The Economist (August 20)
Europe’s leaders and, in particular, Angela Merkel correctly sense the lack of domestic support needed to fix the euro zone crisis. What they overlook is the need to cultivate this support. Half-measures will not work and a euro zone collapse would be damaging. “The current rescue plan for the euro is just not working. The markets continue to price in default…. A year ago it was said that the euro zone could take care of two or three small countries but that Spain was too big to fail. Today, with Italy and even France looming into the picture, the very survival of the euro is coming into question.”
The Independent (July 22)
In assembling the latest bailout plan for Greece, European leaders have again “done the bare minimum required of them.” They have successfully “bought some time, but not much. Their failure to agree on a radical plan of action to restore confidence and address the root drivers of bond market panic means that this crisis is not over.”
Financial Times (July 20)
Dodd-Frank was supposed to be the biggest regulatory overhaul since the Great Depression. One year later, Dodd-Frank’s not living up to its billing. “Plenty of economists, officials and congressional aides think …the reforms have not shaken up Wall Street enough.” Of the 400 required rules, only 55 have been finalized and of 87 required studies, only 32 have been completed. Limited staff have been slowing the process, but so are concerns that the regulations are unneeded and risk slowing a still weak economy. Some are saying that it will take another major crisis to create momentum for real reform.
Tags: Crisis, Dodd-Frank, Economy, Regulation, U.S., Wall Street
Bloomberg (July 12)
In Europe, contagion is spreading from Greece. “Exploding bond yields in Italy and Spain brought the crisis closer to the heart of the euro area.” Europe’s leaders now look prepared to reconsider measures they had previously ruled out, such as buying back Greek debt at a discount. Whether they can avert disaster remains to be seen. Italy felt the brunt of the expanding crisis as 10-year bonds rose 326 basis points over Germany’s, “a euro-era high.”
New York Times (June 29)
The ongoing crisis in Greece has exposed a deeper problem in Europe. “There are no European leaders, just a German chancellor, a French president, an Italian prime minister and others who … never look much beyond their local political interests.”
Tags: Crisis, Europe, Greece, Leadership
Washington Post (November 26)
Sheila Bair fears the next big crisis will start in Washington. The “explosive growth in federal borrowing” is the cause of the FDIC Chairman’s fears. “Federal debt has doubled in the past seven years, to almost $14 trillion” or 62% of GDP. That means each American household shoulders over $100,000 in federal debt. Bair says the deficit needs to be cut before the U.S. wakes up to a new crisis.
Institutional Investor (September Issue)
Four months ago, a sovereign-debt crisis threatened the euro. Today, there is “growing confidence that the region has pulled itself back from the brink.” Institutional Investor points out “crisis eased is far from crisis resolved.” Though the outcome has been better than expected, the euro region still lacks consensus on a mechanism to avoid a future crisis. “The debt crisis has yet to spark the life-altering transformation that the euro area needs.”
Tags: Crisis, euro, Sovereign debt
Financial Times (September 5)
The world needs to awake to the threat posed by global food crisis. After all, we’ve had two in the past 2 years. Riots sparked by food shortages in 2007-08 brought down governments in Haiti and Madagascar. Last week, a 30% spike in the price of bread, caused unrest in Mozambique. “Steps should be taken to mitigate the severity of crises when they strike.” Larger reserves are one of the first steps that we should take.
