Myths and facts of the Euro crisis part 4 – how to save the Euro – an analysis by João Madeira

As shown in the previous text the run on bank deposits and sovereign debt of periphery countries justified the need for an intervention to change the negative expectations in debt markets and to help interest rates converge to the good equilibrium (governments pay lower interest rates and repay their debts). The creation of the EFSF [...]

Myths and facts of the Euro crisis part 1 – an analysis by João Madeira

The Euro crisis is maybe the most important economic question of the moment. Despite being a highly debated matter, I think that the discussion hasn’t always been the best for it has been too coloured by political sympathies and national pride. In my view, the facts should be the basis of the debate. After all, [...]

Understanding Sovereign Debt: Economics Meets Politics – Dr Giancarlo Ianulardo

1) The Problem of Sovereign Debt Just as economic agents such as individuals, households and firms may take out a loan, sovereign states need to borrow when they run deficits. When the revenues are not sufficient to cover spending, the only solution is to borrow and make a promise to repay the debt in the [...]

The banking mess

Three-and-a-half years have passed since the banking run on Northern Rock in the UK, two-and-a-half since the collapse of Lehman Brothers in the US. And we’re still waiting for the government’s decision about what to do with the banks. There’s been some tinkering. The Financial Services Authority, which bore more than its fair share of [...]

The outlook for 2011

It seems a shame to start off my new blog on a gloomy note. But it makes sense to open with the outlook for 2011. And there’s no way round it, I’m afraid. This year is not going to be much fun for most of us. The problem that we face is an unpleasant combination [...]