Tuesday, July 31, 2012

Eurozone crisis: the bankers are happy to play Nero as Europe burns

by Simon Jenkins

Guardian

July 31, 2012

While Rome burned, Nero put on fancy dress, stood on a tower and played his lyre. He sang of the Sack of Ilium and roasted Christians at the stake to light up his party. The people were taxed to pay for his extravagance, but he appeased them with games of ever increasing spectacle and sadism. He clad slaves in deerskins and had lions eat them. It was immensely popular. When Nero duly fell from grace and committed suicide, he cried: "What an artist dies in me."

I like the Olympics now that athletes have taken over from fatcats on centre stage, but the media coverage is disproportionate, idiotic and Orwellian. Never has the BBC in particular purveyed such nationalistic opium to the people. Is it really necessary to ignore all news of the city burning for the duration?

Last weekend a small island off the coast of Schleswig-Holstein saw the American treasury secretary, Tim Geithner, and the German finance minister, Wolfgang Schäuble, attempt a feat as yet unknown to the Olympics. It is called "save the euro". This marathon is being played simultaneously and in real time by bankers and politicians in all Europe's capitals, while a claque shouts "two weeks to save the euro" over and over again.

More

Greeks can no longer afford paying expensive bribes

Reuters
July 31, 2012

Greeks, whose country is facing bankruptcy, can no longer afford the expensive customary cash-filled "fakelaki" or "little envelope" bribes paid to public sector workers, according to an official.

Greece, dependent on international aid to remain solvent, has struggled for years with rampant corruption that has hampered efforts to raise taxes and reform its stricken economy.

The health sector and the tax authorities topped the country's corruption rankings for 2011, said a report by Leandros Rakintzis, tasked with uncovering wrongdoing in the public sector.

"While the crisis has not reduced corruption itself, it has reduced the price of corruption," Rakintzis told Skai TV after publishing his annual report.

"They (civil servants) have lowered their price," he added.

More

Our opt-in opt-out solution for the euro

by Hans-Werner Sinn and Friedrich Sell

Financial Times

July 31, 2012

The distressed countries in Europe’s southern periphery fear exiting or being expelled from the currency union, partly because they believe they would lose all the euro’s advantages permanently. This fear could be laid to rest by making the eurozone an open currency union.

The core idea is to offer exiting countries the status of associated member, allowing them to adopt their own currency temporarily with the option to return to the euro at a later stage. An associated member would spare itself the trauma of a real depreciation inside the eurozone, which can only be achieved through a reduction of prices and wages that almost unavoidably entails economic contraction and mass unemployment. Moreover, an associated member could receive financial help from the other eurozone countries. It could adjust its exchange rate quickly to restore competitiveness and, once it had fulfilled all reform commitments, could fully rejoin the eurozone.

A longstanding arrangement, the European Exchange Rate Mechanism II, could provide a basis for such a currency “association”. Conceived for EU member states that have not yet introduced the euro, the ERM II at present includes Denmark, Latvia and Lithuania. All countries that have adopted the euro since 2000 have done so on condition of spending a two-year period within ERM II without stress, staying within a range of ±15 per cent with respect to a central rate against the euro. This mechanism could be expanded to allow it to harbour, after a transition period, countries leaving the eurozone, too.

More

Ομοιότητες και διαφορές

του Γιώργου Προκοπάκη

Τα Νέα

31 Ιουλίου 2012

Αυτές τις μέρες η Αργεντινή αποπληρώνει τις τελευταίες υποχρεώσεις της από τη χρεοκοπία του 2001. Από την πρώτη στιγμή της ελληνικής κρίσης πολλοί παραλλήλιζαν την κατάστασή μας με αυτήν της νοτιοαμερικανικής χώρας. Το αναμφίβολα σχετικό είναι το δέσιμο της οικονομίας με ένα ισχυρό νόμισμα (δολάριο - ευρώ). Η κυβέρνηση δεν είχε στα χέρια της το εργαλείο της υποτίμησης. Το πρόβλημα χρέους και στις δύο περιπτώσεις αφορούσε κυρίως το κρατικό και δευτερευόντως το ιδιωτικό. Στην Αργεντινή το χρέος ήταν μόλις 60% του ΑΕΠ (έναντι 130% της Ελλάδας) και το εξωτερικό ισοζύγιο ελλειμματικό μόλις κατά 1% (έναντι 11%). Οι δύο χώρες έμοιαζαν στην αναποτελεσματικότητα του κράτους, στη διαπλοκή, στη διαφθορά και στην πολιτική αστάθεια.

Η χρεοκοπία στην Αργεντινή ήλθε έπειτα από δύο αναδιαρθρώσεις χρέους - η τελευταία μόλις λίγες εβδομάδες πριν από την κατάρρευση του τραπεζικού συστήματος και τη χρεοκοπία. Το 2001 οι καταθέσεις είχαν μειωθεί κατά 23%. Στην Ελλάδα οι καταθέσεις έχουν μειωθεί κατά 40% από την αρχή της κρίσης, οι δε τράπεζές μας είναι πρακτικώς χρεοκοπημένες μετά το PSI. Το σημαντικότερο ζήτημα για την Ελλάδα, μερικούς μήνες μετά τη μεγαλύτερη αναδιάρθρωση χρέους στην ιστορία, είναι η επανακεφαλαιοποίηση του τραπεζικού συστήματος. Οι εταίροι παρέχουν τη δυνατότητα να ξεπεραστεί το πρόβλημα. Δυστυχώς δεν μπορούν να εξαλείψουν και τον πολιτικό κίνδυνο.

Περισσότερα

Time for something different from the ECB

by Ralph Atkins

Financial Times

July 31, 2012

Like a whodunit writer, Mario Draghi is good at building suspense and a “yikes, how will he solve this one?” sensation. In December, when the eurozone last faced meltdown, the European Central Bank president wrongfooted markets by providing unlimited three-year loans to the eurozone financial system: the pundits had expected a revamped government bond-buying programme.

Eight months later, the uplifting effects of the longer-term refinancing operations, which saw the ECB pump more than €1tn into banks, have faded. Last week, Spanish two-year bond yields at one point climbed above 7 per cent, a euro-era high.

A day later, Mr Draghi gave a strong hint that he was planning another twist in the eurozone debt crisis. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” he told a London conference.

Once again the ECB’s existing bond-buying instrument is unlikely to be his weapon of choice, at least in its current form. After taking over the ECB presidency in November, Mr Draghi concluded that the “securities markets programme” – launched in May 2010 by Jean-Claude Trichet, his predecessor – was seriously flawed. Although the ECB acquired €212bn in crisis-hit eurozone governments’ bonds, investors were far from overawed. Instead, opposition to the programme from Germany’s conservative Bundesbank called into question the ECB’s commitment to bringing down bond yields.

More

Η κρίση μείωσε τη διαφθορά στο δημόσιο

Το Βήμα
31 Ιουλίου 2012

Την όγδοη ετήσια έκθεσή του παρουσίασε την Τρίτη ο Γενικός Επιθεωρητής Δημόσιας Διοίκησης, κ. Λέανδρος Ρακιντζής, στο γραφείο του οποίου το 2011 κοινοποιήθηκαν 1900 πρωτοβάθμιες πειθαρχικές αποφάσεις μονομελών και συλλογικών πειθαρχικών οργάνων. Όπως τόνισε, η οικονομική κρίση οδήγησε σε λιγότερα φαινόμενα διαφθοράς, τα οποία, όμως, ενδέχεται να επιδεινωθούν, αφού η δυνατότητα υποβολής ένστασης στις πειθαρχικές αποφάσεις των οργάνων ελέγχου του δημοσίου από τον Γενικό Επιθεωρητή, έχει πλέον περιοριστεί από τον Ν. 4057/2012.

Όπως αναφέρεται στην έκθεση του κ. Ρακιντζή, 1245 αποφάσεις αφορούσαν το στενό δημόσιο τομέα, (δημόσιες υπηρεσίες, νομικά πρόσωπα, δήμοι και περιφέρειες) και οι 655 ΔΕΚΟ και οργανισμούς. Ο κ. Ρακιντζής άσκησε συνολικά 13 προσφυγές κατά τελεσίδικων πειθαρχικών αποφάσεων και 186 ενστάσεις (ποσοστό 9,8%) κατά αποφάσεων συλλογικών ή μονομελών πειθαρχικών οργάνων, οι οποίες αφορούσαν στο στενό δημόσιο τομέα, καθώς:

- είχαν επιβληθεί υπερβολικά επιεικείς ποινές σε σχέση με τη βαρύτητα των πειθαρχιών παραπτωμάτων,
- υπήρξε μη ορθή εκτίμηση αποδεικτικών στοιχείων, με τα οποία διαπιστώθηκε η τέλεση των παραπτωμάτων,
- διαπιστώθηκε ανεπαρκής αιτιολόγηση, μη νόμιμη αιτιολόγηση ή παντελής απουσία αιτιολόγησης των πειθαρχικών αποφάσεων,
- διαπιστώθηκε εσφαλμένη ερμηνεία του νόμου.

Περισσότερα

Eurostat: Στο 22,5% η ανεργία

Καθημερινή
31 Ιουλίου 2012

Στο 22,5% ανήλθε η ανεργία στην Ελλάδα τον Απρίλιο του 2012, σημειώνοντας αύξηση 6,3 ποσοστιαίες μονάδες σε σχέση με την αντίστοιχη περίοδο του 2011, σύμφωνα με στοιχεία της Eurostat, που δόθηκαν σήμερα στη δημοσιότητα στις Βρυξέλλες.

Πρόκειται για το δεύτερο υψηλότερο ποσοστό στην ΕΕ, μετά την Ισπανία η οποία προηγείται με 24,8% (στοιχεία Ιουνίου), ενώ τα χαμηλότερα ποσοστά εμφανίζουν η Αυστρία με 4,5% και η Ολλανδία με 5,1%. Τον Ιούνιο του 2012 η ανεργία στην ευρωζώνη έφτασε το 11,2% και στην ΕΕ το 10,4%.

