21 December 2011 Last updated at 19:00 ETWorld leaders probably spent more time worrying about the eurozone crisis than anything else over the past year.
But as eurozone governments struggle to agree the best way out of the crisis, are they missing what caused it?
Continue reading the main storyContinue reading the main story
- The eurozone has agreed a new "fiscal compact"
- Eurozone leaders have agreed to a tough set of rules - insisted on by Germany - that will limit their governments' "structural" borrowing (that is, excluding any extra borrowing due to a recession) to just 0.5% of their economies' output each year. It will also limit their total borrowing to 3%. These rules are supposed to stop them accumulating too much debt, and make sure there won't be another financial crisis.
- But didn't they already agree to this back in the '90s?
- Hang on a minute. They agreed to exactly the same 3% borrowing limit back in 1997, when the euro was being set up. The "stability and growth pact" was insisted on by German finance minister Theo Waigel (centre of image). What happened?
- So who kept to the rules?
- Italy was the worst offender. It regularly broke the 3% annual borrowing limit. But actually Germany - along with Italy - was the first big country to break the 3% rule. After that, France followed. Of the big economies, only Spain kept its nose clean until the 2008 financial crisis; the Madrid government stayed within the 3% limit every year from the euro's creation in 1999 until 2007. Not only that - of the four, Spain's government also has the smallest debts relative to the size of its economy. Greece, by the way, is in a class of its own. It never stuck to the 3% target, but manipulated its borrowing statistics to look good, which allowed it to get into the euro in the first place. Its waywardness was uncovered two years ago.
- 3/9 Italy
Worst offender- 5/9 Germany
First to break rules- 6/9 France
Offender- 9/9 Spain
Top of the Class- But the markets have other ideas
- So surely Germany, France and Italy should be in trouble with all that reckless borrowing, while Spain should be reaping the rewards of its virtue? Well, no. Actually Germany is the "safe haven" - markets have been willing to lend to it at historically low interest rates since the crisis began. Spain on the other hand is seen by markets as almost as risky as Italy. So what gives?
- So what really caused the crisis?
- There was a big build-up of debts in Spain and Italy before 2008, but it had nothing to do with governments. Instead it was the private sector - companies and mortgage borrowers - who were taking out loans. Interest rates had fallen to unprecedented lows in southern European countries when they joined the euro. And that encouraged a debt-fuelled boom.
- Good news for Germany...
- All that debt helped finance more and more imports by Spain, Italy and even France. Meanwhile, Germany became an export power-house after the eurozone was set up in 1999, selling far more to the rest of the world (including southern Europeans) than it was buying as imports. That meant Germany was earning a lot of surplus cash on its exports. And guess what - most of that cash ended up being lent to southern Europe.
- ...bad news for southern Europe
- But debts are only part of the problem in Italy and Spain. During the boom years, wages rose and rose in the south (and in France). But German unions agreed to hold their wages steady. So Italian and Spanish workers now face a huge competitive price disadvantage. Indeed, this loss of competitiveness is the main reason why southern Europeans have been finding it so much harder to export than Germany.
- ...and a nasty dilemma
- So to recap, government borrowing - which has ballooned since the 2008 global financial crisis - had very little to do with creating the current eurozone crisis in the first place, especially in Spain (Greece's government is the big exception here). So even if governments don't break the borrowing rules this time, that won't necessarily stop a similar crisis from happening all over again. Spain and Italy are now facing nasty recessions, because no-one wants to spend. Companies and mortgage borrowers are too busy repaying their debts to spend more. Exports are uncompetitive. And now governments - whose borrowing has exploded since the 2008 financial crisis savaged their economies - have agreed to drastically cut their spending back as well. But...
- Cut spending...
- ...and you are pretty sure to deepen the recession. That probably means even more unemployment (already over 20% in Spain), which may push wages down to more competitive levels - though history suggests this is very hard to do. Even so, lower wages will just make people's debts even harder to repay, meaning they are likely to cut their own spending even more, or stop repaying their debts. And lower wages may not even lead to a quick rise in exports, if all of your European export markets are in recession too. In any case, you can probably expect more strikes and protests, and more nervousness in financial markets about whether you really will stay in the euro.
- Don't cut spending...
- ...and you risk a financial collapse. The amount you borrow each year has exploded since 2008 due to economic stagnation and high unemployment. But your economy looks to be chronically uncompetitive within the euro. So markets are liable to lose confidence in you - they may fear your economy is simply too weak to support your ballooning debtload. Meanwhile, other European governments may not have enough money to bail you out, and the European Central Bank says its mandate doesn't allow it to. And if they won't lend to you, why would anyone else?
