undermining it.

European Commission President Jose Manuel Barroso mandated the respected former EU competition and internal market chief last year to devise a strategy to relaunch the single market and build a new consensus for a competitive economy.

Political cycle ends with no vista

Paul Taylor
May 8, 2010 07:59 UTC

PARIS (Reuters) – Britain’s inconclusive general election brings to an end a long political cycle in which better schools and hospitals had top priority for voters.

But unlike the other major sea changes in post-war British politics — 1945, 1979 and 1997 — there is no new big idea.

“This was a profoundly unhistoric election,” said historian David Starkey. “There was no real choice.”

British political cycle ends with no vista

Paul Taylor
May 7, 2010 14:04 UTC

PARIS (Reuters) – Britain’s inconclusive general election brings to an end a long political cycle in which better schools and hospitals had top priority for voters.

But unlike the other major sea changes in post-war British politics — 1945, 1979 and 1997 — there is no new big idea.

“This was a profoundly unhistoric election,” said historian David Starkey. “There was no real choice.”

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