Author Archives: admin

One reason for being optimistic about the fate of the euro is that leaving the monetary union would be a dramatically disastrous event for every one. Barry Eichengreen has written the definitive description of what that would entail.  Greece, if it were to leave, would see its new currency sharply depreciate, which could double up in local […]

In polite conversation one often tends to moderate one’s view, in deference to the “golden mean” — the notion that the truth in any debate must lie between the two extremes. This is clearly not always appropriate. In a debate over astrology, for example, there’s no point taking a middle road. Indeed this would be dangerous, […]

From people close to Greece and Spain in particular the sentiment is strongly expressed that the crisis today presents an “enormous opportunity” finally to push through reforms which have been long promised but undelivered, because of the usual near-term pain and opposition. We are talking about ‘structural reforms’, with labour-market reform at the top. An […]

What would you do if your nest eggs are in a mix of stocks (30%), bonds (65%) and cash (5%)? I still haven’t recovered from the 1996 recession.” Questions like this are beyond me. But they are useful as a way to force a viewpoint on the likely outcomes here. The first thing to do […]

I will be on an Oxford Analytica conference call on the Greek crisis today from 4-5 pm BST. If a transcript can be made available, I will post one here. UPDATE 26/5/2010 No transcript available. The call went well, with expert analysis on the political situation in Greece and Spain, the economic outlook there, and […]

You might be surprised that the Great Depression (1929-33) was universal. You might also be surprised that in 1931 the title “Great Depression” was already taken. It belonged to the 1890-95 global recession. If you’d asked anyone in 1931, they’d tell you that was the Great Depression. Little did they realize they’d find a way […]

From Payback time: Padded pensions add to New York fiscal woes An online, searchable database compiled by The Times contains the names and pensions of about 3,700 public retirees in New York who receive more than $100,000 a year.  In fact, the cost of public pensions has been systemically underestimated nationwide for more than two decades, say some […]

A few more points on this topic…. eventually I’ll need to write about something else.From comments here and elsewhere I highlight the following: Greek/Club Med default will make European banks (German, French especially) insolvent.In other words, “the cure is worse than the disease”. There is an historical parallel. When Credit Anstalt imploded in Austria (May […]

In an earlier post I argued that Greece cannot grow within the EMU. It must default/ restructure and re-issue the drachma. The costs of exit are outweighed by the costs of staying on the euro. Markets have a short memory, and in fact Greece as a sovereign borrower will be more attractive post-default (because of a lighter […]

Defecting from EMU is being described as a horrible outcome — whether for Europe or for the benighted Greece et al is not always made clear. But the general tenor is that defection from EMU would constitute a shock which the world is in no condition to bear. We have been here before. In the […]