Le Pen: France must leave the eurozone

With the euro zone about to implode, it makes sense for politicians outside of the main stream to rise up, grab the metaphorical mic and make a play for a nationalist response. That’s what Marine Le Pen hopes to do

More on the political economy of the European sovereign debt crisis

European economies are really breaking down and panic has set in. You see pointless proposals to lord over supposed fiscal free riders from Finland and unelected governments lacking in political legitimacy and taking unfavourable economic policies in both Greece and Italy. Europe is clearly on the edge

Spain Another Pain

Pressure is mounting on Spain. The 10-year yield today is essentially back to where it was when the ECB broadened its sovereign bond purchase scheme to include Spanish and Italian bonds. On Oct 27, the 10-year yield was near 5.33%. Today it is 100 bp higher. This is not a very conducive environment for tomorrow’s new benchmark offering (up to 4 bln euros of bonds that mature in 2022)

Can Mario Monti save Italy from default or economic collapse?

I think Monti and Papademos are going to try to shoehorn the standard policy responses into the situation in order to reduce the range of outcomes they have to deal with. In a practical sense, that means going with the standard formula of cutting budgets, selling state assets and working within the Euro framework. Will this work, though

60 Minutes: Congressional Insider Trading

In case you missed it last night here is one that is sure to get your feathers up. It’s about time they Occupy Congress

The Obama Hope and Change Fail

Gallup reports that Congress’ job approval is entrenched at a record low of 13%. Here’s what I noticed, however

Merkel: Change European Constitution for greater fiscal integration by 2013

Sources close to the German government have told Reuters that the German Chancellor Angela Merkel is seeking agreement to make changes to the Lisbon Treaty, considered the European Constitution. According to Reuters’ sources, Merkel wants all 27 EU member states to sign off by the end of 2012. Reuters writes: "The government is pushing for

News Links: Down with the Eurozone, It’s not about Berlusconi

Down with the Eurozone – Nouriel Roubini – Project Syndicate For the last decade, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were the eurozone’s consumers of first and last resort, spending more than their income and running ever-larger current-account deficits. Meanwhile, the eurozone core (Germany, the Netherlands, Austria, and France) comprised the producers of

Report: Germany is preparing for Greece’s exit from the euro zone

This sounds like hearsay to me, but I wouldn’t be telling you about it if I didn’t believe it was credible

The Road to Serfdom

As for Italy itself, the country runs a primary fiscal surplus. As George Soros has noted: “Italy is indebted, but it isn’t insolvent.” Its fiscal deficit to GDP ratio is 60% of the OECD average. It is less than the euro area average. Its ratio of non-financial private debt to GDP is very low relative to other OECD economies.

It is not at all like Greece. It has a vibrant tradeable goods sector. It sells things the rest of the world wants. You introduce austerity at this juncture, and you will cause even slower economic growth, higher public debt, thereby creating the very type of Greek style national insolvency crisis that Europe is ostensibly seeking to avoid. And then it will move to France, and ultimately to Germany itself. No passenger is safe when the Titanic hits the iceberg

Merkel: I do not ‘want to let the people vote’

Germans really are sceptical of the euro and many miss the days of the Deutsche Mark. I think Merkel is trying to make the case for why the German people have never been given a direct vote on any major euro area decision. No one wants tyranny of the majority. So I agree on the benefits of representative democracy over direct democracy at the federal level. That said, Merkel is in awkward position because it has long been clear that German elites have been leading the German people in a direction that many believe is the wrong direction. If the European economy collapses in a heap and leaves Germany in a Depression, the euro itself will be blamed

Chart of the Day: This is how many periphery bonds the ECB has already bought

This chart from Der Spiegel shows you that the ECB has been buying a lot of periphery bonds. But, no matter how much they have bought, their purchases are dwarfed by the absolute magnitude of bonds coming due next year in Italy, over 300 billion euros worth