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Europe Needs the Bond Vigilantes
Keywords:
Martin Feldstein points out why the recent agreement for a "fiscal compact" is no more than an empty statement about fixing the eurozone's finances. In this respect it is no different than the Stability and Growth Pact it replaces, with serious weaknesses. Feldstein cites the weaknesses in the language of the agreement. Each eurozone country is required to limit its"cyclically adjusted" budget deficit to 0.5% of GDP and bring its debt down to 60% of GDP. Compliance will be performed by the European Court of Justice and fines imposed. In practice the questions loom large- for a country like Spain with a 23% unemployment rate, isn't all of the 6% budget deficit cyclical? Again the agreement says deficits are calculated "net of one-off and temporary measures." Under this provision a lot of the stimulus programs would be considered in the category of "one-off." Other language lets eurozone countries frame budgets based on "exceptional circumstances" and "periods of severe economic downturn." Italy has declining economic growth, does it make sense to have a large budget surplus in that situation to lower debt to GDP, and how does that goal relate to "exceptional circumstances."
New fiscal and budget controls in the Eurozone - 2012-2013
03/03/2010
Budget discipline measures for the eurozone taken at the Jan 30, 2012 summit and at other EU meetings.
Grouped Articles
Wall Street Journal 03/03/2010
Economist 05/13/2010
Euro-Zone Budget Controls Proposed
Wall Street Journal 11/22/2011
In euro zone crisis, Germany is the reluctant savior - The Washington Post
Washington Post 12/04/2011
European Leaders Agree to New Budget Discipline Measures
New York Times 01/30/2012
Europe Needs the Bond Vigilantes
Wall Street Journal 04/05/2012
How Mario Draghi, ECB president, sees the problems in the eurozone and policy direction in 2012-2015
01/11/2010
A wide ranging interview with Mario Draghi by Wall Street Journal reporters Blackstone, Karnitschnig and Thomson, which gives insights on how Draghi sees solutions to the crisis in the eurozone and future policy. Draghi favors good fiscal consolidation which combines freeing up labor markets and structural changes for Italy, Spain and other southern countries, with spending reductions, and capital investment in the future as opposed to tax increases for current spending and lack of capital investment for future growth. He points out that with excessive debt to GDP ratios there is no alternative to this right kind of fiscal consolidation. The fiscal consolidation gives the structural changes time to be put in place..
Grouped Articles
ECB Moves Markets, Not Economy
Wall Street Journal 05/03/2013
The Man Whoâll Do Triage on Europeâs Banks
New York Times 10/20/2013
ECB Struggles With Low-Altitude Flying
Wall Street Journal 11/10/2013
Euro Strengthens as Fears Fade
Wall Street Journal 01/12/2013
Bonds of Italy, Spain Narrow Gap With U.S., German Yields
Wall Street Journal 04/09/2014
E.C.B. Plots Strategy for Staving Off Deflation
New York Times 05/26/2014
The EU Summit, December 9, 2011
12/09/2011
The German position not to allow large scale bond buying by the ECB remained unchanged. The focus continued on getting debt brakes and fiscal discipline rules set for the eurozone members. The ECB's Mario Draghi opposes central banks of Europe sending money to the IMF which would be used to support EU countries with debt problems. The ECB lowered interest rates by 0.25% for the eurozone, bringing interest rates to 1%, and reversing earlier ECB policies under Trichet that increased rates. In addition the ECB will provide unlimited funding to European commercial banks for longer maturities of 3 years, instead of the current 1 year maturity.
Grouped Articles
Wall Street Journal 12/09/2011
British Prime Minister Cameron’s veto of E.U. pact splinters his coalition - The Washington Post
Washington Post 12/11/2011
Legal Uncertainty Imperils EU Agreement
Wall Street Journal 12/14/2011
Leaders Grow Further Apart on Solutions
Wall Street Journal 12/15/2011
The Euro Zone's Double Failure
Wall Street Journal 12/15/2011
Euro Treaty to Require Only 9 Nations for Ratification
New York Times 12/16/2011
Why government fiscal discipline alone will not establish a sound financial framework for the Euro currency- the example of Spain
03/03/2010
Spain kept its deficits below the 3% mandated under EU treaties, till recently. Asset bubbles sustained because of bad lending by a country's banks and easy acess to credit from outside the country, are two problems not addressed by tighter budget controls in the revised rules being set after the Dec. 9 EU Summit. Spain's debt problem is to recapitalize these failing banks and debt of regional governments. Spain relied too much on a construction boom for growth, with productivity stalled. Ireland improved competitiveness and attracted foreign investment. This too unraveled in the face of an asset bubble from speculative lending by its banks.
