Charles Kindleberger’s classic book on the Great Depression was originally published 40 years ago. In the preface to a new edition, two leading economists argue that the lessons are as relevant as ever. The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening. We see unemployment, youth unemployment especially, […]
Irish interest spreads did not fall and contagion continues. Here one of the world’s leading international economists explains why. Short-sighted, wishful thinking by EU and German leadership designed a package that is not economically feasible in the long run (it would trigger a vicious debt deflation spiral) and it is not politically sustainable in the […]
The Great Depression of the 1930s was marked by a severe outbreak of protectionism. Many fear that, unless policymakers are on guard, protectionist pressures could once again spin out of control. What do we know about the spread of protectionism then, and what are the implications for today?
Pity the economy with an exploding budget deficit and no currency of its own. Ireland is a case in point: its deficit will soon leave 10 per cent of GDP behind. There is a need for immediate fiscal stimulus, and this is what the economy is getting owing to the collapse of revenues. But fiscal consolidation will soon be essential to avert financial catastrophe. And here the absence of a national currency is problematic. Virtually every example we have of a country that has successfully closed a large deficit has done so while at the same time depreciating its currency.
As the financial crisis has unfolded, the International Monetary Fund has been noticeable mainly for its absence. This will now change at least temporarily as its Governors assemble for their annual meeting and the kleg lights are turned on. The question is whether those Governors and the management to whom they entrust the Fund’s operation […]
A couple of months ago at lunch with a respected Fed watcher, I asked, “What are the odds are that U.S. unemployment will reach 10 per cent before the crisis is over?” “Zero,” he responded, in an admirable display of confidence. Watchers tending to internalize the outlook of the watched, I took this as reflecting […]
The world economy is poised on a knife edge. The United States may or may not be technically in a recession, but it is undoubtedly experiencing a sharp growth slowdown. Having been in Ireland last week, where informed opinion doubts that growth will be positive this year, I suspect that not just Ireland but also […]
[Based on a talk presented on April 29th to a meeting of UK-based CFOs – explaining the references to Britain and focus on Europe.] We have reached a particularly difficult stage in the development of the credit crisis. There are two quite different views of where we’re at. One is that the worst is now […]