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BRUSSELS - The European Central Bank stepped up pressure on Thursday for a joint guarantee for bank deposits across the euro zone, saying Europe needed new tools to fight bank runs as the bloc's debt crisis drives investors to flee risk. | Video
3:00pm EDT
ISTANBUL - The European Union is drafting new sanctions against Syria and wants other nations to do the same to increase pressure on President Bashar al-Assad to comply with an international peace plan, British Foreign Secretary William Hague said on Thursday.
HANOVER, Germany - Volkswagen will grant workers at its German factories a 4.3 percent pay increase despite difficulties in core western European markets amid the euro zone debt crisis.
11:49am EDT
BERLIN - How far is Germany prepared to go to save the euro zone?
BRUSSELS - Euro zone inflation eased further than expected to its lowest level in more than a year in May, giving the European Central Bank a little more room to lower interest rates amid fears of deep recession across the continent.
10:44am EDT
BRUSSELS - Italy is hugely exposed to the risk of contagion from the debt turmoil in the euro zone, its prime minister said on Thursday, suggesting the European Central Bank might take action to help cool borrowing costs.
9:28am EDT
BRUSSELS - Some euro zone countries which are meant to cut budget deficits below 3 percent of GDP in 2013 may need more time and there is room for a more expansionary policy from the European Central Bank, IMF Deputy Managing Director Nemat Shafik said.
8:53am EDT
- European Union lawmakers approved a draft law on Thursday making it easier to channel funds into start-up companies from next year, inserting a safeguard the venture capital industry fears will make the regime too expensive.
6:44am EDT
BRUSSELS - Euro zone inflation eased by more than expected to its lowest level in more than a year in May, giving the European Central Bank a little more room to lower interest rates to help revive economic growth across the continent.
6:44am EDT
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The circle below shows the gross external, or foreign, debt of some of the main players in the eurozone as well as other big world economies. The arrows show how much money is owed by each country to banks in other nations. The arrows point from the debtor to the creditor and are proportional to the money owed as of the end of June 2011. The colours attributed to countries are a rough guide to how much trouble each economy is in.
ABOUT
Click on a country name to see who they owe
Europe is struggling to find a way out of the eurozone crisis amid mounting debts, stalling growth and widespread market jitters. After Greece, Ireland, and Portugal were forced to seek bail-outs, Italy - approaching an unaffordable cost of borrowing - has been the latest focus of concern.
But, with global financial systems so interconnected, this is not just a eurozone problem and the repercussions extend beyond its borders.
While lending between nations presents little problem during boom years, when a country can no longer handle its debts, those overseas banks and financial institutions that lent it money are exposed to losses. This could not only unsettle the home country of those banks, but could, in turn, spread the troubles across the world.
So, in the tangled web of inter-country lending, who owes what to whom? Click on a country in the circle to find out what they owe to banks in other countries, as well to find out their total foreign debt, including that owed by governments, monetary authorities, banks and companies.
FRANCE
GDP: €1.8 tn Foreign debt: €4.2 tn
€66,508 Foreign debt per person
235% Foreign debt to GDP
87% Govt debt to GDP
Risk Status: MEDIUM
Europe's second biggest economy owes the UK, the US and Germany the most money. However, like in Germany's case, these countries also owe France billions in return. France's problem is that it is greatly exposed to the eurozone's troubled debtors. Its banks hold large amounts of Greek, Italian and Spanish debt. This is causing market turbulence, especially against a backdrop of faltering French growth and low consumer spending.
SPAIN
GDP: €0.7 tn Foreign debt: €1.9 tn
€41,366 Foreign debt per person
284% Foreign debt to GDP
67% Govt debt to GDP
Risk Status: MEDIUM
Spain owes large amounts to Germany and France. However, its number one worry is bailed-out Portugal, which is indebted to it by billions of euros. As the country attempts to get its own debts under control, there are fears the country could be thrown back into recession after November's parliamentary elections. The bursting of a housing and construction boom in 2008 had plunged Spain's economy into a recession deeper than in many other European countries.
PORTUGAL
GDP: €0.2 tn Foreign debt: €0.4 tn
€38,081 Foreign debt per person
251% Foreign debt to GDP
106% Govt debt to GDP
Risk Status: HIGH
Portugal, the third eurozone country to need a bail-out, is in deep recession. It is currently implementing a series of austerity measures as well as planning a series of privatisations to fix its shaky finances and reduce its debt burden. The country is highly indebted to Spain, and its banks are owed 7.5bn euros by Greece.