Σύμφωνα με τα ίδια στοιχεία, η Ελλάδα εμφανίζει το υψηλότερο ποσοστό ανεργία στην ΕΕ μεταξύ των νέων με 52,% (στοιχεία Απριλίου) ενώ στους άνδρες η ανεργία ανήλθε στο 20% και στις γυναίκες στο 26%.

Περισσότερα

Monday, July 30, 2012

For Greece there is an alternative to austerity – as Argentina proved

by Dean Baker

Guardian

July 30, 2012

It has been a bit over four months since the latest bailout of Greece was negotiated. This bailout featured a write-down of most privately held debt in exchange for further austerity measures. It is already clear that Greece will not meet its deficit targets from this bailout, the main reason being that cuts to the budget have led to a much steeper recession than official forecasters had predicted. The Greek government now expects the economy to shrink 7% over the course of the year. That compares to the decline of 4.7% that the IMF projected for Greece back in April.

This was hardly the first time that the IMF and other official forecasters had badly underestimated the severity of Greece's downturn. In April 2011, the IMF had predicted that Greece's economy would grow 1.1% in 2012, after shrinking just 3% in 2011. In fact, Greece's economy shrank by almost 7% in 2011. And, in April 2010, the IMF was projecting that Greece's economy would be on a slow and steady growth path in 2012 after shrinking by just 1.1% the prior year.

Clearly things are not panning out as the IMF and the rest of the troika – the European Central Bank and the European Union – had planned. Budget cuts and tax increases in the middle of a downturn are having exactly the effect predicted by the old economics textbooks: they are reducing demand, slowing growth and raising unemployment. Furthermore, since lower output means less tax revenue and higher unemployment means more payouts for unemployment benefits and other transfers, the austerity imposed on Greece is doing little to even bring down its deficits.

More

Eurozone crisis knocks Greek tourist trade

Guardian
July 30, 2012

International tourists are shunning Greece, and hampering the country's economic recovery, as figures reveal that holidaymakers are deterred by the country's role in the eurozone debt crisis.

The fall in the number of foreign visitors is a blow to a country that largely relies on tourism. Nearly 11% fewer tourists came to Greece between January and May than a year earlier, according to latest figures from the Bank of Greece. Holidaymakers who travelled to Greece spent €1.48bn (£1.2bn), 12.5% less than in the same period last year.

The figures do not bode well for Greece's attempts to keep to its deficit reduction plan. Tourism makes up 16.5% of the economy, the largest single contributor, and one in five Greeks work in the industry. Last week officials from the IMF, the European Union and the European Central Bank – the so-called troika – warned that Greece had strayed from its cost-cutting plan, amid estimates that the economy is contracting by 7% this year rather than the 5% previously forecast.

Uncertainty over whether Greece will stay in the euro, and two national elections in May and June that attracted global media coverage, put people off spring breaks in the Mediterranean country, although last-minute bookings appear to have picked up.

More

Europe’s Zero-Sum Poison

by Jean Pisani-Ferry

Project Syndicate

July 30, 2012

Whenever a society regards its problems solely through the prism of distributional disputes, its chances of solving them diminish greatly, because the “us versus them” mentality distorts analysis and blocks solutions that would unambiguously improve the overall situation. Every policy choice is perceived as a zero-sum game, whereby a gain for one group is necessarily a loss for another group. The very notions of trust and progress vanish.

We have seen in the past the extent to which such conflicts – between rich and poor, landlords and industrialists, or capital and labor – can hamper development. We are seeing today in the United States how entrenched antagonisms result in a stalemate on tax and budgetary matters. And there are many examples of failed economic reforms that fundamentally boil down to the same zero-sum logic.

But that logic is nowhere as salient today as it is in Europe. Since the euro crisis began, almost three years ago, there has been a continuous struggle between two readings of it.

More

Juncker Says Crisis Has Reached 'Decisive Point'

Spiegel
July 30, 2012

A decisive point had been reached in the euro crisis and EU leaders and the European Central Bank must use all means at their disposal to rescue the currency, euro-group head Jean-Claude Juncker warned on Monday. He also confirmed plans to buy bonds from struggling member states.


The head of the euro group of euro zone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, warned on Monday that the euro zone was in danger of breaking apart. Leaders must use "all means at their disposal" to save the currency union, he urged.

"We have arrived at a decisive point," Juncker told German newspaper Süddeutsche Zeitung. "The world is talking about whether the euro zone will still exist in a few months."

"There is no time to lose," Juncker added. "We must now make abundantly clear with all available means that we are firmly determined to guarantee the financial stability of the currency union."

Juncker also said the euro countries, together with the temporary bailout fund EFSF and the European Central Bank, were preparing to purchase government bonds of struggling euro-zone member countries.

"It still has to be decided what we're exactly going to do when," he said. This depends on "the developments in the next few days and on how fast we have to react."

More

ECB Divided over Efforts to Save Euro

Spiegel
July 30, 2012

ECB head Mario Draghi wants to save the euro at all costs. But the pledge has created discord within the bank's governing council. Many oppose plans to buy up sovereign bonds from troubled euro-zone member states, fearing it could just make things worse.


It was an illustrious meeting that British Prime Minister David Cameron was hosting on the evening before the opening of the Olympic Games in London. Prince Charles joked with International Monetary Fund Managing Director Christine Lagarde, while top chef Tom Aikens served up Scottish salmon and Yorkshire goat cheese. The heads of global corporations like Google enthusiastically applauded the videotaped appearances of English celebrities, from Victoria Beckham to Richard Branson.

It was meant to be a day of glamour, but then Mario Draghi, the president of the European Central Bank (ECB), made a seemingly trivial remark -- but one that ensured that the 200 prominent guests were swiftly brought back to gloomy reality. His organization, he promised, would do "whatever it takes to preserve the euro."

The audience treated the remark as just another platitude coming from a politician. But international financial traders understood it as an announcement that the ECB was about to buy up Italian and Spanish government bonds in a big way. So they did what they always do when central banks suggest they might soon be firing up the money-printing presses: They clicked on the "buy" button.

Stock and bond prices shot up within minutes, and the yields on some southern European debt securities saw a considerable drop. Newspapers and online news services called it an act of liberation, and market speculators quickly concluded that the ECB was apparently prepared to provide them with what one banker called "excellent gains in share prices" in the coming months.

More

Crash of the Bumblebee

by Paul Krugman

New York Times

July 29, 2012

Last week Mario Draghi, the president of the European Central Bank, declared that his institution “is ready to do whatever it takes to preserve the euro” — and markets celebrated. In particular, interest rates on Spanish bonds fell sharply, and stock markets soared everywhere.

But will the euro really be saved? That remains very much in doubt.

First of all, Europe’s single currency is a deeply flawed construction. And Mr. Draghi, to his credit, actually acknowledged that. “The euro is like a bumblebee,” he declared. “This is a mystery of nature because it shouldn’t fly but instead it does. So the euro was a bumblebee that flew very well for several years.” But now it has stopped flying. What can be done? The answer, he suggested, is “to graduate to a real bee.”

Never mind the dubious biology, we get the point. In the long run, the euro will be workable only if the European Union becomes much more like a unified country.

More

Welcome to the ECB

by Charles Wyplosz

Vox

July 30, 2012

Financial markets once again pushed Eurozone leaders to act. European Central Bank President Draghi recently promised to “do whatever it takes”. This column argues that Draghi made an implicit commitment to act as lender of last resort to Eurozone governments. This means optimism may be justified – if only because it suggests that the Eurozone has a great central banker who is both a serious economist and an astute politician.


On Thursday, the President of the European Central Bank, Mario Draghi, created a buzz by saying that the central bank “is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” This was enough to send the euro up and bond spreads down. But what was Draghi really saying? Very smart things, in fact, for the third time.

Draghi’s first installment

On 11 December 2011, barely one month after assuming his new responsibilities, and two weeks after having lowered the interest rate, Draghi said:

“What I believe our economic and monetary union needs is a new fiscal compact – a fundamental restatement of the fiscal rules together with the mutual fiscal commitments that euro area governments have made.” (Draghi 2011)

More

Banking Union Is Last Gambit to Save Euro Dream

by Luigi Zingales

Bloomberg

July 30, 2012

The euro crisis isn’t Angela Merkel’s fault.

The real culprits are the founding fathers -- Francois Mitterrand, Helmut Kohl, Jacques Delors or Romano Prodi -- who created a common currency based on poor economics and worse politics. They knew their brainchild was flawed, and bet that future crises would force it to evolve. Unfortunately, they willfully ignored the dysfunction of Europe’s political structures, which allow Luxembourg, a country with fewer inhabitants than Tucson, Arizona, to veto any communal decision.

As the impending default of the Spanish regions amply demonstrates, a fiscal union without a transfer of political powers to a central authority is pure folly. Yet no European country is willing to relinquish its sovereignty; this is particularly true of those that have proved most irresponsible.

The euro’s founders designed this game of chicken on purpose, hoping that in a crisis either the periphery countries would blink and relinquish their sovereignty or Germany would cave and open its coffers.

Beyond their willingness to ignore the risks inherent in playing chicken, the euro founders didn’t take into account that even good outcomes of this game could be disastrous. On the one hand, without a transfer of powers, a German rescue would only postpone the disaster. On the other, a transfer of power under duress would fuel such deep national resentment that the idea of Europe would be destroyed for at least a generation.

More

Dos and Don’ts for the European Central Bank

by Martin Feldstein

Project Syndicate

July 29, 2012

Recent statements by European Central Bank President Mario Draghi and Bank Governor Ewald Nowotny have reopened the debate about the desirable limits to ECB policy. The issue is not just the ECB’s legal authority under the Maastricht Treaty, but, more importantly, the appropriateness of alternative measures.

