Mr. Draghi, Mr. Arnault, and Europe’s Gordian Knot

What does the ECB bond purchase program announced by Mario Draghi last Thursday have to do with French billionaire Bernard Arnault’s application for Belgian citizenship on Saturday? Both reflect a Gordian knot at the heart of the European Union that makes relatively straightforward solutions to the crisis elusive. This Gordian knot is, in turn, the […]

Angela’s Ashes: Could a Slowdown in German Growth Save the Euro?

Athens to Madrid: back to you Following the June 17 elections, Greece seems set to be governed by a broad, awkward coalition formed by the center-right New Democracy party, its historical rival, the center-left Pasok, and several small parties. A consequence of this electoral outcome is that Greece is less likely to exit the eurozone […]

The Quiet Revolution

In the four decades since 1970, the world has undergone a “quiet revolution” characterized by profound economic and financial transformations in advanced and emerging economies.  This revolution may not have been as visibly disruptive as the first industrial and political revolution of 1789-1848, but its economic, social and political ramifications may be just as important. […]

Europe’s Perfect Storm: When Possibility Meets Actuality

“May you live in interesting times.” What better phrase than the apocryphal Chinese curse above to capture the essence of the weeks, months and years to come? More to the point, just how interesting will those times be? History suggests we should be careful what we wish for. Europe’s debt crisis poses immense risks to […]

The (Debt) Hangover – Part II

The summer of 2011 has taken developed and overdeveloped economies on a rough ride – and it has taken its toll on consumers, investors, and politicians.  With talk of a double dip recession in the United States and a break-up of the eurozone, it seems like a second—possibly larger—financial and economic storm is brewing.  US […]

A Durable Recession?

Steep declines in durable consumption and residential investment have preceded nine of the US’s past 11 recessions. Neither one is doing well, and policy makers should take heed. First, a word on durable consumption. Some of the purchases that people make on a daily or weekly basis are difficult to delay (groceries, for example), while […]

China, the West, and the Rebalancing of Global Growth

Social unrest in Athens, strikes in London and worries over the United States’ debt ceiling may well turn out to be harbingers of a second wave in the global crisis rather than secondary effects of its first chapter. By all accounts, the global crisis is not over.  Beyond the unrest on display in Europe, the […]

Ireland: Latest GDP Contraction Worrying

The latest numbers on Irish GDP are bad news for those hoping that Ireland’s dynamic export sector will drag the country out of insolvency. Overall, in 2010, GDP contracted by 1% while GNP contracted by 2.1% y/y, although growth in Q4 in relation to the equivalent quarter of the previous year showed a positive trend (Figure 3).