Posts Tagged ‘exchange rates’

Italy’s economic woes

Wednesday, June 20th, 2018

Martin Wolf’s Wednesday column provides an excellent explanation this week of why Italy is in trouble. Italy should never have joined the euro. In theory, countries can avoid devaluation by increasing productivity and lowering wages. In practice, this is politically difficult. In the case of Italy, it is impossible. If Italy had kept the lira, it could easily devalue its currency and regain competitiveness with other countries of the euro zone (primarily Germany). (more…)

Trump’s pick for commerce secretary is a mercantilist!

Sunday, November 27th, 2016

Donald Trump is expected soon to confirm Wilbur Ross as commerce secretary. Mr Ross (born 1937) is a billionaire investor who specializes in leveraged buyouts and restructuring distressed businesses. I learned, reading this weekend’s Financial Times, that he is also a vocal proponent of mercantilism.

The starting point of any trade deal, Mr Ross told the FT this month, should be to ensure that each side share its estimates of the effects on its own industries and jobs. ….

It is time to focus on deals which make sense, he says. That does not include the North American Free Trade Agreement of 1994, for example, which appeared to flip America

China’s currency and economic reforms

Saturday, August 15th, 2015

It is difficult to keep up with rapidly changing economic policies in China. Jamil Anderlini’s column on a key player in this unfolding drama is a must-read. Here is an excerpt. Click on the link below to read the full article (free registration required).

In the early 1980s, a promising PhD student from a prominent political family caught the eye of China

democracy within a monetary union

Monday, August 10th, 2015

FT columnist Martin Sandbu argues that democracy is compatible with monetary union, even though the eurozone elite believes it is not.

In Greece, opinion polls have been remarkably consistent about two things: most Greeks want to keep the euro as their currency, and most also reject the policies imposed by the creditor institution ….

Yet untold numbers of independent observers have uncritically bought into the

the pain in Greece

Monday, July 20th, 2015

FT columnist Wolfgang M

the third Greek bailout: two views

Monday, July 13th, 2015

Two FT columnists offer very different views on the deal agreed upon by government leaders on Monday, at 6am, following 17 hours of heated discussions. Who capitulated, Greece or Germany? Martin Sandbu supports the prevailing wisdom (capitulation of Greece). Gideon Rachman argues that it was Germany who capitulated.

At least Alexis Tsipras avoided having to send Greece

Greece’s creditors are divided

Friday, July 10th, 2015

It is not at all clear whether Greece’s latest offer will be accepted, or rejected. FT columnist Wolfgang M

austerity in Greece

Wednesday, July 8th, 2015

Oxford economist Simon Wren-Lewis writes that Greece’s post-2008 experience

Grexit by stealth

Tuesday, July 7th, 2015

In Berlin, the belief is hardening in official circles that no deal can be reached with a government led by Mr [Alexis] Tsipras [the Greek prime minister]. …. The talk … is not about compromise, but about how to organise post-Grexit humanitarian relief. The idea that Greece would remain in the euro is considered somewhat quaint. ….

My overall conclusion is that if Grexit were to happen, it would happen by stealth. The Tsipras administration one day introduces a euro-denominated liquidity instrument. If the banking system deteriorates further, the government will have to print so many of the new IOUs that they would change hands on the grey market for a discount. Eventually, the central bank will control the supply of that shadow currency. It may never become legal tender, but if there are not enough euros in circulation, it will become Greece

after the Greek referendum

Monday, July 6th, 2015

Don’t expect changes, writes FT columnist Tony Barber.

August 1914 was a descent into hell. May 1945 was an escape from hell. July 2015, the month of a surreal Greek referendum that had no clear question and an answer whose meaning is disputable, will go down in history as a continuation of hell