Nowotny, the president of the National Bank of Austria, suggested that the European Stability Mechanism (ESM) might (if the German Constitutional Court allows it to come into existence) be given a banking license, which would allow it to borrow from the ECB and greatly expand its ability to purchase eurozone sovereign bonds. Draghi later declared that the ECB can and will do whatever is necessary to prevent high sovereign-risk premia from “hampering the functioning of monetary policy.”

Draghi’s statement reprised the rationale used by his predecessor, Jean-Claude Trichet, to justify ECB purchases of eurozone members’ sovereign debt. Not surprisingly, financial markets interpreted his declaration to mean that the ECB would buy Spanish and Italian government bonds again under its Securities Markets Program, as it did earlier this year. Although the previous purchase of more than €200 billion ($246 billion) had no lasting effect on these countries’ risk premia, the presumption is that the effort this time could be much larger. But is that what the ECB should be doing?

More

Sunday, July 29, 2012

IMF can end its agony over Greece

Financial Times
Editorial
July 29, 2012


The International Monetary Fund fought hard and successfully to join the eurozone governments and the European Central Bank when a rescue for Greece was launched more than two long years ago. It has not been a happy experience. The Greek economy has underperformed growth and debt targets and is now enmeshed in a post-election tangle. Unless there is a sharp reduction in the disarray and denial among the fund’s European co-lenders, it is time the IMF handed the reins over to them.

The IMF’s disquiet about Greece has been evident for more than a year. That in itself was a belated recognition of reality: it should have pushed from the outset for a restructuring of privately-held sovereign debt and insisted on a much more realistic view of how much economic growth a battered and sclerotic economy was likely to produce.

Once the first Greek rescue had proved inadequate, the fund was persuaded to sign up to the second version this March only with great misgivings. It must not be bounced into joining in a third – or even continuing to disburse under the current programme – on the basis of yet more hopelessly optimistic debt sustainability projections and more inadequate plans for official financing to fill the gap.

More

Europe’s political union is an idea worthy of satire

by Otmar Issing

Financial Times

July 29, 2012

Recent history, and not just that of Germany, teaches us that the idea of sustaining an economic and monetary union over time without political union is a fallacy.” Has former German chancellor Helmut Kohl, who gave this warning in 1991, been proven right by the eurozone crisis? Should Europe now seek political union?

Forming such a union implies nothing less than the end of the nation state. A European government would have to be created with powers of taxation and public spending, a corresponding European parliament and so on. There are powerful arguments why “Europe” – whatever this means and how many countries might be included – should have this ambition. However, to base the argument for integration primarily on saving monetary union is anything but convincing. And it is more than strange when foreign politicians and experts are pressing eurozone states to give up national sovereignty, out of fear that a collapse of monetary union might have severe consequences for their economies. Juvenal would have said: Difficile est satiram non scribere (It is difficult not to write a satire).

But, independent of any answer to these questions, political union is impossible to achieve within a few years. It cannot be a means of crisis management. And here comes the dangerous part: any proposals, for example, to extend the amount and scope of financial support mechanisms premised on further integration in the future. Promising later action against requests for more money now does not look like a credible strategy – quite the opposite. This approach would severely undermine the idea of establishing political union.

More

Ποια επαναδιαπραγμάτευση;

της Μιράντας Ξαφά

Καθημερινή

29 Ιουλίου 2012

Παρά τις προσπάθειες που καταβάλλει η κυβέρνηση να επανεκκινήσει τις μεταρρυθμίσεις, η προσδοκία εξόδου της Ελλάδας από την Ευρωζώνη παραμένει κυρίαρχη. Στην πρόσφατη έκθεσή του, το Citigroup ανεβάζει την πιθανότητα εξόδου της Ελλάδας στο 90% από 50%-75% πριν από τις εκλογές, διαπιστώνοντας ότι «υπάρχει αγεφύρωτο χάσμα μεταξύ της δημοσιονομικής προσαρμογής και των μεταρρυθμίσεων στις οποίες προσβλέπει η τρόικα και αυτών που είναι πολιτικά και οικονομικά εφικτές στην Ελλάδα». Αυτό που επείγει δεν είναι η αναδιαπραγμάτευση αλλά αποφασιστικά και άμεσα μέτρα για να συρρικνωθεί το κομματικό κράτος, η πηγή τόσο των ελλειμμάτων και του χρέους όσο και της έλλειψης ανταγωνιστικότητας. Οι αλλεπάλληλες φοροεπιδρομές με θύματα συνεχώς τους ίδιους βαθαίνουν την ύφεση και αναβάλλουν την εξυγίανση του Δημοσίου. Ο χρόνος έχει λιγοστέψει δραματικά από την αναποφασιστικότητα του πολιτικού συστήματος και τη διεξαγωγή δύο αλλεπάλληλων εκλογικών αναμετρήσεων μόλις πετύχαμε το «κούρεμα» των ομολόγων αλλά πριν εφαρμόσουμε τις περικοπές δαπανών που συμφωνήσαμε. Τώρα όλες οι προσπάθειες πρέπει να επικεντρωθούν στην περικοπή των δημόσιων δαπανών, στις αποκρατικοποιήσεις και στην πάταξη της φοροδιαφυγής με την τεχνική βοήθεια της τρόικας, που μέχρι σήμερα δεν έχει αξιοποιηθεί. Μόνο έτσι μπορεί να δημιουργηθεί το περιθώριο που χρειάζεται για την επανεκκίνηση του ιδιωτικού τομέα μέσω της μείωσης της φορολογίας, την αποπληρωμή των απλήρωτων υποχρεώσεων του κράτους προς τους ιδιώτες και την ανακεφαλαιοποίηση των τραπεζών για να λήξει η πιστωτική ασφυξία.

Η συγχώνευση φορέων του Δημοσίου με μετάταξη του προσωπικού ελάχιστα μειώνει τις δαπάνες. Χρειάζεται δραστική μείωση του αριθμού των δημοσίων υπαλλήλων με αποζημίωση που ανέρχεται στο 70% του βασικού μισθού τους, όπως έχει προτείνει η Δράση. Μόνο έτσι μπορούν να εξοικονομηθούν τα 11,6 δισ. ευρώ που αναζητεί η κυβέρνηση και ταυτόχρονα να μειωθεί σημαντικά η γραφειοκρατία που είναι τροχοπέδη στην ανάπτυξη. Δραστηριότητες όπως οι διεθνείς εκθέσεις, οι κατασκευές, η αποκομιδή των απορριμμάτων κ.λπ. θα πρέπει να εκχωρηθούν στον ιδιωτικό τομέα σε εύλογο χρόνο, μαζί με ένα τμήμα του προσωπικού τους. Η άμεση πώληση του ΟΠΑΠ θα αποτελούσε έμπρακτη απόδειξη ότι η κυβέρνηση είναι αποφασισμένη να αγνοήσει μικροκομματικά συμφέροντα και να κινηθεί με γνώμονα το δημόσιο συμφέρον. Η αποφυγή του πολιτικού κόστους σήμερα είναι μια εθνικά καταστροφική συμπεριφορά.

Περισσότερα

Ρόμπερτ Μαντέλ: Η έξοδος από το ευρώ θα σας γύριζε μεμιάς 20 χρόνια πίσω

Συνέντευξη στον Μάρκο Καρασαρίνη

Το Βήμα

29 Ιουλίου 2012

Ο Ρόμπερτ Μαντέλ αποκαλείται κατά περίπτωση «πατέρας» ή «παππούς» του ευρώ, και όχι άδικα. Ήταν η δική του πρωτοποριακή εργασία στη δεκαετία του 1970 αναφορικά με τη νομισματική δυναμική και τις βέλτιστες νομισματικές περιοχές (optimal currency areas) που αποτέλεσε το θεμέλιο της οικοδόμησης του ευρώ. Για αυτά τα επιτεύγματά του ο κορυφαίος καναδός οικονομολόγος, καθηγητής σήμερα στο Πανεπιστήμιο Κολούμπια, έλαβε το 1999 το βραβείο Νομπέλ Οικονομίας. Προσκεκλημένος του προέδρου της Εταιρείας Μελέτης Προβλημάτων Συλλογικών (ΕΜΠΡΟΣ), κ. Πέτρου Δούκα, βρέθηκε στις 25 Ιουλίου στην Αθήνα για μία ομιλία για τις διεθνείς και τις ελληνικές πτυχές της οικονομικής κρίσης. Στη συνέντευξή του στο Βήμα επισημαίνει την ανάγκη παρεμβάσεων εκ μέρους της Ευρωπαϊκής Κεντρικής Τράπεζας και έκδοσης ευρωομολόγου, ενώ τονίζει ότι η έξοδος από το ευρώ δεν αποτελεί λύση για την Ελλάδα.

Η Ισπανία είδε την εβδομάδα που μας πέρασε τα επιτόκια δανεισμού της να ανεβαίνουν σε απαγορευτικά επίπεδα. Θα λέγατε ότι εκείνη αποτελεί πλέον το επίκεντρο της κρίσης χρέους;

«Η κατάσταση της Ισπανίας είναι σαφώς πολύ δύσκολη και κατά τη γνώμη μου ο πρωθυπουργός Μαριάνο Ραχόι με την πλειοψηφία που διαθέτει δεν πρέπει να διστάσει ούτε στιγμή να προβεί σε περικοπές δαπανών, παρά το γεγονός ότι αύξησε ήδη τον ΦΠΑ. Από την άλλη πλευρά όμως, θεωρώ ότι το γεγονός των ημερών είναι η δήλωση του Μάριο Ντράγκι, του προέδρου της Ευρωπαϊκής Κεντρικής Τράπεζας, ότι δεν πρόκειται να αφήσει το ευρώ να καταρρεύσει. Ηταν μια πολύ ισχυρή και ξεκάθαρη δήλωση, στην οποία ανταποκρίθηκαν άμεσα οι αγορές με σημαντική άνοδο τόσο του Dow Jones όσο και των ευρωπαϊκών χρηματιστηρίων».

