NEW YORK | The debate between austerity or growth to cure Europes illness is in full swing. Austerians are, though, losing support. A consensus is growing that current cuts alone aren’t likely to tackle the euro zone crisis. For US celebrity economist and director of the Earth Institute Jeffrey Sachs, “Fiscal policy alone won’t save Europe,” he said in the launch of the Center on Global Economic Governance at Columbia…
MADRID | In an interview with the Spanish business daily El Economista, head of the Absolute Return department at Edmond de Rothschild Benjamin Melman said the Spanish government’s austerity plan is credible, but the markets doubt that it will help the economy grow. Unlike most market participants, Melman explained why he is more worried about France than about Spain or Italy. After the sovereign risk rally that we saw last week, would…
MADRID | A calm breeze in the midst of so much economic shock and just-about-fine Spanish bond auctions, whose effects will probably still ripple beyond Easter with the usual euro contagion talk. Let us pause for a moment and read a list of the happiest and satisfied peoples in the world. It is a huge report, a pile of 158 pages full of charts, notes in fine print and details on…
LONDON | Jobless rates gave Monday a nasty reminder of an ongoing credit crisis whose effects seem to have depressed further the economies in the developed countries. The euro area (EA17) seasonally-adjusted unemployment rate was 10.8% in February 2012, compared with 10.7% a month earlier. It was 10.0% in February 2011. The EU27 unemployment rate was 10.2% in February 2012, compared with 10.1% in January. It was 9.5% in February 2011. The statistical…
By Tania Suárez, in Madrid | Alberto Matellán, director of Strategy and Macroeconomics at Inverseguros SVB, considers that the effect of the ECB liquidity auctions will fade away and that, in the end, fundamentals will have a bigger influence. In order to stabilise the euro zone situation, is it a reasonable option the simultaneous use of the rescue funds? The bailout funds are a mechanism for ‘buying time’; so, from that viewpoint,…
NEW YORK | You are going to hear it more than often. It is called individual mandate: citizens required to purchase health insurance, or face a penalty. It is the Gordian knot of Obamacare, the new US Health law. And it is also the essence of both the Netherlands health system (it has been since 2006) and the Swiss (since 1994). In that regard, the US is trying to imitate…
MADRID | Morgan Stanley published a report that analyses the implications of the banking deleveraging process for the commercial real estate sector in Europe. The bottom line is that it will generate a gap in financing estimated in €400 to €700 billion during the coming years and that this is a structural trend. “We believe that the winners may be the venture capitalists. In our view, Blackstone and Partners Group are well positioned to step in that section of business once banks leave. Financing activity in commercial real estate has an…
Eurostat, the statistical office of the European Union, released Thursday data on hourly labour costs in the euro zone and in the EU. In both instances, the records indicate a very small increase but enough to strengthen the argument of those governments introducing wide-reach labour market reforms. Hourly labour costs in the euro area rose by 2.8% in the year up to the fourth quarter of 2011, compared with 2.6%…
NEW YORK | Officials from the International Swaps and Derivatives Association have stated that Greece has not had a ‘credit event’ and credit default swap payments will not be triggered, at least not yet. The body’s decision has reignited the debate over the usefulness of CDS. CDS are a US$32 trillion market, which is more than twice the US gross domestic product and more than twice the national debt. They…
By Juan Pedro Marín Arrese, in Madrid | Greek politicians’ sheer incompetence and the stiff resistance of its population to renounce living beyond its means are branded as evidence of that country unavoidable failure. Yet it only shows European leaders’ blindness in grasping how a monetary union should work. Their diagnosis on where the problem laid has proved to be utterly wrong. Obsession about budgetary targets, they knew beforehand to…