Grouped Articles
New York Times 09/25/2011
Wall Street Journal 03/03/2010
German Optimism Depends On Spanish Deficits
Wall Street Journal 09/25/2013
Euro Zone Deficit Hits Target for First Time Since 2008
New York Times 04/23/2014
Spain's Example Shows Limits of EU Targets
Wall Street Journal 12/09/2011
The Euro Zone's Double Failure
Wall Street Journal 12/15/2011
The twin problems of lack of growth under austerity plans and overvalued currencies of Italy, Greece, Spain and Portugal
06/24/2011
The twin problems of lack of growth and overvalued currencies under the solutions of austerity plans without debt reduction and a single euro currency create impossible odds for a resolution of the eurozone financial crisis. Germany's insistence on tough austerity measures, European banks delaying restructuring of bad loans similar to the U.S. Brady plan, failure of politicians in Italy and Greece to take early action, and small steps by policymakers, are compounding the effects of the eurozone crisis.
Grouped Articles
German Election Overturns Political Order
Wall Street Journal 09/23/2013
New York Times 11/03/2013
Germany's Surplus Isn't the Problem
Wall Street Journal 11/11/2013
The 'Silent Austerity' in Banking
Wall Street Journal 01/21/2014
Italy Central Banker Is Open to 'Bad Bank'
Wall Street Journal 02/10/2014
Saying No to Austerity, Spain Unveils Tax Cuts
New York Times 06/20/2014
Austerity measures facing European countries in 2011-2013
11/13/2011
Grouped Articles
German Election Overturns Political Order
Wall Street Journal 09/23/2013
New York Times 11/03/2013
The 'Silent Austerity' in Banking
Wall Street Journal 01/21/2014
How Righteousness Killed the World Economy
New York Times 10/12/2014
New York Times 11/30/2014
Austerity in Europe Brings Bitterness Unknown in Postwar Era
New York Times 11/13/2011
Ratification of Europe's Fiscal Treaty following the EU Summit of Dec. 9, 2011
12/16/2011
Approval of the fiscal compact agreed to at the European Union summit of December 9, 2011 sets a low threshold, with it going into effect if 12 of 27 countries approve it.
Grouped Articles
Euro Treaty to Require Only 9 Nations for Ratification
New York Times 12/16/2011
Germany's Merkel to Need Opposition Help in Approving EU Fiscal Pact
Wall Street Journal 03/03/2012
Europe Needs the Bond Vigilantes
Wall Street Journal 04/05/2012
Wall Street Journal 04/26/2012
In test for Europe, Ireland votes on fiscal treaty - The Washington Post
Washington Post 05/31/2012
Germany May Compromise on Joint Debt
Wall Street Journal 06/28/2012
Martin Feldstein on the Euro currency and the European Union in 2011-2012
12/15/2011
Feldstein on the efforts to solve the eurozone debt crisis and the vision of a united Europe.
Grouped Articles
The Euro Zone's Double Failure
Wall Street Journal 12/15/2011
Europe Needs Democratic Rejuvenation
Wall Street Journal 02/08/2012
Italy's Leader Warns EU Needs Better Democracy
Wall Street Journal 02/16/2012
Europe Needs the Bond Vigilantes
Wall Street Journal 04/05/2012
Europe's Reform Pact Means Little
Wall Street Journal 04/15/2012
Amar Bhidé: In Praise of the Beleaguered Euro
Wall Street Journal 05/07/2012
The Reding proposal for open debate on political union in the EU by 2020.
02/08/2012
Viviane Reding is vice president of the European Commission. She makes this proposal in an op-ed in the Wall Street Journal on February 8, 2012. The vision of a united Europe persists during the eurozone crisis.
Grouped Articles
New York Times 05/22/2014
Europe Needs Democratic Rejuvenation
Wall Street Journal 02/08/2012
Italy's Leader Warns EU Needs Better Democracy
Wall Street Journal 02/16/2012
Europe Needs the Bond Vigilantes
Wall Street Journal 04/05/2012
Logic Pushing Europe Toward Greater Integration
New York Times 06/07/2012
France's Finance Minister Lagarde on the discipline and coordination needed for the euro to work.
