Using a central
bank as a blunt instrument to force government spending is not a good idea.
When Lagarde was asked
why Europe is either close to a recession, or in recession, she responded that
the problem is U.S. President Donald Trump’s Twitter account, not any of the
policies Europe has pursued.
Lagarde has also
weighed in on so-called green bonds, or debt financing to fight climate change.
She is in favor of using the ECB’s balance sheet to purchase them. A laudable
goal, but a political one nonetheless.
Bloomberg: Macron’s Vision of European Security Is Half-Baked
Bloomberg: Macron’s Vision of European Security Is Half-Baked
His ideas are based
on a flawed long-term view of Russia and a short-term one of the U.S.
Macron sounds bold,
strategic, even prophetic at times — but his geopolitical judgments aren’t
indisputable or even universally attractive. Most of all, they’re unproven.
Waiting seems more attractive at this point than feverishly developing an
expensive, politically iffy project. It’ll take much more than his eloquence to
make Europe’s geopolitical repositioning a reality.
The French
president’s grand talk on migration curbs is less ambitious than it appears.
His lurch into right-wing rhetoric could easily backfire.
The U.K. example is
instructive. Prime Minister David Cameron’s failed promise to cut net yearly
migration to the “tens of thousands” led directly to the Brexit vote. Taking
back control is an alluring promise to voters, but the cost of failure is high.
The race for tech
supremacy between the U.S. and China has driven Europe to look for “data
sovereignty.” It can’t win a head-on battle in this field.
Still, it wouldn’t be
a bad thing if this trend led to France and Germany collaborating more — laying
the groundwork for more ambitious spending — and to Brussels doing what it does
best: setting the rules of engagement for tech companies everywhere. Digital
commissioner Margrethe Vestager is already demanding tougher enforcement of
data protection laws and taking a consistently muscular approach to antitrust
violations by the Silicon Valley and Seattle giants. It’s not sovereignty, but
it’s a start.
ECB forum on central
banking, conference proceedings
Exchange rate
pass-though to export prices is higher in economies which participate more in
global value chains, and that exchange rate pass-through to import prices is
lower in economies whose trading partners participate more in global value
chains. Quantitatively, our estimates
imply that the rise in global value chain participation can account for about
50% of the decline in exchange rate pass-through to import prices since the
mid-1990s.
These factors add up
to a conclusion often voiced by Draghi, who has increasingly called on
governments to undertake fiscal action
The European policy
system is not equipped to address what lies between these two cases. A
recession that is neither particularly mild nor exceptionally severe would
quickly test its limits. Failure to respond would risk reopening socioeconomic
scars and reviving political tensions. Policymakers should concentrate on
possible options beyond the confines of the current framework.
Early in the new millennium,
the EU’s eastward expansion, transatlantic rifts and a mild economic climate
together produced a wave of grandiose claims about the European model’s sunny
future. Books with titles like “The European Dream” and “Why Europe Will Run
the 21st Century” hit the shelves. A convention of grandees drew up a blueprint
for the EU called a Constitution for Europe. But then the blueprint was
rejected at two referendums, economic crisis set in, the euro zone started to
wobble, migration soared and the union ended the decade much less struttingly
than almost anyone had predicted.
On vaikeaa uskoa, että nykyisen rahapolitiikan
mahdolliset kielteiset seuraamukset olisivat keskuspankeissa jääneet
ymmärtämättä tai tiedostamatta […] Melko tavallinen ja mielestäni uskottava näkemys
tästä on, että tietoista päätöstä ei sittenkään ole tehty. Läntiset
keskuspankit, vakuuttuneina osaamisestaan, yksinkertaisesti pitkittivät liikaa
toimenpiteitään finanssikriisin taltuttamiseksi.