ITALY
GDP: €1.2 tn Foreign debt: €2 tn
€32,875 Foreign debt per person
163% Foreign debt to GDP
121% Govt debt to GDP
Risk Status: HIGH
Italy has a large amount of debt, but it is a relatively wealthy country compared with Greece and Portugal. However, doubt about Italy's leadership and fears that its debt load could grow more quickly than the Italian economy's capacity to support it have left the markets jittery. France is most exposed to Italian debt.
IRELAND
GDP: €0.2 tn Foreign debt: €1.7 tn
€390,969 Foreign debt per person
1,093% Foreign debt to GDP
109% Govt debt to GDP
Risk Status: HIGH
One of three eurozone countries to so far receive a bail-out, Ireland has introduced a series of tough austerity budgets. Its economy is now showing a modest recovery. After the boom years leading up to 2008, the country fell into recession as a result of the global credit squeeze, which ended the supply of cheap credit that had fuelled the unsustainable growth in its housing market. It shows a very high level of gross foreign debt to GDP because, although it is a small country, it has a large financial sector - including a big overseas presence. The UK is Ireland's biggest creditor.
GREECE
GDP: €0.2 tn Foreign debt: €0.4 tn
€38,073 Foreign debt per person
252% Foreign debt to GDP
166% Govt debt to GDP
Risk Status: HIGH
Greece is heavily indebted to eurozone countries and is one of three eurozone countries to have received a bail-out. Although the Greek economy is small and direct damage of it defaulting on its debts might be absorbed by the eurozone, the big fear is "contagion" - or that a Greek default could trigger a financial catastrophe for other, much bigger economies, such as Italy.
JAPAN
GDP: €4.1 tn Foreign debt: €2 tn
€15,934 Foreign debt per person
50% Foreign debt to GDP
233% Govt debt to GDP
Risk Status: LOW
The world's third-largest economy has the highest public debt level amongst developed economies. However, most of its debt is owed internally, so it is not seen as at risk of default. The global financial crisis, this year's earthquake and tsunami, a strong yen and Europe's debt crisis are clouding its current economic outlook. But the government has pledged to turn the country's annual budget deficit into a surplus by 2020.
GERMANY
GDP: €2.4 tn Foreign debt: €4.2 tn
€50,659 Foreign debt per person
176% Foreign debt to GDP
83% Govt debt to GDP
Risk Status: LOW
The biggest European economy owes France, Italy and the US most money. However, these economies also owe Germany billions in return. Regarding its relationship with the troubled eurozone countries, Germany is exposed to Greek, Irish and Portuguese, but mostly, Spanish debt. If any of these defaults, Germany will be hit. Its economy is slowing, mainly because of the problems plaguing its eurozone partners. And as Europe's industrial powerhouse, any problems in Germany mean more problems for the eurozone, but also for the wider international system.
UK
GDP: €1.7 tn Foreign debt: €7.3 tn
€117,580 Foreign debt per person
436% Foreign debt to GDP
81% Govt debt to GDP
Risk Status: LOW
The UK has very large amounts of overseas debt, of which the biggest component is the banking industry. The high debt to GDP ratio is explained by the UK's active financial sector, where there is a great deal of capital movement. This level of overall external debt is generally not seen as a problem because the UK also holds high-value assets. Having said this, the UK economy remains in the doldrums and the country is highly exposed to Irish as well as Italian and Portuguese debt. The UK in turn owes hundreds of billions to Germany and Spain.
US
GDP: €10.8 tn Foreign debt: €10.9 tn
€35,156 Foreign debt per person
101% Foreign debt to GDP
100% Govt debt to GDP
Risk Status: LOW
Although the US's overseas debt almost equates to its annual GDP, it is still regarded as a safe bet. However, its credit rating has been downgraded. Although Asia - primarily China and Japan - holds the majority of US debt, Europe has the second largest percentage. This means whatever happens in the eurozone will have a deep impact on the US banking system. Within Europe, the UK, Switzerland and France hold the largest amount of US debt, amounting to hundreds of billions of dollars.
European debt crisis: the possible domino effectAs Spain's credit rating is downgraded a day after Standard & Poor's cut its ratings on Greek and Portuguese debt, how far could the eurozone's debt contagion spread?
How do you measure the whole economy in one number? In the first of a series of videos we're doing with Slate, Adam Davidson goes shopping with economist Simon Johnson to find out the answer.
