Advertisements

Tag Archive: German


When you read history, you tend to read about historical events, about numbers, dates, and data. But it was people who drove those blogevents, people making decisions on the basis of uncertain information, unknown consequences and frequently in the ‚fog of war. The opening quotation in Ahamed’s book is from Benjamin Disraeli: Read no history – nothing but biography, for that is life without theory. This perfectly sets the tone for what for me is one of the best treatments of the Great Depression I’ve ever read.

This account differs from others because it is told largely fromthe vantage points of the four central bankers of the four largest economies of the day: Benjamin Strong at the New York FedHjalmar Schacht of the German Reichbank, Montagu Norman of the Bank of England, and Emile Moreau of the Banque de France. Continue reading

Advertisements

Recently Jörg Bibow was interviewed have tried to put the points in English stating that Mario Draghi’s announcement promise of ECB supportimages for government bond markets seems to have calmed fears of an imminent euro breakup, at least for the time being. That does not mean the euro crisis is over though. Not at all, as the underlying problems remain largely unresolved. Liquidity can buy time but it cannot solve the imbalances inside the euro area and related debt overhangs that are the deeper cause behind the euro crisis. It is important in this context that the ECB promise is for conditional support. As liquidity support comes along with mindless austerity and asymmetric adjustment pressures imposed on debtor countries, debt problems are bound to get worse rather than better. Markets are currently in complacency mode about these prospects. The crisis may resurface at any time.

He pointed out Germany as the main culprit behind the euro crisis. Being the largest economy in Europe, Germany’s performance and policies inevitably impact Europe. In the currency sphere Germany is also Europe’s traditional anchor of stability. As a result, the policy regime of Economic and Monetary Union agreed at Maastricht is largely of German design, based on the Bundesbank success story and deutschmark stability. It was not understood that the pre-EMU success of the German model of export-led growth required that other countries behaved different from Germany. Continue reading

Recently Jörg Bibow was interviewed have tried to put the points in English stating that Mario Draghi’s announcement imagespromise of ECB support for government bond markets seems to have calmed fears of an imminent euro breakup, at least for the time being. That does not mean the euro crisis is over though. Not at all, as the underlying problems remain largely unresolved. Liquidity can buy time but it cannot solve the imbalances inside the euro area and related debt overhangs that are the deeper cause behind the euro crisis. It is important in this context that the ECB promise is for conditional support. Continue reading

When you read history, you tend to read about historical events, about numbers, dates, and data. But it was people who drove those events, people making decisions on the basis of uncertain information, unknown consequences and frequently in the ‚fog of war. The opening quotation in Ahamed’s book is from Benjamin Disraeli: Read no history – nothing but biography, for that is life without theory. This perfectly sets the tone for what for me is one of the best treatments of the Great Depression I’ve ever read.

This account differs from others because it is told largely from Continue reading

BANK runs don’t always involve small depositors queuing round the block. As we saw in 2008, institutions can withdraw

their money with devastating effect.

US money market funds are exiting the euro zone in what can only be described as a stampede. The rating agency Fitch says that the funds’ exposure to euro zone banks has dropped by 33% since May this year, and is now 78% down on its May 2011level. (French exposure is down 88% since May 2011.) Just over 8% of all their assets are now in the euro zone, compared with nearly 40% in 2009.

Britain, though not in the euro zone, has not been spared in the rush. Money market exposure is down 23% since May 2012 and 56% down on May 2011. Luckily, few banks Continue reading

%d bloggers like this: