EconoMonitor

Peterson Institute for International Economics

Roubini Topic Archive: Spain

  • Despite Its Troubles, the Euro Area Is Making Progress

    Yes, the headlines from the euro area are discouraging. The region’s Purchasing of Managers Index (PMI) is falling again—to 45.9 in May, with even German levels down. The European stock markets are down. The euro has slid to 1.25 vs. the dollar, accelerating preparations for a Greek euro exit. No resolutions of the political crisis […]

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  • Brinkmanship in Brussels, Sturm and Drachma for Greece and Europe

    Just as it did when Congress recently extended the payroll tax cut, brinkmanship has produced a deal in Europe to extend a new lifeline to Greece and clear the way for the biggest sovereign bond restructuring in history. Both pieces of the agreement—the privately held Greek debt write-down of more than €100 billion and the […]

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  • Bond Markets, 2; Eurozone Laggards, 0

    This week, the eurozone’s “new normal” played out as a textbook example of how short-term market concerns can have a constructive impact on Europe’s long-term economic future. Under increasing political and economic pressure from rising bond market spreads, the Irish and Portuguese governments finally “did the right thing” and took productive policy actions. The eurozone’s “new normal” (discussed here) is working as intended.

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  • Let Us Welcome the Eurozone’s “New Normal”

    In recent days the eurozone has reentered the headlines (in USA Today, the Financial Times, and the Wall Street Journal among others) amid fears of another round in the continent’s sovereign debt crisis and rising peripheral bond spreads. Yet contrary to the tone of some commentary, this is excellent news. It should be welcomed by anyone interested in the long-term economic health of the eurozone. It means also that financial markets are finally policing the economic policies of troubled eurozone members and punishing the laggards in real time.

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  • One Fiscal Size Does Not Fit All

    Op-ed in Eurointelligence June 22, 2010

    © Eurointelligence

    Twelve years ago, the Asian Financial Crisis hit. The International Monetary Fund took a common approach across the crisis countries, prioritizing fiscal austerity. In retrospect, outside observers and the Fund itself came to the conclusion this was a mistake—while appropriate for Indonesia, the “It’s Mostly Fiscal” approach made the situation worse than it needed to be in South Korea, with negative spillovers for the rest of the region. The euro area governments, under pressure from Berlin and Brussels, are repeating this mistake.

    European politicians, particularly in Germany, are visibly sick of Americans and others telling them that imposing uniform austerity beyond Greece and Portugal is in error. But facts are facts, and it is an error. The experience of the Asian Financial Crisis is directly relevant, and the willingness of the IMF to reconsider its position in the time since would be a good example to follow. What matters is getting policies right, not adhering to a foolish consistency, either in policy recommendations across countries or in publicly taken positions.

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  • The Greek Tragedy That Changed Europe

    by Simon Johnson, Peterson Institute for International Economics and Peter Boone, Effective Intervention

    Op-ed in the Wall Street Journal

    February 13, 2010

    Plutus, the Greek god of wealth, did not have an easy life. As the myth goes, Plutus wanted to grant riches only to the “the just, the wise, the men of ordered life.” Zeus blinded him out of jealousy of mankind (and envy of the good), leaving Plutus to indiscriminately distribute his favors.

    Modern-day Greece may be just and wise, but it certainly has not had an ordered life. As a result, the great opportunity and wealth bestowed by European integration has been largely squandered. And lower interest rates over the past decade—brought down to German levels through Greece being allowed, rather generously, into the eurozone—led to little more than further deficits and a dangerous buildup of government debt.

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