Category Archives: Uncategorized

Plan A is the current official approach to Greece. It provides eur 110 bn in official loans for an initial 3-year period to sustain deficits which cannot be financed in the market. (The funds are charged at 3-month euribor +300 bps, rising to 400 if extended beyond three years.) Greece uses this breathing space to […]

Great discussion between Martin Wolf and Stephen Roach over at Bloomberg.com. Is the US/China bilateral trade imbalance due to inadequate US savings or Chinese currency policy? I’ve got a lot of time for both sides, which is frustrating. But here’s the thing: You can beat up on the USA for inadequate savings. But this is […]

Worth checking out. Just a few quick things to add. Wyplosz notes that if Greece leaves the euro, then its new currency will depreciate sharply against the euro, in which case: The new GDP, measured in euros, will therefore decline to some €140 billion, 40% lower than initially. This works out to a public debt […]

When it comes to policy advice, be wary of Sachs. This is the man whose shock therapy did wonders for Russia. How apropos to the current debate. If I recall correctly, it was only when Russia kicked out Sachs, defaulted on its debt and devalued the currency that the economy turned around. The FT’s Gillian […]

There’s plenty that separates the 1930s from today’s business cycle. Unfortunately, “debt” isn’t one of them. I’m writing this because I think we are at a critical juncture where policymakers can either get out in front of this thing — globally — or tinker at the edges as it all comes down. In other words, […]

“Unaffordable” contracts between the state and its civil service seem like a coming step in the ‘great deleveraging’. Not just in Greece: Having pared the budget to the bone, the city of Stockton, CA has resolved that it can no longer avoid revising the labour contracts of city employees.  Here’s the agenda (pdf) for the city […]

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 […]