euro area

Sovereignty In The Euro Area

18 May 2012

Nouriel Roubini tweets about Trichet’s plan to save the Euro Zone and wonders about sovereignty: Trichet proposes EU’s full takeover of fiscal policy of bankrupt countries. It totally undermines national sovereignty reut.rs/JXuawK — Nouriel Roubini (@Nouriel) May 18, 2012 Two things: My guess is Trichet’s plan involves a Euro Area institution setting fiscal policy. Trichet’s plan [...]

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I Like Martin Wolf

14 April 2012

Updated: 14 April 2012 at 3:30pm GMT (Chart added) Martin Wolf has just written an article on FT: Why the Bundesbank is wrong questioning the arguments made by Jens Weidmann, president of the Bundesbank. (This speech: Rebalancing Europe). This chart is interesting: (click to enlarge) Wolf says: Arguably, the crucial step is to agree on the nature of [...]

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Banco de España’s TARGET2 Liabilities: Again

19 March 2012

I had a post a month ago Banco de España’s TARGET2 Liabilities and this gets more interesting a month later. The bank released numbers for February and it seems capital flight is continuing from Spain and Spanish banks’ borrowing from the ECB rose in February. The following is from BdE (click to enlarge) The Spanish general government [...]

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€2.2 Trillion

6 March 2012

Found this graph at this hilarious blog which quotes Diapason Research. The graph plotted by the researchers uses cumulative current account balances from IMF’s data. I instead directly used the Net International Investment Position at the end of Q3 2011 from Eurostat. The blue bars plot the net indebtedness of each EA17 nation (with signs reversed) and [...]

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Deutsche Bundesbank’s TARGET2 Claims

5 March 2012

Yesterday Wolfgang Münchau wrote an article in the Financial Times The Bundesbank has no right at all to be baffled in which he gave his opinion about Bundesbank President Jens Weidmann’s leaked letter to the European Central Bank President  Mario Draghi expressing concerns on the Bundesbank’s TARGET2 assets. According to the Bundesbank December 2011 Monthly Report, its claims on [...]

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Martin Wolf Pays A Generous Tribute To Anthony Thirlwall

20 February 2012

Readers of this blog will notice how I attach special importance to the balance of payments in telling the story of how economies work. In a recent blog post Can one have balance of payments crises in a currency union? at FT, Martin Wolf refers to the work of Anthony Thirlwall – who has made great contributions to the [...]

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Imbalances Looking For A Policy

14 February 2012

… and not Infernal Muddles Readers of this blog may be aware of my fanhood for Wynne Godley and the title of this post is from a paper by him from 2004, although it was US-centric. This post is on imbalances in the Euro Area. Wynne had not only always foreseen crises, but also knew [...]

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The Eurosystem And Greek Government Debt

25 January 2012

Some bonds of the Greek government mature on March 20. The total principal amount is €14.5bn. The focus in the financial markets is what will happen to these securities and everyday we read about negotiations with the creditors on “private sector involvement (PSI)”. For the latest see this WSJ article Greece Private-Sector Creditors Meet in Paris. According [...]

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Some GIMP Fun With Spain’s Sectoral Balances

24 January 2012

… but not fun for the Spanish people. In yesterday’s post Spain’s Sectoral Balances, I briefly discussed the sectoral balances of Spain and its connection with demand, income and output. Here’s the original graph from the Banco de España again with my viewpoints in the previous post. I learned some GIMP from a friend some [...]

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Spain’s Sectoral Balances

23 January 2012

The Banco de España released its Quarterly Economic Bulletin today and it had an interesting chart on the sectoral balances of the Spanish economy. With a net indebtedness of €994.5bn – i.e., close to €1 trillion – as compared to the gross domestic product of €1.06tn (2010 figure) Spain has limited choices. Except via the possibility of expanding [...]

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