The Eurozone's real malady

Shimelse Ali, Uri Dadush, Zaahira Wyne, 24 July 2012The US and the Eurozone are slowly recovering after the bursting of their huge housing bubbles. Yet the hardest-hit states in the US have adjusted more rapidly than the most troubled European economies. This column examines differences between the US and Eurozone monetary unions that can help explain why.Full Article: Club Med and the Sun Belt: Lessons from adjustment within a monetary union

What would happen if the ECB immediately and directly ran a helicopter drop of money to the periphery?  I don’t find that an easy question to answer.  Here is one recent report: But the indicator [interest rate spreads] has since risen again and reached a record of 3.7 percentage points in January, indicating companies in southern Europe were paying significantly higher interest rates than northern rivals.

Submitted by Charles Hugh-Smith of OfTwoMinds blog, The Real Cyprus Template reveals the core-periphery Neocolonial-Financialization Model in all its predatory glory.

Uri Dadush, Bennett Stancil, 9 May 2011Between 2000 and 2009, developing countries added almost $5 trillion to their foreign-exchange reserves – a number deemed too high by many, prompting accusations of protectionism. But this column argues that developed countries are equally to blame – as well as failures in international coordination. It concludes that remedies therefore require action by both groups.Full Article: Why are reserves so big? And who is to blame?

The basic laws of economics are threatening to pull the eurozone apart, just as politicians are trying to pull it together. As usual, the ECB is stuck in the middle of the mess, and it doesn't like it one bit. For two and a half years, interest rates in the big industrial economies have only gone one way - down. Central banks slashed rates to historic lows in the wake of the financial crisis and then left them there. But not any more. Now the ECB has broken ranks, with today's long-anticipated quarter point rise.