Reuters (August 17)
“Headline inflation in the euro zone has halved in the past nine months and was 5.3% in July. But that’s not good enough for ECB hardliners. They want to see the core number, which excludes energy, food, alcohol and tobacco, come down sharply before putting an end to the unprecedented climb in the bloc’s interest rates. That measure is falling more slowly and was running at 5.5% in July.” The ECB obsession over core inflation increases the “risk of policy mistake.”
Tags: 5.3%, Alcohol, Core, ECB hardliners, Energy, Euro zone, Food, Headline, Inflation, Interest rates, July, Obsession, Policy mistake, Risk, Tobacco
Reuters (December 16)
“The euro zone will soon have to pay for a decade of European Central Bank largesse. Rising interest rates are turning the ECB’s portfolio of bonds acquired since 2014 into a money-losing machine. The question of how those losses are shared could become a major source of tension between member states.”
Tags: 2014, Bonds, ECB, Euro zone, Interest rates, Largesse, Losses, Money-losing, Portfolio, Rising
Financial Times (September 13)
Mario Draghi and the ECB have done their part, but “Germany will wait until it is too late before providing a measurable fiscal stimulus.” This is the optimal “time for Europe to invest in its future,” with low inflation, zero cost of borrowing and fiscal surpluses. “German leaders know this,” but fear alarming “the good burghers of Munich, Hamburg and Frankfurt. Were recession to provoke a full-blown euro-zone crisis, Berlin would of course act…. But do not expect Germany to dispatch the fire brigade before the flames have fully taken hold. What a waste.”
Tags: Borrowing, Crisis, Draghi, ECB, Euro zone, Fiscal stimulus, Germany, Inflation, Recession, Surpluses
Reuters (June 7)
“Despite a torrid start to 2018 and with Brexit uncertainties looming large, British blue-chip stocks have jumped to record highs thanks to a weak pound, a torrent of mergers and acquisitions, and bouts of political anxiety in the euro zone.” This is less the result of long-term optimism and more a re-calibration that UK positions had been marked down excessively.
Tags: Anxiety, Blue-chip, Brexit, Euro zone, M&A, Optimism, Record highs, Stocks, Torrid, UK, Uncertainties, Weak pound
Reuters (April 23)
“For investors, the key question is whether the ECB’s carefully calibrated exit plan from its ultra easy policy could be scuppered by trade tensions, especially if the dispute between the United States and China sucks in the euro zone. The ECB would have to alter its march towards a more normal policy stance if growing risks from protectionism, exchange rates or market swings end up depressing inflation.”
Tags: China, ECB, Euro zone, Exchange rates, Exit plan, Inflation, Investors, Market swings, Protectionism, Risks, Trade tensions, U.S.
The Economist (February 21)
“Deflation can be a good thing. But today’s version is pernicious.” Prices have fallen in Germany, Italy, Spain, Greece, indeed the euro zone as a whole, and “ultra-low inflation is also widespread. America, Britain and China each have inflation rates of less than 1%.” Should there be another crash, central banks would have little room to act. “The world is grievously underestimating the danger of deflation.”
Tags: Central banks, China, Deflation, Euro zone, Germany, Greece, Italy, Pernicious, Prices, Spain, U.S., UK
New York Times (February 18, 2014)
“Some analysts and public officials say the beleaguered euro zone is finally on the road to recovery…. But theirs is an overly optimistic view.” Europe risks falling into deflation “if government officials and central bankers do not take steps to bolster the economy.” Coordinated efforts would be ideal, but with European governments unlikely to work together “it is up to the central bank to act when it meets again next month.”
Tags: Analysts, Central bank, Deflation, Economy, Euro zone, Europe, European governments, Optimistic, Recovery
Washington Post (October 27)
“Not many countries would cheer about an economic growth rate of one-tenth of 1 percent, sustained for a mere three months. But for Spain, which has been mired in negative growth for two years, the tiny uptick in the third quarter of 2013 represents a kind of breakthrough.” For Europe, however, this is just the slightest hint of a “silver lining in a what is still a very dense, dark cloud hanging over Europe’s economy. Spain and its fellow euro-zone debtors — Italy, Portugal, Ireland and Greece — don’t just need a trickle of growth to bring down their unemployment rates and debt-to-gross-domestic-product ratios. They need a gusher; many consecutive months of high-single-digit growth. And there is no short-term prospect of that.”
Tags: Breakthrough, Debt, Economy, Euro zone, Europe, GDP, Greece, Growth, Ireland, Italy, Portugal, Spain, Unemployment, Uptick
The Economist (October 26)
“The euro mess has morphed from an acute crisis into a chronic one.” In contrast with the progress made on sovereign debt, however, “the euro zone has made less headway than other places in reducing this private-debt burden…. If the euro zone’s recovery is to strengthen, this burden of private debt must be lightened. According to the IMF, private debt is a bigger drag on Europe’s growth than government debt.”
Tags: Burden, Crisis, Euro zone, Europe, Government, Growth, IMF, Private-debt, Progress, Recovery, Sovereign debt
The Economist (May 25, 2013)
“Unfortunately, the idea that the euro is yesterday’s problem is a dangerous figment. In reality, Europe’s leaders are sleepwalking through an economic wasteland…. For everyone’s sake, Europe’s leaders must shake themselves out of their lethargy. They must grasp that if they do not act, the euro zone faces stagnation or break-up—possibly both.”
