The European Central Bank (ECB) has decided to bailout its bankrupt members, mainly Italy and Spain, by buying their shorter-term bonds ( 1 to 3 years) with newly created money. The idea is to drive down their interest rates to alleviate their debt cost burden, and to send a message to the world (the financial markets) [...]
The Wolfson Prize in Economics is the second largest monetary award that an economist could win (after the Nobel). It has been going on for many years. This year, they asked respondents to write about how a country could exit the euro with the least disruption.
Both Antal Fekete and yours truly wrote and submitted [...]
This press release came from the Treasury today:
U.S. Treasury Secretary Timothy Geithner and German Finance Minister Wolfgang Schäuble call for a continuation of global and European reform efforts
SYLT, GERMANY – The U.S. Department of the Treasury, in conjunction with the German Finance Ministry, today released the following joint statement at the conclusion of Secretary [...]
FRANKFURT—European Central Bank officials signaled they are prepared to dramatically ramp up the ECB’s crisis response by renewing the central bank’s dormant government bond-purchase program.
“Within our mandate, the ECB is willing to do whatever it takes to preserve the euro and, believe me, it will be enough,” ECB President Mario Draghi said in [...]
The Telegraph has an opinion piece out titled Angela Merkel isn’t bluffing; like everyone else in Europe, she’s defending national sovereignty. It compares her to Britain’s Margaret Thatcher in steadfastness and then says this:
Take this extraordinarily prescient observation by the radical economist Wynne Godley, penned as early as 1992. “It needs to be emphasised at the [...]
The European Union will hold yet another do-or-die summit this week. On this occasion, “growth” is the plat du jour; the allegedly missing ingredient in the “plan” to save the euro. In addition, some suggest that this time is also “different” because Greece, France, Italy and Spain may now be ready [...]
The current financial crisis may progress to a phase where people demand and hoard dollar bills but take electronic deposit credits only at a discount which increases until electronic deposit credits are repudiated entirely. The Federal Reserve would be powerless to solve the problem, because while they can create unlimited electronic deposit credits they can’t [...]
Below the surface of the euro area‘s public debt and banking crisis lies a balance-of-payments crisis caused by a misalignment of internal real exchange rates. At present, the Eurosystem generates real resource transfers in the form of subsidised credits from the creditor to the debtor countries, but this arrangement does not seem [...]
[This article was originally published by Deutsche Bank Group. It explores likely outcomes of the EMU.— Ed.]
Although failing to meet the criteria for an optimal currency union EMU worked fairly smoothly during the first decade of its existence. In our view the reason for this was [...]
The Daily Capitalist is pleased to welcome John L. Chapman, Ph.D., an Austrian economic theory economist, as a regular contributor to our growing site. Dr. Chapman will publish articles on the economy and markets. He is Chief Economist with Alhambra Investment Partners, an investment advisory firm in Florida. He is also a researcher affiliated with [...]
Earlier today, some Italian central banker said the crisis is over and investors will become convinced that Italy’s finances will be back on track. Now the market seems to be buzzing (and the euro is levitating) on news that an Italian clearing firm lowered margins on Italian bonds.
A bond is how the issuer (in this [...]