LSESU Austrian Society and LSE European Foreign Policy Unit public lecture
Date: Thursday 10 November 2011
Time: 4-5pm
Venue: NAB.2.04, New Academic Building
Speaker: Dr Michael Spindelegger
Chair: Professor Dimitri VayanosDr Michael Spindelegger is Vice-Chancellor of the Republic of Austria and Federal Minister for European and International Affairs. He graduated from the University of Vienna with a doctorate in law.
This event is part of the LSESU Austrian Society's Global Business and Politics from an Austrian Perspective lecture series.
LSE's European Foreign Policy Unit| (EFPU) based in the International Relations Department acts as a focus for research and teaching on issues relating to the steadily more serious attempts to create a collective European foreign policy since 1970.
Suggested hashtag for this event for Twitter users: #lseeurope
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19 April 2012 Last updated at 06:05 ETThe euro, the dream of many a politician in the years following World War II, was established in Maastricht by the European Union (EU) in 1992.
To join the currency, member states had to qualify by meeting the terms of the treaty in terms of budget deficits, inflation, interest rates and other monetary requirements.
Of EU members at the time, the UK, Sweden and Denmark declined to join the currency.
Since then, there have been many twists and turns for the countries that use the single currency.
On 1 January, the currency officially comes into existence.
Greece joins the euro.
On 1 January, notes and coins are introduced.
Malta and Cyprus join the euro, following Slovenia the previous year.
In December, EU leaders agree on a 200bn-euro stimulus plan to help boost European growth following the global financial crisis.
Slovakia joins the euro.
Estonia, Denmark, Latvia and Lithuania join the Exchange Rate Mechanism to bring their currencies and monetary policy into line with the euro in preparation for joining.
In April, the EU orders France, Spain, the Irish Republic and Greece to reduce their budget deficits - the difference between their spending and tax receipts.
In October, amid much anger towards the previous government over corruption and spending, George Papandreou's Socialists win an emphatic snap general election victory in Greece.
In November, concerns about some EU member states' debts start to grow following the Dubai sovereign debt crisis.
In December, Greece admits that its debts have reached 300bn euros - the highest in modern history.
Greece is burdened with debt amounting to 113% of GDP - nearly double the eurozone limit of 60%. Ratings agencies start to downgrade Greek bank and government debt.
Mr Papandreou insists that his country is "not about to default on its debts".
In January, an EU report condemns "severe irregularities" in Greek accounting procedures. Greece's budget deficit in 2009 is revised upwards to 12.7%, from 3.7%, and more than four times the maximum allowed by EU rules.
The European Central Bank dismisses speculation that Greece will have to leave the EU.
In February, Greece unveils a series of austerity measures aimed at curbing the deficit.
Concern starts to build about all the heavily indebted countries in Europe - Portugal, Ireland, Greece and Spain.
On 11 February, the EU promises to act over Greek debts and tells Greece to make further spending cuts. The austerity plans spark strikes and riots in the streets.
In March, Mr Papandreou continues to insist that no bailout is needed. The euro continues to fall against the dollar and the pound.
The eurozone and IMF agree a safety net of 22bn euros to help Greece - but no loans.
In April, following worsening financial markets and more protests, eurozone countries agree to provide up to 30bn euros in emergency loans.
Greek borrowing costs reach yet further record highs. The EU announces that the Greek deficit is even worse than thought after reviewing its accounts - 13.6% of GDP, not 12.7%.
Finally, on 2 May, the eurozone members and the IMF agree a 110bn-euro bailout package to rescue Greece.
The euro continues to fall and other EU member state debt starts to come under scrutiny, starting with the Republic of Ireland.
In November, the EU and IMF agree to a bailout package to the Irish Republic totalling 85bn euros. The Irish Republic soon passes the toughest budget in the country's history.
Amid growing speculation, the EU denies that Portugal will be next for a bailout.
On 1 January, Estonia joins the euro, taking the number of countries with the single currency to 17.
In February, eurozone finance ministers set up a permanent bailout fund, called the European Stability Mechanism, worth about 500bn euros.
In April, Portugal admits it cannot deal with its finances itself and asks the EU for help.
In May, the eurozone and the IMF approve a 78bn-euro bailout for Portugal.
In June, eurozone ministers say Greece must impose new austerity measures before it gets the next tranche of its loan, without which the country will probably default on its enormous debts.
Talk abounds that Greece will be forced to become the first country to leave the eurozone.
In July, the Greek parliament votes in favour of a fresh round of drastic austerity measures, the EU approves the latest tranche of the Greek loan, worth 12bn euros.
