Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘De Grauwe’

The ECB grants debt relief to all Eurozone nations except Greece

Posted by hkarner - 15. Mai 2016

Paul De Grauwe 13 May 2016, voxeude Grauwe video

What is certain, however, is that all Eurozone countries, with the exception of Greece, have been enjoying debt relief since early 2015. That may seem surprising to the outsider. Some explanation is necessary here.

QE as EZ debt relief: But not for Greece Den Rest des Beitrags lesen »

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Rebooting the Eurozone: Step 1 – Agreeing a Crisis narrative

Posted by hkarner - 19. November 2015


Thu, 11/19/2015, voxeu

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Why the ECB should not insist on repayment of its Greek bonds

Posted by hkarner - 16. Juli 2015

Paul De Grauwe, Yuemei Ji 16 July 2015, voxeu

Den Rest des Beitrags lesen »

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Greece is solvent but illiquid: Policy implications

Posted by hkarner - 8. Juli 2015

Paul De Grauwe 03 July 2015, voxeude Grauwe video

  • First, there was an explicit restructuring in 2012 forcing private holders of the debt to accept deep haircuts.

This explicit restructuring had the effect of lowering the Greek sovereign debt by approximately 30% of GDP.

  • Second, there were a series of implicit restructurings involving both a lengthening of the maturities and a lowering of the effective interest burden on the Greek sovereign debt.

As a result of these implicit restructurings, the average maturity of the Greek sovereign debt is now approximately 16 years, which is considerably longer than the maturities of the government bonds of the other Eurozone countries. Den Rest des Beitrags lesen »

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Secular stagnation in the Eurozone

Posted by hkarner - 30. Januar 2015

Paul De Grauwe 30 January 2015, voxeu

Professor of international economics, London School of Economics, and former member of the Belgian parliament

This column is a lead commentary in the VoxEU Debate „Secular Stagnation

Since the Global Crisis of 2007-08 most developed countries have been unable to return to their pre-Crisis growth path. Larry Summers describes this as ‘secular stagnation’ (see Summers 2014 and the discussion this has led to in Teulings and Baldwin 2014).

Nowhere in the developed world is the ‘secular stagnation’ hypothesis more visible than in the Eurozone. Figure 1 shows this clearly by comparing the evolution of real GDP in the Eurozone, the US, and the non-euro-using EU countries (EU10 in the chart). The difference is striking.

  • Prior to the Crisis, the EZ’s real GDP was on a slower growth path than in the US and in EU10.
  • Since the Global Crisis of 2008, the divergence has increased even further. Den Rest des Beitrags lesen »

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France rebels against austerity as Europe’s recovery collapses

Posted by hkarner - 19. August 2014

France’s finance minister sends tremors through European capitals with a defiant warning that his country would no longer try to meet deficit targets

German GDP contracted 0.2pc, is France once again stuck at zero and Italy is already in a triple-dip recession

Growth slumped to zero in the second quarter, with Germany contracting by 0.2pc and France once again stuck at zero. Italy is already in a triple-dip recession.

Yields on 10-year German Bunds fell below 1pc for the first time in history, beneath levels seen during the most extreme episodes of deflation in the 19th century. French yields also touch record lows. Much of the eurozone is replicating the pattern seen in Japan as it slid into a deflation trap in the late 1990s. Den Rest des Beitrags lesen »

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For every foolish debtor there must have been at least one foolish creditor

Posted by sschleicher - 3. August 2014

Public Lecture: Professor Paul de Grauwe on ‚The Future of the Euro‘

de Grauwe videoOrganised by the Centre for Post-crisis Finance, on Thursday 13th February leading scholar of the economics of monetary union Professor Paul de Grauwe delivered a public lecture discussing The Future of the Euro.



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Revisiting the pain in Spain

Posted by hkarner - 9. Juli 2014

Paul De Grauwe, 7 July 2014, voxeu

The different macroeconomic adjustment dynamics in Spain – a member of a monetary union – and the UK – a stand-alone country – is stark. Paul Krugman popularised this contrast in his New York Times blog with the title “The Pain in Spain” (Krugman 2009, 2011), and commented on my own analysis in De Grauwe (2011).