Μεταξύ των ευρωπαϊκών οικονομιών του Νότου ποια βρίσκεται στη δυσχερέστερη θέση σήμερα;

«Η χώρα που διατρέχει τον μεγαλύτερο κίνδυνο εξόδου από το ευρώ είναι η Ελλάδα. Είδα ότι κάποιοι αναλυτές της Citigroup υπολογίζουν σε 90% τις πιθανότητες αποχώρησης της Ελλάδας από το ευρώ. Προσωπικά διαφωνώ. Είχα πει τον Ιούνιο ότι κατά την εκτίμησή μου θα έδινα ένα 25% σε αυτό το ενδεχόμενο και σήμερα δεν θεωρώ ότι αυτό το ποσοστό έχει αυξηθεί. Η παραμονή στο ευρώ αποτελεί την καλύτερη δυνατότητα για τη χώρα, δεν χωρά συζήτηση επ' αυτού - η έξοδος θα τη γύριζε μεμιάς 20 χρόνια πίσω και θα περνούσε πολύς καιρός έως ότου επανέλθει σε επίπεδο ποιότητας ζωής σαν το σημερινό. Η άνοδος του ελληνικού ΑΕΠ, αν και ως ένα βαθμό οφειλόταν στις κρατικές δαπάνες, υπήρξε από τις υψηλότερες πανευρωπαϊκά ως το 2008. Η ωφέλεια τα προηγούμενα χρόνια υπήρξε τεράστια, ακόμη και όταν συνυπολογίζει κάποιος πλέον τη μεγάλη πτώση του ΑΕΠ κατά 15% - 20% την τελευταία τετραετία. Αναφορικά με την Ισπανία και την Ιταλία τώρα, δεν είμαι ακόμα σίγουρος για το ποια βρίσκεται σε χειρότερη θέση. Το δημόσιο χρέος της Ισπανίας είναι πολύ χαμηλότερο από εκείνο της Ιταλίας, όμως θα πρέπει να αθροίσουμε και τα χρέη των περιφερειών. Οι επαρχίες της Ιταλίας επίσης έχουν χρέη, το θετικό ωστόσο είναι ότι στη δική της περίπτωση το ιδιωτικό χρέος εξακολουθεί να είναι πολύ χαμηλό».

Περισσότερα

Μα έχουμε κράτος;

του Γιάννη Μαρίνου

Το Βήμα

29 Ιουλίου 2012

Έχουμε κράτος; Ή μήπως κάτω από τη σοβαροφανή, επιδεικτική και κοστοβόρα επιφάνεια που εκφράζουν οι τρεις πυλώνες της τύποις δημοκρατίας (νομοθετική, εκτελεστική και δικαστική εξουσία) λειτουργεί το πρώτο κράτος όπου κυβερνά η αναρχία; Αφού οι βουλευτές μας νομοθετούν, αλλά οι νόμοι δεν είναι σεβαστοί ούτε από τους ίδιους, ούτε από τους εκάστοτε κυβερνώντες, ούτε από τους πολίτες, ιδίως όταν καλύπτονται από ασυλία που τους παρέχουν τα κόμματα και οι συντεχνίες τους, ιδιαίτερα της Αριστεράς. Ως προς τη Δικαιοσύνη, δείχνει φοβερά αμήχανη, διερωτώμενη αν ισχύουν οι νόμοι που ψηφίζει η Βουλή ή αν νόμος είναι το δίκιο του εργάτη, δηλαδή το ατομικό συμφέρον κάθε πολίτη, όπως ο καθένας αυθαιρέτως το αντιλαμβάνεται.

Αντιπαρερχόμενος το από χρόνια λειτουργούν κράτος των Εξαρχείων, όπου ισχύουν και προστατεύονται η αταξία και η ανασφάλεια, θα αναφερθώ επί τροχάδην σε πιο πρόσφατες διαπιστώσεις, που επιβεβαιώνουν τα προαναφερθέντα.

Στη Βουλή δύο «δημοκρατικά» κόμματα της Αριστεράς (με συμπλέοντα δύο νεοπαγή κόμματα της άκρας Δεξιάς) δηλώνουν ότι δεν σέβονται και θα επιδιώξουν ακόμη και με πεζοδρομιακές κινητοποιήσεις να μην εφαρμόζονται όσοι νόμοι δεν τους αρέσουν. Και ότι όσοι θα βασιστούν στην ισχύ των νόμων αυτών θα χάσουν τα λεφτά τους αν είναι επενδυτές ή θα πάνε στη φυλακή αν είναι εφαρμοστές τους. Αρα αξιοσέβαστη είναι μόνο η νομιμότητα που επιτρέπουν το ΠΑΜΕ (ΚΚΕ), ο ΣΥΡΙΖΑ και οι γνωστοί άγνωστοι αναρχικοί. Απέναντί τους το νόμιμο κράτος αυτοκαταργείται. Διότι πού ήταν το κράτος όταν εμποδίστηκε επί εννέα μήνες από το ΠΑΜΕ και κάποιους συνδικαλιστές η λειτουργία της Χαλυβουργίας από τους επιθυμούντες να εργαστούν σε αυτήν; Και ποιο κύρος έχει η Δικαιοσύνη, όταν οι αποφάσεις της αγνοούνται προκλητικά από τους παρανομούντες, ενώ η κρατική εξουσία δεν τολμά να τους εφαρμόσει όπως υποχρεούται;

Περισσότερα

Ενα νέο πολιτικό παράδειγμα

του Ανδρέα Πανταζόπουλου

Το Βήμα

29 Ιουλίου 2012

Από κοινού με την αποκατάσταση της Δημοκρατίας, το βασικότερο χαρακτηριστικό της περιόδου που ακολούθησε τη Μεταπολίτευση του 1974 ήταν το έλλειμμα αυτονομίας της πολιτικής από την κοινωνία. Η κοινωνία καθοδήγησε την πολιτική και τους πολιτικούς, αυτή ήταν που υπαγόρευσε τους κανόνες του παιχνιδιού. Η λεγόμενη φιλολαϊκή πολιτική θεωρήθηκε κάτι εγγενώς καλό, αξία ανυπέρβλητη, έγινε κυρίαρχη ιδεολογία και κοινωνική πρακτική. Οι ελάχιστοι πολιτικοί που τόλμησαν να αντιπαρατεθούν σε αυτήν, από όποιο πολιτικό χώρο και αν προέρχονταν, εξαφανίστηκαν από τη δημοσιότητα, συχνά στιγματιζόμενοι ηθικά. Αυτό ήταν το βασικό χαρακτηριστικό της μεταπολιτευτικής συνθήκης που εγκαινίασε η πτώση της δικτατορίας. Αυτή η φιλολαϊκή πολιτική γιγάντωσε έναν μικροαστικό, εγωιστικό και αλαζονικό ατομικισμό, την αδιαφορία για το κοινό συμφέρον. Είναι παράδοξο, στα όρια του τραγικού: ενώ όλα αυτά τα χρόνια ο δημόσιος χώρος παλλόταν από ένα και μόνο σύνθημα, αυτό της υποχρέωσης της πολιτικής να είναι στην υπηρεσία του «λαού και του έθνους», αυτό που πραγματικά συνέβη ήταν ένας εξατομικευμένος λαός να στραφεί κατά του έθνους, δηλαδή κατά των κανόνων που ορίζουν και καθιστούν εφικτή την κοινή συμβίωση, το κοινό καλό.

Προφανώς, ευθύνονται οι ελίτ, ένα μεγάλο έστω μέρος τους. Αλλά η κοινωνική συνέργεια σε αυτήν τη διαδικασία της κοινωνικής αποσάθρωσης που σήμερα ζούμε δεν πρέπει να αποσιωπάται. Με τελευταία εμβληματική περίπτωση αυτήν της μίνι εξέγερσης στην Κερατέα, καθίσταται προφανές ότι μια νέα Μεταπολίτευση δεν μπορεί παρά να οικοδομηθεί πάνω στην τήρηση και υπεράσπιση του δημοκρατικά επεξεργασμένου νόμου.

Περισσότερα

Saturday, July 28, 2012

ECB buys time for Euro - also bonds?

by Stephanie Flanders

BBC News

July 28, 2012

Mario Draghi's comments in London this week prompted some euphoria in the financial markets, which Chancellor Merkel and President Hollande seem keen to encourage.

It tells you something about the state of anxiety about the Euro - and the centrality of the ECB's position in this sorry mess - that a statement of support from Dr Draghi, on a panel at a conference in London, should have had such an impact.

Still, the ECB president is someone who chooses his words and intonation carefully.

Thursday's comments were more emphatic than we have heard before. He also seemed to draw a link between the high level of government borrowing costs ("sovereign premia") and the ECB's own mandate.

Here are the key lines:

"To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate.... We have to cope with the financial fragmentation, address these issues.... Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.... And believe me, it will be enough."

More

Αριστερά και Δημοκρατία

του Σταύρου Τσακυράκη

Τα Νέα

28 Ιουλίου 2012

Οι οικονομικές κρίσεις ποτέ δεν έλειψαν από τη χώρα, αλλά μέχρι τη Μεταπολίτευση η Ελλάδα πήγαινε από πολιτική κρίση σε πολιτική κρίση: Κίνημα στο Γουδή, Μικρασιατική Καταστροφή, δικτατορία του Μεταξά, Κατοχή, Εμφύλιος, μαύρη δημοκρατία στις δεκαετίες του 1950 και του 1960 και τέλος δικτατορία των συνταγματαρχών. Φυσικά όλες αυτές οι κρίσεις είχαν τις ιδιομορφίες τους. Ολες, όμως, ήταν κρίσεις μιας χώρας που πάσχιζε χωρίς επιτυχία να εγκαθιδρύσει μια πραγματική κοινοβουλευτική Δημοκρατία. Θα τις ονομάσω «κρίσεις που είχαν ως ζητούμενο τη Δημοκρατία».

