Austerity Economics is Fraying Europe’s Social Contract

Conn M. Hallinan |  On one level, the recent financial agreement between the European Union (EU) and Greece makes no sense. Not a single major economist thinks the $96 billion loan will allow Athens to repay its debts or get the economy moving anywhere but downward.

Klaus Zimmermann

“Austerity is not a growth strategy, neither is demand stimulus”

MADRID | April 19, 2015 | By Ana Fuentes | Germany’s Institute for the Study of Labor Chairman Klaus Zimmermann finds the debate between EU ‘austerians’ and ‘stimulus fans’ too shallow. In his view, spending cuts for their own sake were never the German style. In a conversation with The Corner, he explains that the effects of the minimum wage introduction in his country cannot be measured yet and why he thinks the German corporate governance model helped cushion the crisis’ labor market impact.


What structural reforms?

PARIS | April 15, 2015 | By Francesco SaracenoI am ready to bet that the latest IMF World Economic Outlook, that was presented [on Tuesday]  in Washington, will make a certain buzz for a box. It is box 3.5, at page 36 of chapter 3, which has been available on the website for a few days now. In that box, the IMF staff presents evidence on the relationship between structural reforms and total factor productivity, the proxy for long term growth and competitiveness. (Interestingly enough people at the IMF tend to put their most controversial findings in boxes, as if they wanted to bind them).


Syriza’s victory: Greeks reject Europe’s recipe but they need Brussels’ support

MADRID | By JP Marín Arrese | The landslide victory snatched by leftwing Syriza plus the sizeable score recorded by parties opposed to the austerity measures represents a challenge to Europe’s orthodoxy in addressing real adjustment. Greek voters have voiced their rebuke to policies encompassing significant sacrifices but failing to redress a dismal economic record. Scrapping key elements of the welfare state and imposing harsh conditions on citizens has resulted in widespread poverty. In addition, the sentiment the troika was running the country has infuriated many of those going to the polls on Sunday. For all the popular support received, Tsipras faces a  formidable challenge ahead in delivering his election promises.

AngelaMerkel HorschTC

Is austerity losing the battle in Europe?

BERLIN | By Alberto Lozano | The different measures implemented in Europe in order to boost growth through increased monetary action, investment and structural reforms have replaced austerity as the new dominant dogma. While Angela Merkel is adapting to the new situation, Bundesbank president Jens Weidmann disagrees with more budget flexibility and a possible QE by the ECB in 2015. (Cartoon: Horsch / La Repubblica).


Keynesians Trojan horse a sign of changing times at OECD

MADRID | By Sean Duffy | The OECD´s economic outlook showed that voices calling for action in Europe are growing louder. With the outcomes of austerity and budgetary consolidation continuing to drag down the economy, Catherine L Mann´s arrival as its chief economist represents a significant coup for advocates of the opposite recipe.

Prof YAO

“Globalisation is Southern Europe’s source of agony”

MADRID | By Ana Fuentes | Trying to compete with emerging markets is not enough: Those EU countries trying to re-launch their industrial sectors in order to boost  economic recovery need to go through technological changes, Yao Yang explains to The Corner. Dean of the China National School of Development and Director of the China Center for Economic Research, he believes that austerity in Europe has not been in vain. On the same day, business-research group Conference Board reported that Chinese growth will dip to 5.5% in 2015-19, Prof. Yang points out that such a decline would not mean any catastrophe. 

mercados bolsa TC

Markets run wild

MADRID | By JP Marín Arrese Stock markets all over the world are plummeting while bond yields have regressed to fresh lows, as investors grow increasingly worried about growth prospects. Signs the US economy might be slowing down, coupled with the Eurozone plight, paints a gloomy scenario. Yet, the utter lack of direction in policies across the Atlantic stands as the most worrying concern.