03/03/2010
This discipline and tight fiscal coordination would be imposed on eurozone countries as part of the effort to make the euro experiment work. Lagarde is interviewed by Carney and Jolis of the WSJ.
Grouped Articles
Wall Street Journal 03/03/2010
Charlie Rose Talks to Christine Lagarde
BusinessWeek 04/28/2010
Toward a United States of Europe
Wall Street Journal 12/18/2010
Wall Street Journal 12/20/2010
Wall Street Journal 01/14/2011
Europeâs Odd Couple: Sarkozy and Merkel
New York Times 01/13/2011
The focus on competitiveness by economists, credit ratings agencies, and European leaders as austerity measures alone won't work
02/05/2011
Mario Monti focusses on the need for investing in the economy in an interview with German newspaper Die Welt during a January 2011 visit to Berlin. S&P economists and Nobel winner Stiglitz also emphasize this after a downgrade of France's credit rating- the need for improved competitiveness for the economies of France, Spain Portugal and Italy.
Grouped Articles
New York Times 09/25/2011
Wall Street Journal 05/29/2013
The Next First (and Only) 100 Days
New York Times 12/10/2011
A Proud Nation Ponders How to Halt Its Slow Decline
New York Times 08/24/2013
After a Recession in Portugal, the Tiny Green Fruits of Success
New York Times 08/28/2013
France Says It Will Miss Budget Deficit Targets
Wall Street Journal 09/12/2013
Italy, Spain and austerity measures- 2011-2013
08/08/2011
Analysts point to the austerity measures adopted by Italy and Spain much earlier than other countries in the eurozone. The risk now is cutting into muscle as growth for 2011 is expected to be below 1% in both countries. Italy say analysts is actually in surplus when the interest on debt is excluded.
Grouped Articles
Italy Urged to Resist a Relapse in Spending
Wall Street Journal 05/03/2013
Still Sputtering, Spain Turns Away From Cuts
Wall Street Journal 05/12/2013
German Election Overturns Political Order
Wall Street Journal 09/23/2013
New York Times 11/03/2013
Saying No to Austerity, Spain Unveils Tax Cuts
New York Times 06/20/2014
European Finance Ministers Support Investment Program
New York Times 09/14/2014
Summit meetings of European leaders for an agreement on closer economic integration in the EU
02/04/2011
Grouped Articles
Logic Pushing Europe Toward Greater Integration
New York Times 06/07/2012
European Leaders Clash in Summit
Wall Street Journal 02/05/2011
Germany and France Roll Out Plan to Boost Euro
New York Times 02/04/2011
Legal Uncertainty Imperils EU Agreement
Wall Street Journal 12/14/2011
Europe Needs the Bond Vigilantes
Wall Street Journal 04/05/2012
The Sarkozy-Merkel meeting in Deauville, France, October 18, 2010, that sets the stage for a closer union for the EU.
12/27/2010
Germany and France make the momentous decision to move forward with a closer fiscal union of the 16 nation European Union. The efforts to build anew the conditions for the Euro to succeed. The vision of a united Europe persists.
Grouped Articles
New Attempt at French-German Amity Stumbles in Venice
Wall Street Journal 08/21/2013
Germans Respond to Merkel's 'Motherly' Side
Wall Street Journal 08/23/2013
German Election Overturns Political Order
Wall Street Journal 09/23/2013
New York Times 05/22/2014
Economist 11/11/2015
As Ireland Flails, Europe Lurches Across the Rubicon
Wall Street Journal 12/27/2010
Krugman and Feldstein provide different views on the Fiscal Compact agreement for the Eurozone
04/05/2012
Krugman calls the austerity measures in the Fiscal Compact a form of suicide at a time of high unemployment in coutnries like Spain. Feldstein says the Fiscal Compact does not provide strict spending limits to fix Eurozone finances, with language that allows for exceptions.
Linked Articles
New York Times 04/15/2012
Europe Needs the Bond Vigilantes
Wall Street Journal 04/05/2012
Martin Feldstein on why the "Fiscal Compact" agreed to in December 2011 by EU countries is a failure
12/15/2011
Linked Articles
Europe Needs the Bond Vigilantes
Wall Street Journal 04/05/2012
The Euro Zone's Double Failure
Wall Street Journal 12/15/2011
Economic Suicide or Need for Bond Vigilantes- Krugman and Feldstein offer opposing views on austerity measures in Europe
04/05/2012
Linked Articles
New York Times 04/15/2012
Europe Needs the Bond Vigilantes
Wall Street Journal 04/05/2012
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