A visceral disgust for handing out cash to "save the euro" has seized German leaders like a gag reflex in the declining weeks of summer. The idea of paying for the mounting debts of euro-zone countries like Spain and Greece has suddenly struck a number of people in Chancellor Angela Merkel's circle as insane, if not criminal. Christian Wulff, the normally quiet and uncontroversial German president, wondered out loud during a keynote speech last week whether the European Central Bank really should be starting a second round of massive debt purchase in the form of Greek and other European ... Read More
Merkel May Have Rescued the Eurozone
February 9, 2011 • By • Leave a Comment
Germany Chancellor Angela Merkel made progress last week toward a long-term rescue of the euro, along with other EU leaders, by imposing some discipline on wobbling European economies that may need German help in the future to keep them from defaulting on sovereign debt. "Merkel," Bloomberg reported on Friday, "is turning Europe's sovereign-debt crisis into an opportunity to reshape the euro region in Germany's image." For years she's been known as "Frau Nein," at least to English-speaking journalists. Lately she's uttered consistent refusals to promise German money for new, direct eurozone ... Read More
Probing the Depths of the ‘Submerged State’
February 8, 2011 • By • Leave a Comment
In 2009, when President Obama negotiated a stimulus bill that included $288 billion in tax cuts, his advisers decided to structure their "Making Work Pay" tax credits so that workers' regular paychecks were a little bit bigger, and the money would flow back into circulation gradually, rather than all at once. They believed it would have a greater economic impact that way. Without running the counterfactual, it's hard to know whether the tax credits had the desired economic impact. But one thing is clear: It was just about the worst-advertised tax cut ever. One year later, just 12 percent of ... Read More
A Brief History of the Dollar
August 11, 2010 • By • Leave a Comment
This year's derby between the euro and the dollar is nothing but an extension of age-old trade relationships across the Atlantic, and as unstable as the last few years have been, it's astonishing how little has changed, essentially, over the last three or four centuries. We think of the U.S. dollar as a single firm currency and the euro as a rickety new experiment in economic union, but the name "dollar" itself is an echo of an earlier union in Europe. The thaler became a general name for money in the Holy Roman Empire after a successful regional coin called the Joachimsthaler was minted ... Read More
