In analysing the adjustment process here in Ireland, it is helpful to keep track of what is going on in other European countries that are dealing with reform challenges. George Kopits provides a summary of the Hungarian situation in this WSJ article.
Category: EMU
Adam Posen is always worth reading; his account of why a large, diverse eurozone is in Germany’s interests is available here.
Via the FT’s Brussels blog, here‘s a supposedly authentic copy of proposals for a competitiveness pact being circulated for the next European Council meeting by Barroso and van Rompuy. Much of it is still quite vague but, as leaked documents go, it’s somewhat more impressive than this one.
Via Vox,eu, here is a link to a translation of an open letter objecting to the EFSF that has been signed by 189 German economists. Rather than making the current mechanism permanent, they prefer the idea of setting up an insolvency scheme for EU states combined with EU funding for states that enter this scheme.
The economists may be presuming that the proposed permanent European Stability Mechanism is intended as a direct follow-on from the EFSF. However, it has been my understanding for some time (i.e. at least since Mrs. Merkel’s comments on burden-sharing last Autumn and the Deauville declaration) that the ESM could well be a vehicle that facilitates sovereign defaults and then provides conditional funding. So the position of the economists may not be far off what the German government is looking for.
Wolfgang Münchau is in fine form in this morning’s FT. And this morning’s Eurointelligence provides further evidence along the same lines, with some alarming German comments about the forthcoming stress tests (or should that be “stress tests”?).