With interest rates pegged back, the immediate impact of this announcement was for the dollar to fall. In general, a weak dollar is good for the world economy. It helps those who borrow in dollars and whose trade is priced in it. But it puts Europe, which relies on selling exports in euros, under pressure. For a long time, the EU has been able to rely on worries about financial crises in Greece and Italy to keep the value of the euro down. Yet 2020 has upended that calculation. The political crises in the US, contrasted with the success of the Europeans in devising a financial deal, has sent the euro soaring, squeezing exports and tempting deflation by cutting the price of imports to Europe. … [Read more...] about The world’s central banks are starting to experiment. But what comes next?
European central bank
• In Greek parliamentary elections voters rejected two mainstream parties who had helped negotiate austerity plans meant to pull the country out of its debt crisis in favor of extreme candidates who echoed the popular outcry against austerity. The move cast further doubt on Greece’s long-term ability to stay in the eurozone. … [Read more...] about Europe in turmoil: five years of economic crisis
“The same problems will crop up again with the same result of austerity, privatisations and changes in the [domains of] labour and pension reforms,” the ultra-leftists said. “The European Union’s blackmailing is not the exception but the rule. There is no democratic EU, nor is there an EU of the people.” … [Read more...] about Greece confirms it will ask for bridging loan from eurozone partners
In the cafes of Athens on Saturday there was consensus that what the country had essentially agreed to was the best of increasingly bad deals that inevitably would have been on offer. “The government won time, it got a four-month extension to the adjustment programme, but it was a lousy deal, and that’s because this new government managed to antagonise the euro group, the German government, the European Central Bank, Spain and Portugal from the outset with its negotiating stance,” said Giorgos Kyrtsos, a Euro-MP with the centre-right New Democracy party. “And the response was to impose rules in a very strict manner … We have a huge financing gap that will present itself in the next few months,” he told the Observer. “It is a time-bomb. The government will not be able to service its debt and meet its government programme.” … [Read more...] about Syriza’s honeymoon over as Greece strikes debt deal with EU
Monday evening’s letter said the humanitarian aid would be fiscally neutral, not affecting the budget, that aid to the poor would be “non-pecuniary”, for example by issuing food stamps. It said that raising minimum wages would be delayed, there would be a clampdown on early retirement and completed privatisations would not be reversed. … [Read more...] about Greece secures eurozone bailout extension for four months