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Tag Archives: Eurozone

The Italian bank crisis – another Eurozone mess

So several investment funds based on real estate in the UK have suspended trading to stop people withdrawing their funds. Who would have thought that in a vastly overvalued UK property market that people would start to reassess the value of these investments, especially after working out (gosh!) that the mismatch in maturities in these type of funds was more or less extreme? And so the Leave vote is now being blamed on crashing a market when all that is happening is that the real estate...

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ECB research shows huge output gap and need for fiscal expansion

Last week, I reported on some claims by Australian private sector economists that the Australian government was deplete of policy tools (“run out of ammunition” was the cute term used among these self-serving characters) and would not be able to handle the Brexit fallout – see When journalists allow dangerous economic myths to pervade. It was obvious that the statements were nonsensical and only reflected the dangerous neo-liberal ideology that discretionary fiscal policy...

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Further evidence that ECB monetary gymnastics have not stimulated lending

This morning I was reading the – The euro area bank lending survey – for the first quarter of 2016, published by the European Central Bank (ECB). This is a quarterly survey that the ECB conducts which was first published in 2003. It seeks to assess the extent to which banks are lending and the factors that are influencing that behaviour. The results published in the April 2016 edition relate to the first three months of 2016 and “expectations of changes in the second quarter...

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The European Commission and ECB outdo themselves in their quest for absurdity

As the years have passed, I have become inured to the depths of absurdity that the European Commission and the political elites its nurtures go to justify their existence. The Maastricht exercise in the late 1980s and early 1990s was comical. The convergence process towards Phase III of the Economic and Monetary Union in the 1990s was established a new norm for craziness. Who would believe the stuff that went on. Then the Goldman Sachs fiddle to allow Greece to enter the Eurozone two years...

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The EU’s greatest achievement

  "The EU's greatest achievement is the Euro", said Michael Portillo on the BBC's This Week programme last Thursday.No, Michael, it isn't. It is the EU's worst mistake.As Yanis Varoufakis entertainingly explains in an interesting lecture published in the Australian Journal of Political Economy, the creation of the Euro led inexorably to the buildup of unsustainable debt - both private and public - in the Eurozone periphery countries: The problem is that creating a monetary union is a...

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Sisyphus,Tantalus and a prisoner’s dilemma

Should Greece leave the Euro? That was the title of the Oxford debate at the Prague Summit in which I had the pleasure of participating yesterday.But this is the wrong question. Unless there is a considerable shift in Eurozone politics, Greece WILL leave the Euro - eventually. The question is when, and how.To see this, we need to look at the motivations of all the players involved in the negotiations. The Greek negotiations resemble a "prisoner's dilemma", in which the best outcome for...

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The Pro-European Union Left is Delusional

I am getting sick of these people. I see them on Facebook and Twitter and their arguments are pathetic.Some of them appear to be living in a quasi-Marxist internationalist fantasy world. The motto of the pro-EU left may as well be: “We want to destroy Europe in order to save it!”The EU and Eurozone are outrageous, catastrophic neoliberal disasters. They have caused tremendous suffering. The EU is a corporate tyranny of unelected and incompetent neoliberal lunatics. They are basically...

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Iceland proves the nation state is alive and well

On May 27, 2016, Statistics Iceland (the national statistical agency) released the news – Iceland economy to grow by 4.3% in 2016. The nation is enjoying strong household consumption and investment growth and tourism is driving export growth. Inflation is low and the exchange rate, which depreciated sharply during the crisis, is stable, if not steadily appreciating again. Compare that to the Eurozone Member States, which are in varying states of moribund. We also learned this week that...

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ECB’s expanded asset purchase programme – more smoke and mirrors

On January 25, 2015, the press release heading read – ECB announces expanded asset purchase programme. The ECB had decided to ramp up its quantitative easing (QE) program by adding “the purchase of sovereign bonds to its existing private sector asset purchase programmes in order to address the risks of a too prolonged period of low inflation”. We now have sufficient data to assess what has been going on under this program, and specifically under the public sector purchase...

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The Eurogroup statement on Greece, annotated

The Eurogroup (part of which is pictured above) has produced a statement on the outcome of the latest debt talks with Greece. As ever with Eurogroup statements, it confuses more than it enlightens. So here is my attempt at translating Eurogroup-speak into plain English. __________________________________________________________________________________ The Eurogroup welcomes that a full staff-level agreement has been reached between Greece and the institutions.  Phew. We got that through...

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