News
Daily Morning Newsbriefing
Merkel, Sarkozy, and Monti agree to shut up about the ECB
The Strasbourg meeting produced no result, only the contours for further discussions in the run-up to the December 9 summit; they agreed not to pressure ECB, whilst focusing on Treaty changes to establish a fiscal union; Merkel continues to reject Eurobonds, but may have to compromise to secure a deal; for registered users only.
The run on the eurozone has started
A German bond auction flops, as investors are now starting to bet heavily on the break-up of the eurozone; the euro falls, as do global equity prices; Italian spreads are back above 500bp, and Belgian spreads at 350bp – levels at which neither country can sustain its membership in the eurozone; as a result of yesterday’s events, the eurozone government bond market is effectively broken; for registered users only.
Comment
The case for a European Monetary Fund
The most urgent challenge is the stabilization of interest rates on government bonds at a level below the rate of economic growth. This is a task for EU economic policy . For this, the European Financial Stability Facility (EFSF) should be transformed into the European Monetary Fund.
The case for optimism
The role of ideology in this crisis
Analysis
The Americans, Baby
As the world focuses on the eurozone, this extensive analysis reminds us that the that the debt problem of the US government is at least as bad as that of the eurozone, and is likely to resurface very shortly.
