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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
I have recently returned from a trip to Greece and offer these reflections based on many conversations with policymakers and other experts. Basic Overview. After the second elections in June, New Democracy formed a coalition with the Socialist party PASOK and Democratic Left under Prime Minister Antonis Samaras. The government’s first task is to implement [...]
The euro area crisis and debate over fiscal reform have led many observers to pray for salvation by a modern, European version of Alexander Hamilton. By this they generally mean someone capable of leading a movement for a robust fiscal union and implementing this vision (see for example McKinnon 2011). Europe has instead, they lament, [...]
Europe is seeking further assistance from the international community through the International Monetary Fund (IMF) to address the crisis in the euro area. The global community has a clear interest in aiding Europe. But the package being developed will be the largest ever adopted by the IMF and poses risks for that institution as well [...]
The euro area debt crisis has reached the acute stage: The contagion from Greece has begun to infect the markets for the sovereign debt of the large countries in the zone, Spain and Italy. Euro group finance ministers are considering a range of old and new options, including a previously rejected but worthy proposal to [...]
Discourse in the financial press and among officials involved in assisting Greece in recent weeks has focused on the merits, mechanics and modalities of private sector involvement in a new Greek aid package. The question has been whether the holders of Greek government bonds should accept an extension of maturity or some other form of [...]
The ironies and contradictions surrounding the demand by some European governments that Ireland raise the corporate tax rate as part of a program to address its present financial predicament are breathtaking. They threaten the political underpinnings of the euro area, but also highlight a constructive role for the IMF. Let us count the ironies. First, [...]
The recent turn toward fiscal austerity in Europe in the wake of the Greek crisis has raised serious concerns that it will threaten economic growth and revive global trade imbalances. While fiscal consolidation is unavoidable for the high-deficit, high-debt countries, the cuts made by Germany, whose government deficit is comparatively moderate, have attracted particular criticism. [...]
President Obama’s trip to East Asia over the next two weeks comes at an important time in Asian regionalism. East Asian governments have been moving on several fronts toward regional cooperation and, while some skepticism might be justified, the rest of the world would be wrong to dismiss these developments as inconsequential. The United States, [...]
The impending Group of 20 summit in Washington, DC, November 14–15, organized to discuss solutions to the economic crisis and reforms to the international financial architecture, is potentially the most important international economic meeting in a very long time. However, it has been hastily convened, insufficiently prepared, and President-elect Barack Obama will not participate. To make this meeting and those that will follow successful, officials of the Bush administration and other governments should heed six key principles for successful international negotiations. The Obama team should also reflect on them as it prepares to take office.
In recent weeks, several governments stricken with financial emergencies have tried to circumvent the International Monetary Fund (IMF) by turning to Russia, China, Saudi Arabia, and other reserve-rich states for crisis finance. These moves underscore the need for common acceptance of a set of principles to guide bilateral and regional responses to countries requiring liquidity and balance-of-payments support during the present crisis. Such principles should be discussed and adopted at the high-level meetings scheduled over the coming weeks as part of the international response to the financial crisis.