The consequences of prolonged low interest rates in Europe
Monetary policymakers are becoming preoccupied with the risks of persistently low interest rates to Europe’s still fragile economic recovery. Ultra-easy credit is creating growing economic distortions and asset bubbles, while reviving volatility and risk in financial markets. The European Central Bank realizes it must “normalize” rates, but it worries that sudden tightening could precipitate a financial crisis that could be as bad or worse than 2008-2009.
The EU’s tilt toward centralization
The European Commission has proposed creating a European Ministry of Economy and Finance, and transforming the European Stabilization Mechanism into the European Monetary Fund, controlled by Brussels. These steps toward economic centralization are dangerous for Europe’s competitiveness. What it needs is diversity and regional competition.
GIS Dossier: The strangely resilient euro
The euro has been remarkably stable during its 15-year existence as a major currency. That has not always been a good thing for the European economy. But the real concerns for the single currency hinge on politics and survival.
Zero interest rates put savings, political reform at risk
The United States Federal Reserve made news last week by raising its benchmark interest rate. However, even if the Fed continues with modest hikes, globally, rates close to and even below zero are here to stay, especially in the eurozone. Some observers explain this unusual state of affairs by citing economic trends (long-term stagnation), while others blame moneta...
Searching for a face-saving compromise on Greek debt
The clock is ticking and Greece is getting desperate for a new flow of cash to meet current spending and pay off some its national debts by the February 28 deadline. But it continues to play tough in negotiations with the EU, refusing to accept further austerity measures after an election endorsing a new economic policy. Can the EU save face in the stand-off? ...
French economic moves attract the ‘Sick man of Europe’ tag
French President Francois Hollande’s austerity policy is increasing taxes and stifling the French economy. More than three million people are unemployed and the government has had to ask Brussels for another year to meet its minimum deficit target. France has a major role in the EU project, so reform is vital for both the national and European interests. ...
The future of the European Union – a German perspective
How does Germany want the EU to look in the next five or even 20 years? In the second of a series on the EU we look at German politics which has traditionally been the most ‘pro-European’ both in rhetoric and practice among the larger EU members. Today, as a consequence of the financial crisis in Europe, Germany has to assume a leadership role in reshaping the EU. ...
Threats loom for Germany’s federal budget
The current situation of Germany’s federal fiscal affairs seems comfortable at first glance, but the future drain on the country’s budget is likely to be dramatic as Germany faces a demographic timebomb and future commitments. GIS expert Prof Dr Michael Wohlgemuth takes a look at the current situation and the future debt in the second of his four-part series. ...