Η Μεταπολίτευση έθεσε τέλος σε αυτού του είδους τις υπαρξιακές κρίσεις. Το δημοψήφισμα έσβησε οριστικά τον βασιλιά ως τον αντίπαλο πόλο της δημοκρατίας και οι κανόνες του δημοκρατικού παιχνιδιού που θεσπίστηκαν από το Σύνταγμα σε γενικές γραμμές τηρήθηκαν με αποτέλεσμα να έχουμε την πιο μακρά περίοδο ομαλής λειτουργία της Πολιτείας. Σταματήσαμε να έχουμε διαμάχες για την αυθεντικότητα των εκλογών, για το ποιος τις κέρδισε ή ποιος πρέπει να διοριστεί πρωθυπουργός και γενικά λειτουργούσαμε, τουλάχιστον τυπικά, σαν όλες τις δυτικοευρωπαϊκές δημοκρατίες.

Παρ' όλα αυτά, δεν αποφύγαμε και πάλι μια νέα υπαρξιακή κρίση. Τη λέω υπαρξιακή διότι, όπως και οι πριν από τη Μεταπολίτευση κρίσεις, δεν απειλεί απλώς την ευημερία μας αλλά θέτει υπό αμφισβήτηση τη θέση μας στην Ευρώπη και τον κόσμο• μας κάνει να συζητάμε ποιοι είναι οι σύμμαχοι και οι φίλοι μας• θέτει εκ των πραγμάτων ζητήματα εθνικής κυριαρχίας. Η ειρωνεία είναι ότι μόλις λίγα χρόνια πριν λέγαμε με περισσή οίηση ότι εμείς δεν είμαστε μέρος του προβλήματος στα Βαλκάνια, ο πιο άχρηστος πρωθυπουργός που είχαμε, δε, με ύφος χιλίων καρδιναλίων έδινε συμβουλές στην Τουρκία τι πρέπει να κάνει για να μπει στην ΕΕ. Εδώ και τρία χρόνια βρισκόμαστε - σχεδόν σε καθημερινή βάση - στα πρωτοσέλιδα όλων των μέσων ενημέρωσης, είμαστε χωρίς αμφιβολία ένα από τα προβλήματα του κόσμου ολόκληρου.
Η κοινωνία που δημιουργήσαμε είναι σε αδιέξοδο και βιώνουμε μια νέα υπαρξιακή κρίση που, όμως, διαφέρει από τις προηγούμενες όχι ως προς το βάθος ή την οξύτητα αλλά ως προς το γενικό πλαίσιο που διαμορφώθηκε. Ενώ οι προηγούμενες ήταν κρίσεις αναζήτησης της Δημοκρατίας, αυτή εδώ είναι κρίση εφαρμογής της Δημοκρατίας.

Περισσότερα

Εντός, εκτός και επί τ’ αυτά

του Μπάμπη Παπαδημητρίου

Καθημερινή

28 Ιουλίου 2012

Επανήλθε το γνωστό ερώτημα: «Θα μείνουμε στην Ευρωζώνη;». Η δημοσίευση μιας περιοδικής μελέτης του τραπεζικού ομίλου Citigroup έθρεψε τη συζήτηση. Βεβαίως, η ομάδα του εξαιρετικού αναλυτή οικονομολόγου Ουίλεμ Χέντρικ ήταν μεταξύ των πρώτων που πίστευψαν ότι η Ελλάδα δεν θα αντέξει τη θεραπεία λιτότητας και προσαρμογής. Οπως είχε εξηγήσει, το πρόγραμμα διάσωσης της ελληνικής οικονομίας θα αποτύχει για δύο λόγους. Ο ένας είναι ότι οι Ελληνες δεν θα αποδεχτούν την ανταλλαγή μεταξύ σημερινών ζημιών και μελλοντικού οφέλους, δηλαδή μεταξύ βαθύτατης λιτότητας με αντάλλαγμα τη διατήρηση ενός ισχυρού νομίσματος. Ο δεύτερος λόγος είναι ότι τα μεγάλα κράτη της Ευρωζώνης, κυρίως η Γερμανία και όσοι την ακολουθούν, δεν θα δεχτούν να διακινδυνεύσουν όσα χρειάζονται για τη διάσωση όλων των ζημιών που κρύβει η δημοσιονομική κατάσταση της Ευρωζώνης.

Σε κάθε περίπτωση, θα ήταν σωστό να προσέχουμε καλύτερα την ακριβή διατύπωση. Πράγματι, στο σημείωμα που συνόδευε την έρευνα, υπογραμμίζεται ότι το πέρασμα της Ελλάδας εκτός Ευρωζώνης στην 1η Ιανουαρίου 2013 δεν αποτελεί πρόβλεψη των εμπειρογνωμόνων της Citi, αλλά «μια αυθαίρετη επιλογή ημερομηνίας για τις ανάγκες της ανάλυσης». Οπως και να έχει, όμως, η πιθανότητα ενός Grexit (ελληνικής εξόδου...) είναι πλέον στο 90% και μπορεί να συμβεί στους προσεχείς 12–18 μήνες. Η προηγούμενη πρόβλεψη των ιδίων ήταν ότι υπήρχε πιθανότητα 50–75% να εγκαταλείψει η Ελλάδα το ευρώ. Για να κατανοήσουμε καλύτερα το πλαίσιο της συγκεκριμένης ανάλυσης, προσθέστε ότι στο ίδιο αυτό σενάριο υποθέτουν πως Ισπανία και Ιταλία θα υιοθετήσουν κάποιο μνημόνιο και θα δεχτούν την παρακολούθηση της δημοσιονομικής και οικονομικής πολιτικής από την τρόικα, και ακόμη ότι το δημόσιο χρέος Πορτογαλίας, Ιρλανδίας και ίσως Ιταλίας, Ισπανίας και Κύπρου θα υποστεί «κούρεμα». Ολα αυτά στα αμέσως επόμενα χρόνια.

Περισσότερα

Germany, France Back Pledge to Save Euro

Wall Street Journal
July 27, 2012

The leaders of Germany and France threw their weight behind European Central Bank President Mario Draghi's pledge to protect the euro with decisive action, delivering a crucial political endorsement for the ECB's use of its printing press to buy beleaguered nations' bonds.

The remarks, from German Chancellor Angela Merkel, French President François Hollande and others, helped propel a broad market rally that began Thursday after Mr. Draghi's declaration.

Ms. Merkel and Mr. Hollande held a phone conference Friday and released a statement saying they are "deeply committed" to the euro zone and "determined to do everything to protect it." In a reference that seemed to endorse Mr. Draghi's remarks, the leaders said euro-zone member states and European institutions must live up to their responsibilities in their areas of competence.

German Finance Minister Wolfgang Schäuble also signaled his support for Mr. Draghi.

The public display suggests that Mr. Draghi's comments were part of an orchestrated effort among the region's key power centers to calm restive markets.

More

Ο μπεκρής

του Τάκη Μίχα

Protagon.gr

28 Ιουλίου 2012

Ο μακαρίτης ο πατέρας μου συνήθιζε να μού λέει το ανέκδοτο για τον μπεκρή-που πιθανώς πολλοί από εσάς γνωρίζετε. Πρόκειται για ένα τύπο που κάθε φορά που ξεκινάει να καταστρώσει τον ημερήσιο προϋπολογισμό του κόβει από όλα τα άλλα πλην του κρασιού. Δεν ξέρω τι ήταν αυτό πού έκανε τον πατέρα μου να μού επαναλαμβάνει αναρίθμητες φορές αυτή την ιστορία –ίσως ήθελε να μου τονίσει τα κακά της εξάρτησης από το αλκοόλ ίσως πάλι ήθελε να με εξοικειώσει με την έννοια των «ανελαστικών δαπανών».

Η ιστορία αυτή έρχεται στο μυαλό μου κάθε φορά που βλέπω μία ελληνική κυβέρνηση είτε να προσπαθεί να καταρτίσει προϋπολογισμό η να περικόψει δαπάνες. Πάντοτε ό ένας και μοναδικός στόχος παραμένει ο ίδιος: Να μην απολυθεί ούτε ένας δημόσιος υπάλληλος! Τίποτα άλλο. Είτε ο αρμόδιος υπουργός λέγεται Γ.Στουρνάρας είτε Γ.Παπακωνσταντίνου είτε Ε.Βενιζέλος η πυξίδα την οποία ακολουθούν τυφλά είναι η ίδια: Όχι απολύσεις στον δημόσιο τομέα! Και έτσι έχουμε φτάσει στην απίστευτη κατάσταση τρία χρόνια μετά την έναρξη της κρίσης να μην υπάρχει ούτε ένας απολυμένος από ίσως τον πιο διεφθαρμένο και αντιπαραγωγικό τομέα στην Ευρώπη ενώ αντίθετα να υπάρχουν ένα εκατομμύριο απολυμένοι στον ιδιωτικό τομέα!

