The policy and the institutional options taken by core and peripheral European countries do not appear as the result of too haste political decisions or ill institutional design, but as deliberate choices, method in the madness
The austerity measures proposed by Wisconsin Governor Scott Walker are misguided. Public-sector workers’ compensation is neither the cause, nor can it be the solution to, the state’s financial problems.
The Greekcase of public spendingdeficitistotallydifferentfrom theIrish crisischaracterizedby debtofprivate banks,buttheunfortunatepolicyof the euro-zonehasthe same devastating effect.
OPEC lacks sufficient tools to manage oil, but Saudi Arabia could shift from the position of price taker to that of price maker. Saudi Arabia should sell its oil in the same way that Governments sell their bonds, by auction.
The real question is the extent of collateral damage that a Euroarea-member’s default – in the form of debt restructuring – would cause, in view of the interdependence between banks and “sovereigns” both within countries at risk and across the entire area.
