News/Op-Eds
EUROPEAN DEBT CRISIS
Wall Street Journal. A currency union need open banks not banks stuffed with dodgy sovereign debts. With Andy Atkeson. local pdf.
IGM/Bloomberg Business Class series. Austerity of high taxes is hurting Europe. Lack of spending isn't their problem. Get rid of the distortions, now, is the only answer. Local pdf
Bloomberg.com Business Class. Local pdf. Latest on the euro. "... by artful application of bad ideas, Europe has taken a plain-vanilla sovereign restructuring and turned it into a banking crisis, a currency crisis, a fiscal crisis, and now a political crisis.." Italian version, thanks to Duccio Gasparri.
Wall Street Journal (WSJ link, requires subscription.) The ECB is buying PIGS sovereign debt, and lending massively to banks who are buying sovereign debt, taking same debt as collateral. Current proposals essentially expand this bond buying a lot, but with smoke and mirrors so you don't see it. When defaults come, Germany will either have to pour euros into the ECB, validating the fait-accompli bailout, or watch the euro inflate. Everyone thinks that the euro can't survive sovereign default. No, allowing sovereign default is the way to preserve the euro.
Wall Street Journal, with Anil Kashyap. Local pdf. Why is Europe so scared to let Greece reschedule just a bit? Answer: because their banks holding Greek debt. Greece isn't being bailed out -- they'd rather defaut than work a year and a half just to pay off old debts. Bondholders are being bailed out, and those are mostly banks. So much for the wonders of bank regulation. Europe needs to fix its banks pronto, because the sovereigns will default. The default doesn't have to imply a financial crisis.
Wall Street Journal. Local pdf The latest on the unfolding sovereign debt crisis. Contagion is nonsense, and short term debt is a big part of the problem.
Wall Street Journal. Local pdf file. Let Greece default to save the Euro. A good currency is a monetary union without fiscal union.
Event and video from the IGM Myron Scholes forum on "The Euro In Crisis." More video from the April 28 Management Conference.