What went wrong in Greece and how to fix it: Lessons for Europe from the Greek crisis

Greece’s problem came from the bursting of a debt-financed growth bubble inflated with the help of EZ membership. This column argues that the inevitable adjustment was more painful than necessary. The fiscal consolidation was too tight and too front-loaded, and, importantly, structural reform wasn’t properly sequenced. By concentrating on labour market rather than product market […]

Greece: Don’t play with fire, but don’t sweep it under the carpet

Greece’s government is absolutely right that it cannot further cut budget expenses and raise taxes imposed already on the people in order to have funds to endless repaying of the foreign debt. That would be wrong, since it is not just socially unacceptable, but also economically irrational. Thus far, the implemented policies have succeeded in […]

Are the IMF and EU at Loggerheads Over Greece?

Everything has a cost, or so the story goes, especially time. In the Greek case we now know an additional item on the mounting bill: the country is back in recession. The issue is who – apart of course from the long-suffering Greeks themselves – will pay the extra costs of  the latest imbroglio. The […]

Greece Still Has a Fighting Chance

Anatole Kaletsky (2015) has a take on Europe vs. Greece confrontation. He notices that, since coming to power in January, the Greek government has believed that default on its debt would be a strong enough threat to the Eurozone, which would force Europe to choose between two alternatives: either Grexit (with potentially disruptive consequences for […]

If Greece Had Not Existed, Europe’s Leaders Would Have Had to Invent It

δεῖ δ’ αὐτὸν ἐς φάρμακον ἐκποιήσασθαι – He must be chosen from among you as a scapegoat. Hipponax One of the more intriguing aspects of the whole modern Greek drama is the tragicomic way the country seems to be constantly condemned to live out well known themes which come from its own mythology. The latest […]

Greek Parallel Currency: How to Do it Properly

According to several recent media reports, both the Greek government and the ECB are taking into consideration the possibility (for Greece) to issue a parallel domestic currency to pay for government expenditures, including civil servant salaries, pensions, etc. This could happen in the coming weeks as Greece faces a severe shortage of euros. It is […]

The Saudi Re-engineering of the Global Corporate Oil Board

Something interesting is happening now. Energy insiders and OPEC officials are saying publicly and privately that the days of OPEC managing the market is over, and it certainly seems that OPEC’s cohesion is breaking down. In truth, OPEC may already be a thing of the path, and Saudi Arabia appears to be in the midst of creating […]

Consequences of the World Oil Glut

Forecasting crude oil prices has been difficult. Forecast errors have been large, especially for the end of 2014, when typical forecasts were more than $40 per barrel too high. A panel of Wall Street Journal analysts forecast $94.65 per barrel, but the actual price was $53.27 per barrel. Forecasts implicit in oil futures contracts exhibited […]