Αλλά ο εμπαιγμός δεν σταματάει εδώ: Συνεχίζεται και με τις πρόσφατες εξαγγελίες για «καταργήσεις» και «συγχωνεύσεις» φορέων του δημοσίου. Οπουδήποτε στον ιδιωτικό τομέα λαμβάνουν χώρα αυτές οι διαδικασίες συνοδεύονται από την απόλυση των εργαζομένων στην υπό κατάργηση επιχείρηση. Όμως όχι στο ελληνικό δημόσιο. Εδώ όχι απλά δεν απολύεται κανείς όταν κλείνει ο φορέας αλλά δεν θα με εκπλήξει και αν πάρουν αύξηση! Και διερωτάται κανείς: Αν δεν απολυθεί κανείς από τους υπό κατάργηση φορείς τότε από πού θα προέλθουν οι περικοπές των δαπανών; Από την εξοικονόμηση στους στυλούς και τα μολύβια;

Περισσότερα

Friday, July 27, 2012

What if Europe Fails?

by Thomas Wright

The Washington Quarterly

Summer 2012

The European Union is engaged in a ferocious political, diplomatic, and economic struggle to preserve the future of the single currency, the euro, and the viability of what has become known simply as ‘‘the project,’’ namely the process of integration that has been the bedrock of Western European politics for over half a century. It is distinctly possible that its members’ efforts may fail, either in the short or long term, and give way to an era of disintegration. Some have sounded the alarm: German Chancellor Angela Merkel famously remarked, ‘‘If the euro fails, Europe fails.’’ Former president Nicolas Sarkozy of France predicted, ‘‘If the euro explodes, Europe would explode. It’s the guarantee of peace in a continent where there were terrible wars.’’ Polish Foreign Minister Radek Sikorski warned the euro’s collapse could cause an ‘‘apocalyptic’’ crisis. Harvard economist Dani Rodrik cautioned ‘‘the nightmare scenario would…be a 1930’s-style victory for political extremism.’’ After all, ‘‘fascism, Nazism, and communism were children of a backlash against globalization.’’ The erosion of democracy in Hungary and the rise in support for populist parties in Greece, the Netherlands, Finland, and France appears to some to be the beginning of the end.

Yet, verbal warnings from nervous leaders and economists aside, there has been remarkably little analysis of what the end of European integration might mean for Europe and the rest of the world. This article does not predict that failure will occur it only seeks to explain the geopolitical implications if it does. The severity and trajectory of the crisis since 2008 suggest that failure is a high-impact event with a non-trivial probability. It may not occur, but it certainly merits serious analysis. Failure is widely seen as an imminent danger, but even if this moment passes, it will remain a significant risk for some time to come.

Would the failure of the euro really mean the beginning of the end of democracy in Europe? Could the global economy survive without a vibrant European economy? What would European architecture look like after the end of European integration? What are the implications for the United States, China, and the Middle East? Since the international order has been primarily a Western construction, with Europe as a key pillar, would the disintegration of the European Union or the eurozone have lasting and deleterious effects on world politics in the coming decade?

Read the Published Version (PDF)

A New Idea to Save the Common Currency

Spiegel
July 27, 2012

Germany's Left Party is not often associated with neo-liberalism. But a new proposal from a senior party member could provide a way out of the cycle of bailouts and bank aid. Why not just reboot the market economy and then cushion the fall?


If there is one thing that has seemed to characterize the euro crisis, it is the lack of alternatives. The common currency bailout fund, for example, had to be vastly enlarged to prevent financial markets from plunging the common currency zone into chaos. Spain had to be given billions in aid to prevent its banks from collapsing and making the situation even worse. The list of instances in which European leaders have made moves they've called mandatory is long.

Such tunnel vision, however, hasn't exactly led to a swift end to the economic woes sweeping across the Continent. Increasing numbers of economists and politicians are predicting that Greece will soon collapse into uncontrolled bankruptcy -- exactly the scenario that Europe has been struggling to avoid for the last two years. The €100 billion Europe has pledged to Spanish banks has failed to stop rising interest rates on the country's sovereign bonds. And both Madrid and Rome may ultimately have to apply for a full bailout, which would stretch the euro backstop funds to their limits. It seems time to start seriously considering whether there might be another way.

Two concepts are already out there, of course. There is the arch-liberal idea that, simply put, calls for allowing them all -- both the troubled banks and the deeply indebted countries -- to go broke. The resulting recession, of course, would be painful. But it is the necessary catharsis, proponents of this idea say, following past spending excesses.

Then there is the left-wing strategy, which calls for the immediate introduction of communitized European debt in the form of euro bonds in addition to a Continent-wide banking union. German taxpayers would become the primary backers of European debt, and a euro-zone-wide deposit guarantee would help ensure the stability of banks in the bloc. Other ideas tend to be a mixture of these two approaches.

More

For E.U. Leaders, a Political Dare

by John Vinocur

New York Times

July 27, 2012

Europe’s Olympian vision of its future — great power plus universal indispensability as a beacon of reason — has dimmed to a flicker. Without willingness to accept a dare or two, the situation is unlikely to brighten soon.

The European Union’s debt and deficit grief, compounded by a crisis of political will, is much more than a bad moment that puts progress temporarily on hold.

The community’s faster-higher- stronger thread of grand ambitions has frayed. And the vision meant to give it direction, an independent political role — and to project Europe to the world as something wiser and more responsible than other great powers — has faded.

There are no doubts tingeing the European Union’s exceptional practical achievements, like a single regulatory system or open internal borders. And no one could disparage smaller successes — on the order of reduced mobile phone roaming charges, which save the average E.U. business traveler €1,000 annually. The problem involves once-great-notions associated with Europe that now seem empty and overreaching, shaking confidence in its claim to unlimited promise.

Beyond concern for the euro’s permanence, the list of disillusionment is long.

More

ECB may take losses in second Greek debt restructuring

Reuters
July 27, 2012

European policymakers are working on "last chance" options to bring Greece's debts down and keep it in the euro zone, with the ECB and national central banks looking at taking significant losses on the value of their bond holdings, officials said.

Private creditors have already suffered big writedowns on their Greek bonds under a second bailout for Athens sealed in February, but this was not enough to put the country back on the path to solvency and a further restructuring is on the cards.

The latest aim is to reduce Greece's debts by a further 70-100 billion euros, several senior euro zone officials familiar with the discussions told Reuters, cutting its debts to a more manageable 100 percent of annual economic output.

This would require the European Central Bank and national central banks to take losses on their holdings of Greek government bonds, and could also involve national governments also accepting losses.

The favored option is for the ECB and national central banks to carry the cost, but that could mean that some banks and the ECB itself having to be recapitalized, the officials said.

More

6 στις 10 επιχειρήσεις που ελέγχθηκαν φοροδιαφεύγουν

Καθημερινή
27 Ιουλίου 2012

Καλπάζει η φοροδιαφυγή στις τουριστικές περιοχές της χώρας. Περίπου έξι στις δέκα επιχειρήσεις που ελέγχθηκαν σε δημοφιλείς τουριστικούς προορισμούς φοροδιαφεύγουν. Σύμφωνα με τα στοιχεία που δημοσιοποίησε χθες το υπουργείο Οικονομικών σε 1.410 έλεγχους εντοπίστηκαν παραβάσεις σε 805 επιχειρήσεις. Στις επιχειρήσεις αυτές βρέθηκαν 22.435 παραβάσεις του Κώδικα Βιβλίων και Στοιχείων. Κατά μέσο όρο δηλαδή εντοπίστηκαν 28 παραβάσεις σε κάθε επιχείρηση.

Το μέσο ποσοστό παραβατικότητας διαμορφώθηκε στο 57,1%, αλλά στους δημοφιλείς προορισμούς όπως σε Μύκονο, Σαντορίνη, Κρήτη, Κω, Κέρκυρα, Λευκάδα, Ζάκυνθο το ποσοστό παραβατικότητας φθάνει ακόμη και στο 100%.

Οπως αναφέρουν στελέχη του ΣΔΟΕ οι περισσότερες παραβάσεις στις επιχειρήσεις αφορούν τη μη έκδοση αποδείξεων, την ελλιπή τήρηση των βιβλίων και την υποτιμολόγηση των εσόδων από τις παρεχόμενες υπηρεσίες.

Περισσότερα

The Allure of Growth for the Euro Zone

by Jason Manolopoulos

CNBC

July 27, 2012

A currency union requires strong political leadership, and complete integration of monetary institutions within a single state, to be able to survive. Yet there still seems to be a collective reluctance to acknowledge the scale of the requirements for full monetary and fiscal union in the euro zone.

It would mean the surrender of national sovereignty on economic management, and a pooling of debt. The terms "debt pooling" or "monetary union" are used in an abstract way; in reality it would mean taxes sent from all individuals and organizations in all euro zone states to the center, to be distributed to all others, covering debt repayments as well as hospitals for example. It would mean a single central Exchequer responsible for taxation and budget spending across the euro zone. Are the countries of the euro zone ready for this?

While the official line is that the euro is here to stay, the yield on five-year government bonds is just 0.3 percent in Germany, over 5 percent in Italy and 6.5 percent in Spain. Thus the markets are already assuming a break-up, at the very least into two blocs.

More

Successful Austerity in the United States, Europe and Japan

by Nicoletta Batini, Giovanni Callegari and Giovanni Melina

International Monetary Fund

Working Paper No. 12/190
July 2012


The output effects of 2009 fiscal expansions have been hotly debated. But the discussion of fiscal multipliers is even more relevant now that several European countries have had to quickly retract their stimulus measures in an effort to regain market confidence. Using regime-switching VARs we estimate the impact of fiscal adjustment on the United States, Europe and Japan allowing for fiscal multipliers to vary across recessions and booms. We also estimate ex ante probabilities of recessions derived in association with different-sized and different types of consolidation shocks (expenditure- versus tax-based). We use these estimates to understand how consolidations should be designed to be most effective in terms of permanently and rapidly reducing a country’s debt-to-GDP ratio. The main finding is that smooth and gradual consolidations are to be preferred to frontloaded or aggressive consolidations, especially for economies in recession facing high risk premia on public debt, because sheltering growth is key to the success of fiscal consolidation in these cases.

More

Thursday, July 26, 2012

Europe's Central Bank Signals Action

Wall Street Journal
July 26, 2012

European Central Bank President Mario Draghi sent the strongest signal to date that the ECB was willing to use its power to print money to preserve the euro, giving investors hope that the bank was poised to undertake massive purchases in euro-zone bond markets if the region's crisis worsens.

"Within our mandate, the ECB is willing to do whatever it takes to preserve the euro and, believe me, it will be enough," Mr. Draghi said in a speech in London, one week ahead of the ECB's next policy meeting.

