Adjustment in the euro zone: More and more and not enough

The Economist has a special briefing on how adjustment is proceeding inside the euro area – it is here.

5 replies on “Adjustment in the euro zone: More and more and not enough”

The man from Mullingar said it best

More and more and more
I want you near me
Economic expansion though you’ve gone
I hope you’ll hear me

Time and time again
I try to find you
Til the very end
I won’t turn back
Down every road I travel on and on and on

Reaching out my hand
I try to touch, I try to feel
But you’re not there
No you’re not real
Still I believe
That you’ll be mine
You’ve been gone far too long

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‘Indicators of underlying competitiveness like unit labour costs have also turned in the right direction in most of the countries in trouble, though Italy’s are still rising. Ireland has done the best, with a 14% improvement since 2008.’

Fallacy of composition I think. Creative destruction of less productive building jobs is only OK if you have something more productive to replace them. We have emigration.


‘Breaking the vicious circle between weak banks and weak sovereigns requires a big leap forward in economic integration: a euro-area banking union (see article). Although European leaders recognised the necessity of this reform over the summer, they have since been backtracking on making it a swift and meaningful reality. In particular, hopes of introducing euro-wide deposit insurance are dwindling.

Article on Banking Union here:

‘Yet it is Germany that argues most vigorously that the ECB should supervise only a handful of big cross-border banks. Its coyness has much to do with its fear of what supervisors might say about its own Landesbanken, wholesale banks with a history of duff judgments. “The first call the new supervisor would make would be to Germany to tell it to recapitalise its banks,” says the boss of a large French bank, with a mischievous grin.’

Germans have played a ‘blinder’ on protecting its Landesbanken … not a murmur from Jens or Herr Sinn on this one … or from Wolfgang or Angela …

Brouzing the Economist

A golden age of micro
Oct 19th 2012, 10:06 by R.D. | LONDON

‘Cooperative game theory looks at how well people can do when acting together; by examining all the possible combinations, theorists can spot outcomes that individuals acting alone cannot achieve. They then focus on something called the “core” of the game—those outcomes that are “stable” in the sense that no subgroup would do better by breaking away and acting alone. So far, so theoretical. ….

Read on:

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