A second bailout for Greece is agreed. The eurozone agrees a comprehensive 109bn-euro ($155bn; £96.3bn) package designed to resolve the Greek crisis and prevent contagion among other European economies.
In August, European Commission President Jose Manuel Barroso warns that the sovereign debt crisis is spreading beyond the periphery of the eurozone.
The yields on government bonds from Spain and Italy rise sharply - and Germany's falls to record lows - as investors demand huge returns to borrow.
On 7 August, the European Central Bank says it will buy Italian and Spanish government bonds to try to bring down their borrowing costs, as concern grows that the debt crisis may spread to the larger economies of Italy and Spain.
The G7 group of countries also says it is "determined to react in a co-ordinated manner," in an attempt to reassure investors in the wake of massive falls on global stock markets.
During September, Spain passes a constititional amendment to add in a "golden rule," keeping future budget deficits to a strict limit.
Italy passes a 50bn-euro austerity budget to balance the budget by 2013 after weeks of haggling in parliament. There is fierce public opposition to the measures - and several key measures were watered down.
The European Commission predicts that economic growth in the eurozone will come "to a virtual standstill" in the second half of 2011, growing just 0.2% and putting more pressure on countries' budgets.
Greek Finance Minister Evangelos Venizelos says his country has been "blackmailed and humiliated" and a "scapegoat" for the EU's incompetence.
On 19 September, Greece holds "productive and substantive" talks with its international supporters, the European Central Bank, European Commission and IMF.
The following day, Italy has its debt rating cut by Standard & Poor's, to A from A+. Italy says the move was influenced by "political considerations".
That same day, in its World Economic Outlook, the IMF cuts growth forecasts and warns that countries are entering a 'dangerous new phase'.
The gloomy mood continues on 22 September, with data showing that growth in the eurozone's private sector shrank for the first time in two years.
The sense of urgency is heightened on 23 October, when IMF head Christine Lagarde urges countries to "act now and act together" to keep the path to economic recovery on track.
On the same day, UK Prime Minister David Cameron calls for swift action on the debt crisis.
The next day US Treasury Secretary Timothy Geithner tells Europe to create a "firewall" around its problems to stop the crisis spreading.
A meeting of finance ministers and central bankers in Washington on 24 September leads to more calls for urgent action, but a lack of concrete proposals sparks further falls in share markets.
After days of intense speculation that Greece will fail to meet its budget cut targets, there are signs of a eurozone rescue plan emerging to write down Greek debt and increase the size of the bloc's bailout fund.
But when, on 28 September, European Union head Jose Manuel Barroso warns that the EU "faces its greatest challenge", there is a widespread view that the latest efforts to thrash out a deal have failed.
The sense that events are spinning out of control are underlined by Foreign Secretary William Hague, who calls the euro a "burning building with no exits".
On 4 October, Eurozone finance ministers delay a decision on giving Greece its next instalment of bailout cash, sending European shares down sharply.
Speculation intensifies that European leaders are working on plans to recapitalise the banking system.
On 6 October the Bank of England injects a further £75bn into the UK economy through quantitative easing, while the European Central Bank unveils emergency loans measures to help banks.
Financial markets are bolstered by news on 8 October that the leaders of Germany and France have reached an accord on measures to help resolve the debt crisis. But without publication of any details, nervousness remains.
Relief in the markets that the authorities will help the banking sector grows on 10 October, when struggling Franco-Belgian bank Dexia receives a huge bailout.
On 10 October, an EU summit on the debt crisis is delayed by a week so that ministers can finalise plans that would allow Greece its next bailout money and bolster debt-laden banks.
On 14 October G20 finance ministers meet in Paris to continue efforts to find a solution to the debt crisis in the eurozone.
On 21 October eurozone finance ministers approve the next, 8bn euro ($11bn; £7bn), tranche of Greek bailout loans, potentially saving the country from default.
On 26 October European leaders reach a "three-pronged" agreement described as vital to solve the region's huge debt crisis.
After marathon talks in Brussels, the leaders say some private banks holding Greek debt have accepted a loss of 50%. Banks must also raise more capital to protect them against losses resulting from any future government defaults.
On 9 December, after another round of talks in Brussels going through much of the night, French President Nicolas Sarkozy announces that eurozone countries and others will press ahead with an inter-governmental treaty enshrining new budgetary rules to tackle the crisis.
Attempts to get all 27 EU countries to agree to treaty changes fail due to the objections of the UK and Hungary. The new accord is to be agreed by March 2012, Mr Sarkozy says.