Officials have pledged in the past to support the euro, but Mr. Draghi's promise that "it will be enough" was more definitive than anything he has said since becoming ECB president nine months ago.

Asian markets opened higher Friday on Mr. Draghi's comments. Japan's Nikkei gained 1.2% and Australia's S&P ASX 200 was up 0.8% in early trading. Asian currencies were also boosted by the comments.

More

See also

Moran: Greece Will Leave the Euro in 12-18 Months

Bloomberg
July 26, 2012

Mike Moran, currency strategist at Standard Chartered Plc and Brian Singer, head of dynamic allocation strategies at William Blair, talk with Bloomberg's Sara Eisen and Stephanie Ruhle about the future of the euro, a Greek exit and ECB president Mario Draghi's comments on preserving the euro. They speak on Bloomberg Television's "Lunch Money."



More

Εκθεση Ρακιντζή: Κακοδιοίκηση και συναλλαγές κάτω από το τραπέζι

Το Βήμα
26 Ιουλίου 2012

Συναλλαγές κάτω από το τραπέζι, κακοδιοίκηση, ανευθυνότητα και… άφεση αμαρτιών για τους επίορκους δημόσιους λειτουργούς αποτυπώνει η έκθεση του Γενικού Επιθεωρητή Δημόσιας Διοίκησης Λέανδρου Ρακιντζή για το 2011, που θα κοινοποιηθεί την ερχόμενη Τρίτη.

Την «πρωτοκαθεδρία» στις περιπτώσεις διαφθοράς διατηρούν οι εφοριακοί, λόγω της φύσης της εργασίας τους, και υπάλληλοι με πολλά χρόνια προϋπηρεσίας και συχνά υψηλό βαθμό στη διοίκηση.

Τα περισσότερα περιστατικά διαφθοράς σχετίζονται με παραβάσεις καθήκοντος, συναλλαγές δημόσιων λειτουργών κάτω από το τραπέζι και ελλιπή ή αδικαιολόγητα «πόθεν έσχες». Κοινό χαρακτηριστικό των περισσότερων πειθαρχικών αποφάσεων είναι η απαλλαγή ή μη επιβολή της προσήκουσας σε σχέση με τη βαρύτητα των παραπτωμάτων ποινής, γεγονός που οδήγησε το γενικό επιθεωρητή στην άσκηση ένστασης ενώπιον των δευτεροβάθμιων πειθαρχικών συμβουλίων, δυνατότητα που όμως περιορίζεται από το νέο πειθαρχικό δίκαιο.

Είναι χαρακτηριστικό ότι οι υποθέσεις που εξετάστηκαν σε δεύτερο βαθμό, ύστερα από παρέμβαση του κ.Ρακιντζή, είναι αυξημένες περίπου κατά 10% συγκριτικά με πέρσι, στοιχείο που καταδεικνύει την εντατικοποίηση των ελέγχων αλλά και τη διατήρηση των προβλημάτων κακοδιοίκησης. Ο γενικός επιθεωρητής άσκησε ένσταση κατά 185 πρωτόδικων πειθαρχικών αποφάσεων (εν συνόλω 1.250) που ήταν υπερβολικά επιεικείς ή η αιτιολόγησή τους ανεπαρκής.

Περισσότερα

Greeks Live in Dread of Troika Verdict

Spiegel
July 26, 2012

Financial inspectors from the troika have arrived in Greece to draft their final report on whether the country has made enough progress with its austerity and reform efforts. But many Greeks have already lost hope and are counting on the worst -- an exit from the euro zone.


An aluminum bowl filled with pasta, a bottle of water and a bread roll. "The most important thing is that it quiets your hunger," says Yannis. The 63-year-old is leaning on the wall of a building on Sophocles Street spooning up his lunch. He spent the last half-hour waiting in line outside a soup kitchen in downtown Athens. He says he doesn't have any money for food, adding: "I earn €500 ($600), of which €200 goes to rent alone."

Yannis numbers among the more than 400,000 people in the greater Athens area that rely on free food for their daily survival. He doesn't harbor any illusions anymore -- either about his future or that of his country. "I don't know how they expect to keep squeezing people like me anymore. There's no more to squeeze. Should I throw myself off a high-rise to unburden the state?"

People like Yannis can say what Greece's social reality feels like these days. In particular, he can convey the frustration that has come to grip almost all levels of society. Many have had to accept layoffs, losing up to half of their income and pension cuts, on top of which comes an endless stream of new taxes and fees. They've had to watch as stores shut down and entire city neighborhoods become run-down. They've also observed how pharmacies have turned to dispersing medications for cash only, and seen the number of drug addicts and suicides rise.

Sharan Burrow, the general secretary of the International Trade Union Confederation (ITUC), recently visited Greece. She says she saw a country in which people are "losing hope." She added that people told her that they "are frightened to have children because they will not be able to support them."

More

ECB's Draghi Boosts Markets With Euro Comments

Wall Street Journal
July 26, 2012

Global markets rose following ECB president Mario Draghi's comments that the ECB would do "whatever it takes to preserve the euro." Charles Forelle reports on Markets Hub.


More

See also

How Greece Could Save on Defense Spending

Spiegel
July 26, 2012

Greece is struggling to achieve the deep cuts demanded by its international creditors. But the country's military budget still offers plenty of room for trimming. Athens, though, has refrained from tackling the primary problem: too many soldiers and too many military bases.


The Hellenic Army IV Corps is headquartered in Xanthi, a city in north-eastern Greece, close to the Turkish border. Yet when it is time for the unit's hundreds of jeeps and other vehicles to go in for regular maintenance, they have to travel 570 kilometers. The technical corps for Greece's largest unit, after all, is based in the western Greek city of Ioannina, not far from the Ionian Sea.

The long journey is not cheap: Military personnel get travel expenses, work hours are lost and of course, copious quantities of fuel are consumed. A former senior officer with the corps described the operation, which he oversaw several times while on duty, in a conversation with SPIEGEL ONLINE.

Why the detour? "Probably because some locally elected politician wanted the unit in Ioannina so that he could act as a 'visma' and get people transferred." In Greek military jargon, a "visma" is a politician who ensures that his constituents get transferred as far as possible from the Greek-Turkish border.

The example of the military vehicles' long westward journey is particularly topical this week as the troika, made up of inspectors from the European Commission, the European Central Bank and the International Monetary Fund, begins examining the country's progress on austerity. At the same time, politicians in Germany and elsewhere have begun speculating even more openly about the country's possible exit from the euro zone. The country needs to show clear progress on budget cuts, and the military would seem to be a good place to make them.

Costly armament purchases are, of course, part of the equation. According to the independent Stockholm International Peace Research Institute (SIPRI), Greece has spent much of the 2000s as one of the top five arms importers globally, lavishly spending on new submarines, tanks and fighter jets. Just last year, the country spent €4.6 billion on defense, representing 2.1 percent of its economic output. European NATO members, by contrast, spent an average of 1.6 percent, Germany just 1.4 percent.

More

Euro EUphemism: François Hollande is trying to wriggle out of Germany’s demand for more political union

Economist
July 28, 2012

France's political discourse these days is rich with euphemisms. The words austérité or rigeur are shunned, though everybody knows that spending cuts must come soon. Instead the government of François Hollande prefers to speak of redressement, or “putting right” public finances. And when it comes to the euro crisis and Germany’s demand for greater political union, Mr Hollande responds with the artful phrase: intégration solidaire, or integration with solidarity.

Precisely what Mr Hollande means by this is as important to the future of the euro as Germany’s willingness to accept further risk-sharing. The euro zone is descending into the next circle of misery, with investors fleeing Spain and the mess in Greece returning to the fore. Above all, markets have lost confidence in the future of the single currency. The task of political leaders is to prove that they intend to keep it.

So Germany is being urged to stand behind the euro by accepting the pooling of sovereign debt and collective action to shore up the banking system. Angela Merkel, the German chancellor, says that if there is to be any mutualisation of liabilities, there must be greater central control. That means giving European institutions more power to determine national budgets and economic policies, and to oversee the financial sector. And such power must be legitimised by democratising EU bodies and strengthening the European Parliament.

More

Is “Grexit” at hand?

Economist
July 28, 2012

On his visit to Athens this week, José Manuel Barroso, the head of the European Union (EU) Commission, brought a stern warning for Antonis Samaras, the new prime minister of a precarious right-left coalition government. Greece has only a couple of weeks left to convince its creditors that it can put economic reforms back on track. Should its latest plans for making €14.5 billion ($17.6 billion) of spending cuts over the coming two years be judged unrealistic, the next €31.2 billion loan tranche will again be held back.

If that happens, Greece would be unable to finish recapitalising its big banks. Without credit, the economy will seize up. Pensions and public-sector salaries would not be paid. A “Grexit” from the euro could occur within weeks. The worry for Greeks is that with Spain and Italy coming under attack in financial markets, some euro-zone members may be tempted to sacrifice Greece.

Two previous Athens governments have failed dismally since mid-2010 to implement reforms agreed on with the Commission and the IMF, thanks to widespread official corruption and a lack of political will. Mr Samaras opposed the first Greek bail-out while in opposition; he still wants, at some point, to renegotiate parts of the second.

