Jun 30, 2010

Eurozone isn't doomed yet

MUNICH — Despite huge rescue packages, interest-rate spreads in Europe refuse to budge. Markets have not yet found their equilibrium, and the governments on Europe’s southwestern rim are nervously watching how events unfold. What is going on? The rescue packages were put together on ...

Apr 29, 2010

Reining in Europe's debtor nations

MUNICH — The euro-zone countries have now agreed to provide some 80 billion euro in cheap loans to Greece over the next three years, and hope that the International Monetary Fund will provide another 15 billion euro at the least. But the interest rate ...

Mar 3, 2010

Grasping for a way to save the Greek sinner

MUNICH — The euro’s current weakness has one culprit: Greece. At 14 percent of GDP, Greece’s latest current-account deficit was the largest of the euro-zone countries after Cyprus. Its debt-to-GDP ratio stood at 113 percent by the end of 2009. As this year’s deficit ...

Jan 18, 2010

Europe's surrender of resources similar to U.S. spending on wars

MUNICH — Once upon a time, stocks were risky and collateralized securities were safe. That time is over, as the breakdown of the American mortgage securitization market has shown. For years, hundreds of billions of new mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) ...

Oct 28, 2009

It's Italy for America and Japan for Europe

MUNICH — The American business model has collapsed. During recent years, the United States borrowed gigantic sums of money from the rest of the world. Net capital imports exceeded $800 billion in 2008 alone. The money came largely from selling mortgage-backed securities and collateralized ...

Aug 27, 2009

Promise and peril of global change

MUNICH — Panta rhei. Everything flows. This Greek aphorism often comes to mind when I think of the economic and political changes in my lifetime. They seemed as impossible before they occurred as they have felt natural in retrospect. Communism fell. Germany was united. ...

May 3, 2009

World's biggest shock absorber

MUNICH — Since last autumn, Germany has been accused by a number of Anglo-American economists, above all by the 2008 Nobel laureate Paul Krugman, of not doing enough to combat the world economic crisis and of free-riding on other countries’ stimulus programs. Recently, The ...

Jan 3, 2009

Why does Germany's chancellor hesitate?

MUNICH — “Where is Angela?” is the question The Economist asked when Nicolas Sarkozy, Gordon Brown and Jose Manuel Barroso met to prepare a European economic stimulus plan without Chancellor Merkel being present. Indeed, Germany is currently the spoiler in the competition to provide ...

Oct 17, 2008

Plugging U.S. equity leaks

MUNICH — With pain and misgiving, the U.S. Congress has bailed out Wall Street to prevent a meltdown of America’s financial system. But the $700 billion to be used may flow into a leaky bucket, and so may the billions provided by governments throughout ...

Jul 4, 2008

A wave of migrating brains and barbarians

MUNICH — Europe is experiencing a huge wave of migration between east and west. This movement resembles the Great Migrations (Volkerwanderung) of the fourth to sixth centuries. Within the first year of Romania’s accession to the European Union on Jan. 1, 2007, for example, ...