On 13 January, credit rating agency Standard & Poor's downgrades France and eight other eurozone countries, blaming the failure of eurozone leaders to deal with the debt crisis.
Three days later, the agency also downgrades the EU bailout fund, the European Financial Stability Facility.
Also on 13 January, talks between Greece and its private creditors over a debt write-off deal stall. The deal is necessary if Greece is to receive the bailout funds it needs to repay billions of euros of debt in March. The talks resume on 18 January.
The "fiscal pact" agreed by the EU in December is signed at the end of January. The UK abstains, as does the Czech Republic, but the other 25 members sign up to new rules that make it harder to break budget deficits.
Weeks of negotiations ensue between Greece, private lenders and the "troika" of the European Commission, the European Central Bank and the IMF, as Greece tries to get a debt write-off and make even more spending cuts to get its second bailout.
On 10 February, Greece's coalition government finally agrees to pass the demands made of it by international lenders. This leads to a new round of protests.
But the eurozone effectively casts doubt on the Greeks' figures, saying Athens must find a further 325m euros in budget cuts to get the aid.
On 12 February, Greece passes the unpopular austerity bill in parliament - two months before a general election.
Coalition parties expelled more than 40 deputies for failing to back the bill.
On February 22, a Markit survey reports that the eurozone service sector has shrunk unexpectedly, raising fears of a recession.
The next day the European Commission predicts that the eurozone economy will contract by 0.3% in 2012.
March begins with the news that the eurozone jobless rate has hit a new high.
However, the economic news takes a turn for the better just days later with official figures showing that the eurozone's retail sales increased unexpectedly in January by 0.3%, and the OECD reports its view that the region is showing tentative signs of recovery.
On 13 March, the eurozone finally backs a second Greek bailout of 130bn euros. IMF backing was also required and was later given.
The month ends with a call from the OECD for the eurozone rescue fund to be doubled to 1tn euros. The German chancellor, Angela Merkel says she would favour only a temporary boost to its firepower.
On 12 April, Italian borrowing costs increase in a sign of fresh concerns among investors about the country's ability to reduce its high levels of debt.
In an auction of three-year bonds, Italy pays an interest rate of 3.89%, up from 2.76% in a sale of similar bonds the previous month.
Attention shifted to Spain the next day, with shares hit by worries over the country's economy and the Spanish government's 10-year cost of borrowing rose back towards 6% - a sign of fear over the country's creditworthiness.
On 18 April, the Italian government cut its growth forecast for the economy in 2012. It was previously predicting that the economy would shrink by 0.4%, but is now forecasting a 1.2% contraction.
On 19 April, there was some relief for Spain after it saw strong demand at an auction of its debt, even though some borrowing costs rose.
The 10-year bonds were sold at a yield of 5.743%, up from 5.403% when the bonds were last sold in February.
1 October 2011 Last updated at 20:06 ETA number of ideas are reportedly being discussed to tackle the eurozone debt crisis.
These include a 50% write-down of Greece's government debts, strengthening big European banks that could be hit by any defaults by highly indebted governments, and boosting the size of the eurozone bailout fund, the European Financial Stability Facility (EFSF).
Here, eight economists discuss what they think will happen and what they think needs to happen in the eurozone.
Senior managing director of economics at FTI Consulting and former UK government adviser
Last week's events, with all the market volatility, were a serious wake-up call to all international institutions and to policymakers. I think they've understood it and institutions will be set up in such a way to ensure future crises should be averted.
I think we will see a haircut on Greek bonds, a recapitalisation programme for banks and an increase in the size of the bailout fund - but you need all these things, they need to be part of a package.
Even with that, in a year's time Europe will still be pretty weak because the long-term problems will still be there - low growth and unsustainable debt.
What we have seen for Greece will have to happen elsewhere. Haircuts are inevitable for other countries too.
They have to rethink how you achieve faster growth in Europe. If you don't get back to growth then the debt problems will remain.
The next thing that needs to be looked at seriously is issuing eurobonds. That may well be what we need in the longer term to lead us back to growth.
Director, Centre for European Policy Studies
We believe a market-based approach is needed to reduce Greece's debt.
The EFSF should offer holders of Greek debt an exchange into EFSF paper at the current market price. Banks would be forced in the context of the ongoing stress tests to write down holdings in their banking book and thus have an incentive to accept the offer.
More widely, we argue that the EFSF needs to be restructured.
You cannot just increase its size because if Italy or Spain were to step out as a guarantor, that would leave France, for instance, with a share of 40%, which it could not sustain and would lose its triple-A credit rating.