More

Η εξεταστική του Ιουλίου

του Πάσχου Μανδραβέλη

Καθημερινή

26 Ιουλίου 2012

Όλοι θυμόμαστε με περισσή νοσταλγία τη φοιτητική ζωή. Ηταν η περίοδος που υπερτερούσαν οι μέρες ξεγνοιασιάς. Ομως η ανέμελη ζωή βάναυσα διακοπτόταν τρεις φορές τον χρόνο. Εκεί περί τα τέλη Μαΐου, αρχές Σεπτεμβρίου και μέσα Ιανουαρίου το τάβλι έκλεινε. Οι παρέες στα φοιτητομάγαζα αραίωναν. Τα ξενύχτια γίνονταν μόνο για διάβασμα και όχι για ποτό και ρομάντζο ή κουβέντα μέχρι πρωίας. Εκείνες τις περιόδους «οι πιέσεις των καθηγητών εντείνονταν», ή τουλάχιστον έτσι μας φαινόταν. Ψάχναμε ποιος καθηγητής ήταν «καλός» και ποιος «στριμμένος»· βρίσκαμε «τα θέματα sos» του καθενός, για να δούμε ποιες σελίδες θα διαβάσουμε. Οι πιο πολιτικοποιημένοι από εμάς κατήγγελλαν το σύστημα που εντατικοποιεί τις σπουδές (έστω για τρεις μήνες τον χρόνο) και κήρυτταν ότι σε έναν άλλο κόσμο -που είναι εφικτός- δεν θα υπήρχαν εξεταστικές.

Κάπως έτσι πρέπει να νιώθουν αυτές τις μέρες οι υπουργοί. Πρέπει να καλύψουν τα κενά ολόκληρης της προηγούμενης περιόδου, ή έστω να κάνουν «σκονάκια» γι’ αυτά. Στο λεξιλόγιο της πολιτικής τα «σκονάκια» λέγονται «ισοδύναμα μέτρα»: ναι, δεν κατορθώσαμε να ανοίξουμε τα κλειστά επαγγέλματα για να πυροδοτήσουμε την ανάπτυξη, αλλά θα κάνουμε μια περικοπή συντάξεων που θα τη θυμούνται για χρόνια.

Σαν φοιτητές πορευόμασταν τα τρία τελευταία χρόνια. Μετά από κάθε εξεταστική της τρόικας (και τη σχετική διαπραγμάτευση για «να περάσουμε το εξάμηνο»), ακολουθούσε μια περίοδος ανεμελιάς -συνοδευόμενης από καταγγελίες για το «σύστημα»-, για να ξαναβρεθούμε στην περίοδο που «εντείνονται οι πιέσεις», δηλαδή στη νέα εξεταστική με τα παλιά «σκονάκια» και την καινούργια επαναδιαπραγμάτευση.

Περισσότερα

Europe must face up to ongoing euro crisis

by Anne Applebaum

Washington Post

July 26, 2012

Like the bass line in a pop song, the euro zone keeps pumping out bad news, even while the world is distracted by other themes. On a typical day this week — Tuesday, between 8 a.m. and 3 p.m. in Britain — one could learn that Moody’s, the rating agency, had just lowered its outlook on Germany from stable to negative; that there were “alarming signs for Italy in the bond markets”; that Spanish 10-year bond yields had hit a euro-era record high; and that the entire euro zone was suffering from a manufacturing slump. Besides all that, European stock markets had not yet recovered from the previous day’s crash, which had itself been caused by rumors that Spain would soon need a full-scale bailout.

Another day, another set of crisis headlines — but there is a silver lining: Finally, Europeans are being forced to face up to decades’ worth of fundamentally dishonest politics. Since the 1970s, one government after the next has spent, borrowed and then inflated its way out of the subsequent debt. Then they recovered — only to spend, borrow and inflate once again. Not coincidentally, this cycle was most severe in countries with weaker democracies. Spain ceased to be a dictatorship only after Franco’s death in 1975, Greece was ruled by a military junta from 1967 to 1974, and Italy has had more than 60 governments since World War II. Successive leaders in all of those countries have tried to “buy” the electorate with elaborate pensions, state-sector employment and other perks. Banks across the continent and around the world have greedily facilitated them.

Now they can’t. Though no one recognized it at the time, joining the euro was like adopting the gold standard: It meant that individual governments couldn’t inflate their way out of trouble anymore nor pass on to the next generation the bill for today’s expenditures — as they still can in the United States and Britain. All along, it has been a mistake to describe the euro zone’s difficulties as a “currency crisis.” In fact, it’s a political crisis, caused by an addiction to debt, and it requires a political solution. Electorates have learned the truth: They are bankrupt. Whatever decisions the European Union now makes, future recovery depends on how much of the plain facts ordinary people can bear to absorb.

More

Greek Debate: Austerity or Exit

Wall Street Journal
July 25, 2012

International inspectors arrived in Greece this week to uncover just how far months of political uncertainty have pushed the country's rescue program off track.

The findings of experts from the European Commission, the European Central Bank and the International Monetary Fund, to be reported to euro-zone governments in September, will set up a period of tense negotiations during which Greece's future in the common currency could be decided.

The choices will, to a point, be familiar: Policy makers could decide to force Athens to make more spending cuts; they could agree to provide it with yet more bailout money; or they could decide to take losses on the money Greece owes them. But this time, the stakes are higher and the chances of success appear diminished: Added austerity threatens even more punishment to the Greek economy, while attitudes of some euro-zone politicians to Greece are hardening.

That raises a fourth option, of Greece abandoning the euro.

More

Wednesday, July 25, 2012

A cure for the eurozone’s Lehman syndrome

by Martin Sandbu

Financial Times

July 25, 2012

The way the eurozone’s imbalances are being unwound is poisoning what solidarity the monetary union used to possess. But it is not sufficiently appreciated that these imbalances were driven by private investors. When money flowed from, say, Germany to Spain or Ireland, it did so between the stewards of Germans’ savings – banks, insurance companies, pension funds – and Irish and Spanish banks.

Today’s debt crisis, too, arises from private investment decisions that may make individual sense but are collectively irrational. Politicians are unable to solve it because they have succumbed to the same irrationality.

In the euro’s first decade these private investors funnelled enormous flows from the richer, older, and higher-saving core to a poorer, younger periphery that seemed to offer better investment opportunities. In practice, they merely offered hungrier borrowers.

Investors are now trying to reverse these flows. The credit drought in the periphery; abnormally high yields in some countries and abnormally low ones in others; the renationalisation of Europe’s banking system – all are symptoms of surplus country creditors trying to repatriate the claims they have accumulated on deficit country debtors.

More

History suggests euro's obituaries are premature

by Alan Wheatley

Reuters

July 25, 2012

As talk persists that cash-strapped Greece might have to exit the euro, and bond markets panic over Spain, the fate of Europe's single currency could soon be hanging in the balance again.

After "Grexit" and "Spanic", is it finally time to get ready for "Eurover"?

The euro certainly seems in danger of market-driven disintegration, as signaled by wildly divergent borrowing costs among the nations sharing the currency. Bond yields in Spain are at euro-era highs because investor confidence has evaporated, while yields on two-year German notes and 12-month Dutch bills are negative.

Ever-greater economic divergence is assured, scaring investors still further.

But if the currency does break up, it will be for want of political will, not for want of policy solutions.

"Is there some point at which the integrity of the region is sufficiently undermined that we pass the point of no return?" asked David Mackie, an economist with J.P Morgan in London.

"I don't see that happening in a technical sense, because anything happening in the capital markets at the moment can easily be reversed," Mackie added. "The break-up of the monetary union is not something that can ever be forced by financial markets."

More

Economists Warn EU on 'Threshold of Catastrophe'

Spiegel
July 25, 2012

The euro crisis has returned with a vengeance this week, with Greece potentially facing bankruptcy, Spain teetering towards a bailout and even Germany at risk of losing its top credit rating. A group of prominent economists are calling for a radical restructuring of Europe and the euro zone to prevent a disaster of "incalculable proportions."


A panel of respected European economics experts are ringing the alarm bell this week over the euro crisis -- direly calling on all European leaders to move swiftly to deploy the most powerful tools available to halt the currency's downward spiral.

"We believe that as of July 2012, Europe is sleepwalking toward a disaster of incalculable proportions," the New York-based Institute for New Economic Thinking (INET) stated in a report warning leaders they need to move faster and more decisively to save the common currency. Otherwise it could very well disintegrate.

The study's publication on Tuesday couldn't be any timelier, given the recent dramatic developments in the euro crisis. Greece's recession is proving to be far worse than previously expected, it is getting tougher for Spain to raise money on the markets (on Tuesday, interest rates on 10-year Spanish bonds rose to an unsustainable 7.6 percent) and Germany's top triple-A rating is also at risk.

More

Read the report

EU Should Be Ready to Give Greece More Cash

Wall Street Journal
July 25, 2012

European Commission Vice President Joaquin Almunia said European countries should stand ready to support Greece, giving the country more financial assistance if needed.

In an interview with Dow Jones Newswires Tuesday evening, Mr. Almunia said provided Greece had honoured its pledges of pushing through reforms, its partners should take more steps to help the country.

"They have huge problems that need to be tackled and they should be at the forefront of their own solutions. But they cannot solve their...problems alone. If they do what they have committed to do, then the EU institutions and the other members of the EU should support Greece," Mr. Almunia said.

Asked if this support meant giving Greece more cash, Almunia said: "Yes... more cash."

It's the first time a top member of the EU executive has publicly backed the idea that Greece should get more money above and beyond its current 174 billion euro ($210 billion) bailout package, the second it has received.

More

The origins of money, and saving the euro

Economist
July 25, 2012

It is really hard to see where the euro is going. Spanish yields are up again today, meaning Madrid’s debt looks less and less sustainable. Yet there is still no clear plan for the euro, new ideas seem to have run out, and there is a lack of progress on old ideas. What is going to happen?

One way to think about the euro’s future is to look at its past, and to go back to the origins of money. There are two leading schools of thought about this. The first was set out 120 years ago in a paper by Austrian economist Karl Menger. In Menger’s theory buyers and sellers agree on a common commodity to use as the medium of exchange. Something small, valuable and divisible is best. It helps if it doesn’t rot. Gold, spices and shells are all good examples. This money is highly “saleable” so everyone accepts it, and this means that traders don’t face the costs associated with barter (the time spent having to scout around looking for the rare person that both wants what you have, and has what you want).

There is no role for government here. The Mengerian theory describes a market-led response to the high transaction costs of barter, in which the private sector defines and uses money as a solution.

More

Read the Menger paper

Read the Goodhart Paper