Following the Greek sovereign debt crisis in 2010, Spain – together with other countries of the periphery – was hit by panic in the government bond market, leading to massive dumping of government bonds, fast increases in government bond yields, and a liquidity crisis, forcing the Spanish government to institute an intense austerity program. Although the UK faced similarly unfavourable fundamentals – a banking crisis, a deep recession, and exploding government debt – it was spared the panic, the ensuing liquidity crisis, and sky-high interest rates. This difference between Spain and the UK was explained by the fact that Spain did not enjoy a liquidity backstop from the central bank, while the UK government could count on the Bank of England to provide liquidity in times of crisis.

In De Grauwe (2011), I concluded that what Spain (and other Eurozone countries) needed was a liquidity backstop provided by the ECB. Two years after the start of the sovereign debt crisis, the ECB announced it would be ready to provide such a backstop in the Eurozone. It is therefore interesting to analyse how this announcement affected the ‘pain in Spain’, and to revisit the difference in macroeconomic and budgetary adjustments in Spain and the UK. Den Rest des Beitrags lesen »

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Debt Without Drowning

Posted by hkarner - 9. Mai 2013

Very reasonable, I believe ! (hfk)

Date: 09-05-2013
Source: Project Syndicate

LONDON – Since the 1970’s, economists have warned that a monetary union could not be sustained without a fiscal union. But the eurozone’s leaders have not heeded their advice – and the consequences are becoming increasingly apparent. Europe now faces a difficult choice: either fix this fundamental design flaw and move toward fiscal union, or abandon the common currency.

Choosing the latter option would have devastating consequences. Indeed, while the desirability of establishing a monetary union may have been open to question in the 1990’s, dismantling the eurozone now would trigger profound economic, social, and political upheaval throughout Europe. To avoid this outcome, Europe’s leaders must begin designing and implementing strategies aimed at bringing the eurozone closer to a fiscal union.

To be sure, a fiscal union such as that in the United States is a distant prospect that eurozone leaders should not expect to achieve any time soon – or even in their lifetimes. But that does not mean that establishing a fiscal union is a chimera. Small steps in the right direction now can make a significant difference.

A successful strategy would have to address one of the eurozone’s main design flaws: member governments issue debt in euros, a currency that they cannot control. As a result, they cannot provide a guarantee to bondholders that the cash will be available to pay them at maturity. Den Rest des Beitrags lesen »

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Are Germans really poorer than Spaniards, Italians and Greeks?

Posted by hkarner - 17. April 2013

Very interesting analysis, which shows that Germany and Austria have the highest inequalities in financial wealth (hfk)

Paul De Grauwe (LSE), Yuemei Ji, 16 April 2013, voxeu

A recent ECB household-wealth survey was interpreted by the media as evidence that poor Germans shouldn’t have to pay for southern Europe. This column takes a look at the numbers. Whilst it’s true that median German households are poor compared to their southern European counterparts, Germany itself is wealthy. Importantly, this wealth is very unequally distributed, but the issue of unequal distribution doesn’t feature much in the press. The debate in Germany creates an inaccurate perception among less wealthy Germans that transfers are unfair.

Rarely have statistics been misused so much for political purposes as when recently the ECB published the results of a survey of household wealth in the Eurozone countries (2013a).1 From this survey it appeared that the median German household had the lowest wealth of all Eurozone countries. Figure 1 summarises the main results for the most significant Eurozone countries.

Figure 1. Net wealth of median households (1000€)

Source: European Central Bank (2013).

From Figure 1 it appears that not only the median German household has the lowest wealth, but also that the differences within the Eurozone are enormous. The median households in countries like Belgium, Spain and Italy appear to be three to four times wealthier than the median German household. Even the median Greek household is twice as wealthy as the German one.

The publication of these numbers by the ECB quickly led many observers to conclude that it is unacceptable that the poor Germans have to pay for the rescue of the much richer Greeks, Spaniards and Portuguese (see, e.g., Wall Street Journal 2013, Financial Times 2013, Frankfurter Allgemeine 2013).

Is this the right conclusion? Den Rest des Beitrags lesen »

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