As Croatia’s lawmakers enter the final stretch toward euro membership, it is essential that they understand exactly what happened in Greece, and why. In five short years, 2009-2014, the Greek economy imploded: one quarter of it vanished. This was a direct result of the austerity packages that the EU and the ECB forced upon the government in Athens. What will Croatia do to avoid ending up in the same trap as Greece?
A new debt crisis looks unavoidable. There is practically no interest in fiscal reforms across Europe, leaving the continent vulnerable to a destructive downward spiral of rising interest rates and structural budget deficits.
Despite higher inflation and upward pressure on treasury yields, the European Central Bank (ECB) maintains that this is not the time to raise interest rates. In an April 14th press release, the ECB reaffirmed its commitment to both unchanged rates and its tapering of the Asset Purchasing Program. The Bank explained that APP-related purchases of […]
Now that the Greek Parliament is eager to beef up the nation’s defense, it faces a serious problem: the economy is so weak it can barely keep its population at a standard of living from 20 years ago.
Interest rates in the euro zone remained low through January, the European Central Bank reported on March 3rd. Loans by commercial banks to non-financial corporations averaged an annualized rate of 1.43%, the same as in October last year and only marginally up from November (1.39%) and December (1.36%). The average interest rate on loans to […]
Any major monetary expansion causes inflation. This past year, a combination of domestic restrictions on economic activity, speculation in the headwind of uncertainty, and the overall nature of energy markets, created inflationary pressure where under normal economic circumstances none would have existed.
The ceremony, honoring Lagarde’s distinction for her “contribution to the renown of France” took place in the winter garden of the Élysée Palace. The event fuelled speculation as to what Macron’s intentions may be.
Reflecting concerns for continued high inflation, a survey of professional forecasters published by the ECB showed a considerable 1.1 percentage-point rise in expected euro-zone inflation for the first quarter of 2022.
The euro itself is only part of the failure. An entire structure of government institutions, laws, and even constitutional provisions were erected around it in order to secure its success. It all looked impressive two decades ago; today, the structure itself, from the European Central Bank (ECB), to the so-called Stability and Growth Pact, is a package of sordid evidence that even under democratic governments, central economic planning is a bad idea.
The common currency was a gigantic economic experiment, an application of political preferences rather than the product of sound scholarly research. As is always the case with grand government plans, for every problem they solve a new one is created.
Spanish political life will polarize around those offering policies that have straightforwardly led to present difficulties, and those whose program has promised to drastically reduce a state whose regional level is notoriously hypertrophic and reindustrializing the country. VOX is the most obviously poised to take advantage of this.
Central banks are recognizing that their own sustained monetary expansion has now awoken the sleeping giant of inflation. The goal now is to avoid trapping us in the same protracted inflation period we experienced 40 years ago.
Caught between Scylla and Charybdis, the choice for our central bankers is hard but simple: which short-term pain comes with the best prospects for prosperity in the future?
