American history lessons for the eurozone

There are many lessons and implications from the Cypriot crisis (we list 25 here). Among the most important is that conditionality is back, energetically, which is very important when considering the circumstances under which other, bigger, countries might access ESM or OMT. We believe, like BNP's James Mortimer-Lee, that the market has been too complacent, seeing OMT and “whatever it takes” as unconditional – that’s wrong. A second lesson is that a harsher line is being taken by the core.

By David Beckworth: Back in April 2010 when it first seemed the Eurozone was about to crack up, I did a post on the lessons of the Eurozone crisis.

Ireland has surrendered. All that now remains is the detail - and we may not get that for some time.

Adalbert Winkler, 6 November 2011The Eurozone crisis is escalating as governments have failed dismally in their attempts to restore confidence. This column argues that the interventions have been too little and too weak, leaving the EZ crisis with no end in sight. To back up its case it looks at 19th century finance in the US.Full Article: How Eurozone governments have failed to produce confidence and end the crisis – lessons from 19th century US commercial banks

Now that the Eurozone crisis is heating up again, I thought it worthwhile to revisit an earlier post of mine that discussed the key lessons I see from the Eurozone crisis: (1) The optimal currency area (OCA) criteria should be taken seriously ex-ante.

I've gotten several questions recently asking if consumer spending is being propped up by mortgage defaults, especially the "strategic mortgage defaults."  My take is: yes, but just by a little bit.  Here's the story.

Helmut Reisen, 19 May 2010Credit rating agencies have recently downgraded Greek, Portuguese, and Spanish sovereign debt, causing unrest among Europe’s leaders. This column argues that unless sovereign ratings can be turned into proper early warning systems, they will continue to increase instability and volatility and to undermine the benefits of capital markets.