It cannot work as intended, but if it were re-registered as a bank, which would give it access to potentially unlimited ECB refinancing in case of emergency, the general breakdown in confidence could be stopped while leaving the management of public debt under the supervision of finance ministers.
Professorial research fellow, the European Institute of the London School of Economics. Currently researching EU economic policy, governance and policy co-ordination under European Monetary Union
The one obvious thing leaders should do would be to decide rapidly on a way of moving towards genuine eurobonds.
The Germans, manifestly, are very hostile to the idea, but it is a development that seems to have so many advantages that it ought to be pursued.
The trick will be to find a formula that deals with the "moral hazard" objections by introducing well-judged conditionality.
Economist at Open Europe, an independent think tank campaigning for reform of the EU
Greece obviously needs to restructure. It's looking at write-downs of 50% - that's a necessary step. It finally looks like the eurozone leaders are coming round to that.
But if it's not combined with recapitalising banks and other economic reforms it won't work.
In terms of the write-downs, banks will be able to absorb the hit because they should have been preparing for it for the last year. I think it would be necessary to use the EFSF to help recapitalise these banks and provide a backstop.
At the moment there's no clear pan-European mechanism for dealing with winding down a cross-border bank. I think we need a policy for what happens in this situation, a huge policy that needs to be detailed.
They also have to look at the different needs of the eurozone - for instance, interest rates in Germany would be very different to those in Greece. Those imbalances aren't going to go away.
Senior Economic Adviser, UBS Investment Bank
What I think the Europeans will choose to do is leverage the capital of the EFSF (currently 440bn euros) up by borrowing 5-10 times that from the market. They would then have the capacity to go and buy all of the sickly sovereign bonds that the banks are sitting on and swap them for bonds they themselves will issue.
I don't think it would be successful. In the short run it would probably be a bit of a tonic for bank stock prices and equity markets, but it doesn't do anything to solve the problem of the euro crisis at all.
I think you need a combination of three things.
These are: a restructuring template for Greece's debt with long gross periods - three years for the interest payment and 5-10 years for the principal repayment. That template might then have to be used for other countries.
Then, to stop Greek banks collapsing, you have to support the Greek banking system. And to stop banking contagion spreading to the likes of Italy and Spain, you need a banking recapitalisation programme.
And if the ECB said they were prepared to stand by and buy any amount of Spanish and Italian bonds, then we'd raise three cheers.
Anything that stops short of cleansing the European banking system will not be enough.
Chairman and chief economist, Lombard Street Research
The problem is that the Club Med countries - Greece, Italy, Spain and Portugal - are not competitive. Even if they agree to writing down Greek debts and increasing the EFSF, that will only be successful in postponing the issue for a few more months. It won't stop debt going up.
For the euro to survive the only solution is for the Club Med countries to leave the single currency. I think Ireland could stay in the euro as, although it's banking system is a mess, it is cost competitive - exports make up most of its GDP - so it is possible to turn the economy round quite fast.
Former economist at Merrill Lynch/Bank of America, now chief economist at Berenberg Bank
The probability that we will get a significant write-down of Greek debt as part of an orderly programme, with an immediate recapitalisation of Greek banks, and with further European support for Greece, has risen substantially.
The key question in all this is nothing to do with Greece - but whether upon granting Greece debt relief we can protect Italy from the market panic and prevent contagion.
The risk Greece will default is now above 50%. But Greece is highly likely to stay in the euro come what may.
I would like to see the ECB commit to being the ultimate backstop - if things get really ugly the ECB should buy more government bonds.
Professor of economics at the Graduate Institute in Geneva, specialises in monetary integration, monetary policy and financial crisis
Discussions about the EFSF are irrelevant. It shows policymakers haven't zeroed in on the crisis and what to do about it. The EFSF currently has 440bn euros. The amount we're talking about for Italy and Spain, as well as Greece, Portugal and Ireland could be 3.5 trillion euros.
I think that Greece will inevitably default, and I believe that Italy too will have to default, but I don't see a willingness in policymakers to accept that.
The ECB is the only institution that can stop the crisis. My solution is for the ECB to issue a partial guarantee on the existing public debts of eurozone governments, of say, up to 60% of GDP. It would allow governments to default but would create a backstop.
