EMU



Perseverare Diabolicum

Last week the Council decided that Spain and Portugal’s recent efforts to reduce deficit were not enough. This lead to the two countries being fined, the first time this happens since the inception of the euro.

 


The ECB Will Prefer To Be Safe Rather Than Sorry

The ECB’s main priority will be to fuel confidence in the financial markets and inflation will be its alibi for this. In February, eurozone CPI receded to -0.2% year-on-year and, in the short term, the region should be prepared for negative rates to continue.






A Greek flag

On the Greek crisis and German imbalances

NICOSIA |By Marios Zachariadis via MacroPolisPolicies undertaken from a narrow national perspective that encourage systematic fiscal surpluses, coupled with a national consensus on wage suppression between unions and industry facilitated by the state, impact negatively upon domestic spending while increasing national saving. 


Mr Sinn on EMU Core Countries’ Inflation

By Franceso Saraceno | Where [President of CESifo Group Hans-Werner Sinn and I] disagree is on how to trigger the demand-driven boom. Mr Sinn expects this to happen thanks to market mechanisms, just because of the reversal of capital flows that the crisis triggered. He argues that the capital which foolishly left Germany to be invested in peripheral countries, being repatriated would trigger an investment and property boom in Germany, that would reduce German’s current account surplus. This and this alone would be needed. Not a policy of wage increases, useless, nor a fiscal expansion even more useless. Problem is, the data speak against Mr Sinn’s belief. Since the crisis hit, capital massively left peripheral countries, and yet this did not fuel domestic demand in Germany.