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Regardless of ECB Bond Purchases, Conditionality for Eurozone States is a Myth

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The debate about European Central Bank (ECB) purchases of distressed sovereigns’ bonds is potentially relevant to the outcome of the sovereign debt crisis in the Eurozone, as these purchases might ultimately be the Eurozone’s last defense. However, the substance of the debate is somewhat less relevant. Specifically, one key sticking point in the debate between […]

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The Obsession With Austerity Must Finally Give Way to Reality

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Approximately eleven months ago, I argued that a solution to the Eurozone debt crisis required a more long-term approach that took into consideration the unique origins of the crisis in each of its ‘victim’ states and the resultant need for a solution that addressed these distinct aspects of the Eurozone’s failings. Unfortunately, the same argument […]

The Fiscal Treaty Alone Cannot Solve the Debt Crisis

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Far from being a bold, decisive solution to the Eurozone debt crisis, the new fiscal treaty is almost entirely beside the point. Assuming one is prepared to indulge in a fantasy world where all it takes to make sovereign states forget their national interests and all it takes to make politicians forego tax cuts in […]

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Yet Again, the EU is a Step Behind

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Following the European Council Summit in December of last year, leaders agreed to accelerate entry of the European Stabilization Mechanism (ESM), the permanent successor to the European Financial Stability Facility (EFSF) to July of this year. Given increased pressure on the remaining triple-A guarantors of the EFSF, this shift to the ESM, which will draw […]

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Who Cares About David Cameron – Remember the Eurozone Debt Crisis?

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Much has been made of the so-called failure of David Cameron in Brussels on Thursday. That is, failure to have his demands accepted over special treatment for the City of London in new European financial regulations and failure to stop a new agreement going ahead without Britain, when Cameron declared he could not accept it […]

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Unfortunately for the Eurozone’s Core, Moral Hazard is Nothing Compared to a Breakup

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One argument against bold solutions to the Eurozone debt crisis, such as issuing common Eurobonds or extending bond purchases of indebted sovereigns by the European Central Bank (ECB) has been the issue of moral hazard associated with such solutions. According to this argument, bailing out states that have racked up unsustainable debts through years of […]

There is no Attractive Solution to the Eurozone Debt Crisis: The Time has come to find the Least Worst Option

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It has become increasingly difficult to argue that the solution to the Eurozone debt crisis is to provide further bailouts to Greece. This is not because there appears an alternative solution, nor that the risks of contagion to other Eurozone economies in the event of a Greek default have been minimized, nor for any other […]

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Strict Rules may be the Long Term Solution, but Understanding is Needed Now

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In the Financial Times of 7th September was an article co-authored by Mark Rutte and Jan Kees de Jager, respectively Prime Minister and Finance Minister of the Netherlands. The article begins by pointing out that it is not only necessary to find a solution to the current crisis in the Eurozone, but also to think […]

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The Gap Between Economics and Politics

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Solutions to the Eurozone debt crisis must take into account both economic necessity and political acceptability. Unfortunately, there is often a gap between those two features, where economic necessity is politically unpopular and politically acceptable policies are unwise economically. This is certainly the case with the Eurozone crisis, in which it seems that the gap […]

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