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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.
European Union leaders had the umpteenth euro crisis summit at the end of January. Indeed the EU Council meets so often that the descriptions of these gatherings should be changed from “yet another summit” to “back in session.” The slide to near-permanent policymaking has occurred as the EU Council begins to resemble a sitting parliament. [...]
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, [...]
As the most anxious year in the history of the euro draws to a close, and with dire predictions about the euro’s fate in 2012, it is an irresistible option for this author to take stock in a more realistic way. Despite all this year’s drama, the value of the euro is almost exactly where [...]
The drama surrounding Prime Minister George Papandreou’s proposal to hold a referendum on Greece’s acceptance of its bailout package, followed by his change of mind, has had the positive outcome he apparently intended. Though messy, his tactics have broadened the political support for the International Monetary Fund (IMF) reform program in Greece. That much became [...]
It isn’t every month a US Treasury Secretary flies to Europe multiple times to meet with Europe’s top economic policymakers. So even if the Obama administration has an obvious own-interest in lining up a potential convenient external excuse for Europe, should the American economy continue to sputter during the accelerating election campaign, it is important [...]
The sense of despair enveloping American politics seems to be at an all-time high. But a lesson from the past, counseling that it really is possible to work together during a crisis, is being delivered this week, following the death of the most creative, resilient, and gutsy political leader I have ever known, former Governor [...]
Henry Kissinger once said that while "the illegal we do immediately, the unconstitutional takes a little longer."1 Perhaps this is why it took the European Central Bank (ECB) until this week to begin buying up Italian and Spanish bonds in the euro area secondary bond markets. The ECB’s initial hesitation stemmed from its understandable reluctance [...]
With Portuguese interest rates above the 7 percent level at which their sovereign debt—even if it is considerably lower than that of say Greece—becomes unsustainable, the point in time at which the country will be forced to accept an EU-IMF financial assistance package looks imminent. It is increasingly evident that the Portuguese government’s attempt to [...]
The European Union Council, meeting in the first week of February, did not produce the “comprehensive long-term solution” to the eurozone’s debt crisis that some had hoped. Yet, EU leaders did agree on a deadline to produce their version of such a solution at the next Council in late March 20111, and they offered the [...]
“Monetary policy responsibility cannot substitute for government irresponsibility.” So said Jean-Claude Trichet in a speech on January 7. Few would probably disagree with that statement, at least initially. But doubts and dissent may arise about whether the European Central Bank (ECB) should cut its financial support for Portugal and force it into the arms of [...]