Category Archives: Uncategorized

From the Financial Times, 28 May 2010: But the alternative to [Greek debt] restructuring [i.e. default/re-profiling/haircut/etc.] will probably be grim too. If Greece staggers on, without a miracle, fears about future “haircuts” will continue to poison the bond markets and interbank world. That will essentially produce a pattern similar to Japan in the late 1990s: […]

This is an extract from my post of 29 May 2010 — critiquing Europe’s ‘Plan A’ for Greece.  Plan B starts from the assumption that Plan A won’t work; that Greece will arrive at year 2013 still insolvent. The economy has contracted sharply so the external debt is even less sustainable. These adverse dynamics all the […]

I’ve argued since May 2010 that Greek travails — the debt dynamics, the dogmas, the policy response — revealed a situation all-too-similar to the breakdown of the interwar period’s fixed-rate monetary regime. The very short story of that episode is that, when capital flows to some European economies suddenly halted, the troubles which beset euro-area […]

Judging from comments on a popular right-wing UK newspaper blog, efforts to rescue the euro augur something  sinister. The essence of this view is that, in order for the common currency area to be sustainable, the sovereignty of the member economies must be sharply curtailed. The deal agreed at the EU summit last week indeed […]

The argument here is that some countries in Europe are further from the liberal-democratic, social-market end-state than others. Crudely: some states have not reached the ‘end of history’, as Fukuyama put it. When you read about the Greek crisis exposing sub-optimal tax collection, inefficient bureaucracy, state corruption, closed-shop professions, inflexible or under-the-table labour markets, you […]

Italian bond yields reflect decisions announced at the 27 October EU summit — namely, that new Italian bond issues might carry first-loss insurance. If that’s the case, investors would rather hold those new bonds than the existing secondary market bonds. Which means there will be a wedge between the secondary market Italian bonds and the […]

Just heard Simon Johnson at the IMF conference on Iceland (webcast). He’s (still) very worried about overleveraged financial institutions and especially about the euromess. I’ll have a lot more to say on the latter in an upcoming post. For now, I just wanted to report the terrifying proclamation of Johnson. Paraphrase: ‘The European banking system […]

Paul Krugman … then you might be pretty confused about what’s happening to our world, economically. I recently finished a mid-career break to study globalization. When I started — 2005 — I wanted to explore something which was the common question among clients:  ‘Where is globalization heading?’  Rather than reply with an uninformed hunch, I […]

Note: The left panel is 1997, the right panel is 2009. I’ve been reading the Macroeconomic Review of Singapore’s central bank (the new edition will be published in October), from which the above ‘heat maps’ are lifted. Read down the Y-axis for the exporting country, and the X-axis for the importer. China is still a […]

The current recession has brought to the fore two key schools of thought regarding economic policy, in a rehearsal of earlier and probably ageless debates. One school is Keynesian and the other can be called an ‘Austrian’ viewpoint because many of its founding figures in fact studied and theorized in pre-war Austria. The main purpose […]