Michael GoldfarbFebruary 15, 2012 07:03

Euro zone debt crisis: War?

Hyperbole sweeps the pundits, obscuring the situation

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Sometimes commentators can get swept up in events but the euro zone debt crisis really is bringing out the worst in pundits. Is what's happening in the euro zone really a kind of warfare?

Here is Edwin Truman, of the Peterson Institute for International Economics, in yesterday's New York Times:

"FOR the third time in a century, a bitter conflict fuelled by historic grievances has erupted in Europe, with the United States looking from afar and hoping not to get involved. Of course, this is not being fought on the battlefields but in the arcane arenas of international finance. But as in World War I … "

Michael GoldfarbFebruary 10, 2012 12:52

Greek debt crisis: have Greek leaders or haven't Greek leaders agreed a deal?

Will the rest of the EU or won't the rest of the EU accept it?

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GREECE, ATHENS-FEBRUARY 10:Demonstators during protests against planned reforms by Greece's coalition government in Athens, February 10, 2012 during a 48 hours general strike.(Photo by Milos Bicanski / Getty Images) (Milos Bicanski/AFP/Getty Images)

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In Greek mythology Hercules was set 12 impossible labors by the Goddess Hera, journalists have been set one impossible task by the Greek government: trying to summarize what is happening in the Greek debt crisis.

Late last night, following a marathon meeting (sorry, those Greek allusions can't be avoided) Prime Minister Lucas Papademos and the leaders of the three political parties in the country's coalition government agreed to a package of further austerity measures meant to insure Greece gets another bail-out from the EU. The bail-out is worth 130 billion euros ($ 171.4 billion).

The country's Finance Minister Evangelos Venizelos set off for Brussels to meet with his euro zone counterparts to present the plan and presumably get their approval.

He didn't get far on his journey before the plan came under attack both inside Greece and outside.

One of the political leaders in the room when the deal was agreed, Georgios Karatzaferis of LAOS, said he would not vote for it.

The Greek newspaper eKathimerini quotes the LAOS leader saying, "The creditors are asking for 40 years of submission. Greece will not give itself up." Karatzaferis added, "Greece can survive outside the EU but cannot survive under a German boot."

Michael GoldfarbFebruary 10, 2012 07:14

Coming Apart? European experience of illegitimate births is different than America's

Controversial author Charles Murray's new book points to births out of wedlock as a reason for social decay in America. Europe's experience says illegitimacy may not be the reason.

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Not all families are traditional, like President Obama's, but is the decline in their number behind America's social crisis? (Brendan Smialowski/AFP/Getty Images)

The works of conservative intellectual Charles Murray are designed to provoke debate and raise hackles among liberal intellectuals. His book "The Bell Curve" is the best-known example, along with "Human Accomplishment: The Pursuit of Excellence in the Arts and Sciences." He is an ice-cold flame-thrower as this radio interview from a couple of years ago shows.

He's at it again, in the just published, "Coming Apart: The State of White America, 1960-2010." Much of the discussion of the book has centered on Murray's statistical dissection of the white working class, particularly family breakdown as measured by births out of wedlock.

New York Times columnist Nicholas Kristof has an interesting discussion of the book here, and at least partially tips his liberal hat towards a point Murray makes.

Michael GoldfarbFebruary 8, 2012 13:10

Greek leaders meet: Europe shrugs

In or out, Europe is now prepared for any eventuality.

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Greek Prime Minister Papademos and leaders of Greece's main political parties before their meeting today in Athens. (ARIS MESSINIS/AFP/Getty Images)

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Tick-tock, tick-tock … the clock on the Greek crisis is running down for real. As I write, leaders of Greece's three main political parties are meeting with Prime Minister Lucas Papademos to agree on the terms of a harsh budget that will allow the country to qualify for its next bail-out from the EU.

The meeting has been scheduled and postponed often in the last four or five days. As I blogged on Friday, last autumn this would have had the markets in a tizzy. Now, they shrug. So do leading eurocrats in Brussels.

"It’s not the end of the world if someone leaves the euro zone," Neelie Kroes, the European Commission vice-president, told Dutch newspaper De Volkskrant. "It’s always said, if you let one nation go, or ask one to leave, the entire structure will collapse. But that is just not true."

Michael GoldfarbFebruary 7, 2012 06:43

China's economic slowdown: blame it on Europe

IMF report on China demonstrates the links between the two

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The IMF report cuts to the chase in the headline bullet points:

"A storm emanating from Europe would hit China hard"

It notes: "China's growth rate would drop abruptly if the Euro area experiences a sharp recession."

Merkel starts campaigning for Sarkozy

Paul AmesFebruary 6, 2012 18:48

Brussels — Merkel and Sarkozy give joint interview to stress Franco-Germany unity in euro crisis, warn against undermining austerity plans.

Michael GoldfarbFebruary 3, 2012 14:18

Greek bail-out: where's the panic?

A deal has been expected for a couple of weeks, why is every one so blase about the delay?

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The terms of the Greek bail-out package were supposed to be agreed with its private bond-holders two weeks ago, then last Friday, then definitely before last Monday's EU leaders' summit in Brussels and then again by today.

Nothing is happening … and it's not clear when there will be agreement. The EU's finance ministers were scheduled to meet Monday in Brussels to discuss details of the EU's 130 billion euro rescue package for the country. But that package is conditional on the country's private creditors agreeing to take a substantial loss on the bonds they hold.

Six months ago this would have triggered panic in the markets. Today the FTSE 100 closed at a seven month high, up 1.8 percent on the day. The Paris CAC and Frankfurt Dax posted similar gains.

What gives?

China mulls contribution to Europe’s rescue fund

Siobhan DowlingFebruary 2, 2012 13:09

Berlin — Premier Wen says China will study ESM involvement, following talks with Chancellor Merkel.

Michael GoldfarbJanuary 30, 2012 06:48

Austerity: Cause and predictable effect

Post-Davos consensus growing among enlightened commentators: policy makers haven't got a clue

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There's a general strike on in Belgium today. The predictable effect of austerity cuts to services and wages. (VIRGINIE LEFOUR/AFP/Getty Images)

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Davos is not a place where policy gets made or treaties get negotiated, as I wrote last week. If it has a benefit, it is that the World Economic Forum gets a bunch of the one percent in a single place for a concentrated period of time and allows thoughtful commentators an equally undiluted opportunity to assess what they are thinking.

The result this morning is three excellent essays by commentators working in the mainstream press.

At The New York Times, Paul Krugman makes much of a chart published last week by British think tank, National Institute of Economic and Social Research (here, scroll down right column). It shows that the current economic downturn in Britain is now longer than that of the Great Depression, if you measure the length of time it takes to return to pre-downturn economic output.

Michael GoldfarbJanuary 27, 2012 14:01

Mario Draghi at Davos

ECB chief says bond markets are overestimating the risk attached to many euro zone countries' sovereign debt

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An interesting week in the euro zone crisis is over. Most of the important players made it to Davos so nothing definitive was being decided. As I wrote yesterday, Davos isn't a place where policy is made.

It's clear it has been a week where the center held and the sense that a corner has been turned continued to frame the week's activities. Even Greece and her creditors inability to reach final agreement on debt reduction hasn't ruffled feathers.