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Dr Jeffrey M. Chwieroth
Department of International Relations
London School of Economics
Houghton Street
London WC2A 2AE
United KingdomTel: +44 (0) 20 7955 7209
Fax: +44 (0) 20 7955 7446
Email: j.m.chwieroth@lse.ac.ukSecretarial Support
Ciara Durkan
Tel: +44 (0) 20 7955 7560
Email: c.durkan@lse.ac.uk
Featherstone, Kevin
Professor Kevin Featherstone
Department
Position held
Head of the European Institute
Director, and Professor of Contemporary Greek Studies
Experience keywords:
British membership of EU; contemporary Greek public policy; processes of Europeanisation; economic and monetary union; contemporary Greek politics; pension and labour market reform in southern Europe; European Union politicsPolitical scientist specialising in the politics of the European Union and in contemporary Greek politics. My recent publications have covered: the concept and application of 'Europeanisation'; the process leading to the EMU agreement at Maastricht; the domestic consequences of Economic & Monetary Union, especially in southern Europe; the relationship between EU policies and the domestic reform of pensions and labour markets. The latter represent my current research interests on Greece. I have also written on Greece and the EU, parties and elections in Greece, socialist parties in the EU, and US-EU relations.
Countries and regions to which research relates:
Britain; Greece; Europe; Southern EuropeMedia experience:
Radio; TV
The following references are sourced from LSE Research Online|. References that are linked lead to the full text.
Featherstone, Kevin (2011) The Greek sovereign debt crisis and EMU: a failing state in a skewed regime. Journal of common market studies, 49 (2). pp. 193-217. ISSN 1468-5965
Featherstone, Kevin and Papadimitriou, Dimitris and Mamarelis, Argyris and Niarchos, Greorgios (2011) The last Ottomans: the Muslim minority of western Thrace during the axis occupation and the Greek civil war 1941-49. Palgrave Macmillan, Basingstoke, UK. ISBN 9780230232518
Featherstone, Kevin (2009) Britain and the dynamics of Europeanisation. In: Flinders, Matthew and Gamble, Andrew and Hay, Colin and Kenny, Michael, (eds.) The Oxford handbook of British politics. Oxford University Press, Oxford, UK. ISBN 9780199230952
Featherstone, Kevin and Papadimitriou, Dimitris (2008) The limits of Europeanization: reform capacity and policy conflict in Greece. Palgrave Macmillan, Basingstoke, UK. ISBN 9780230007062
Featherstone, Kevin (2008) Greece and EMU: a suitable accommodation? In: Dyson, Kenneth, (ed.) The Euro at ten: Europeanization, power, and convergence. Oxford University Press, Oxford, UK, pp. 165-181. ISBN 9780199208869
Featherstone, Kevin (2008) Country report: Greece. In: Bertelsmann transformation index 2008: political management in international comparison. Bertelsmann Stiftung, Gütersloh, Germany. ISBN 9783892049685
Papadimitriou, Dimitris and Featherstone, Kevin (2007) Between Europeanization and a Greek variety of capitalism: public policy making and structural reform in modern Greece. In:Modern Greek Studies Association Symposium @ 20 (18-21 Oct 2007 : Yale University, New Haven, USA).
Featherstone, Kevin (2007) Can Europe have purposive leadership? In:The European Political Ideal: Cultural Origins and Future Challenges (23 Jul 2007 : European Cultural Centre of Delphi, Delphi, Greece).
Featherstone, Kevin and Furlong, Paul and Quaglia, Lucia (2007) Greece and Italy: is there a Mediterranean 'world' of EMU? In:European States and the Euro: The First Decade (23-24 May 2007 : The British Academy, London, UK).
Featherstone, Kevin and Papadimitriou, Dimitris (2007) Manipulating rules, contesting solutions: Europeanisation and the politics of restructuring Olympic Airways. Government and opposition: an international journal of comparative politics, 42 (1). pp. 46-72. ISSN 1477-7053
Featherstone, Kevin (2006) What have we learnt about Maastricht. In:15th International Conference of the Council of European Studies (30 Mar - 2 Apr 2006 : Chicago, IL, USA).
Featherstone, Kevin and Tinios, Platon (2006) Facing up the Gordian Knot: the political economy of pension reform. In: Petmesidou, Maria and Mossialos, Elias, (eds.) Social policy developments in Greece. Ashgate Publishing, Ltd, Aldershot, pp. 174-193. ISBN 9780754643708
Featherstone, Kevin, (ed.) (2005) Politics and policy in Greece: the challenge of modernisation. Routledge, London. ISBN 9780415376297
Featherstone, Kevin (2005) Introduction: "modernisation" and the structural constraints of Greek politics. In: Featherstone, Kevin, (ed.) Politics and policy in Greece: the challenge of modernisation. Routledge, London, pp. 1-19. ISBN 9780415376297
Featherstone, Kevin (2005) Greece and the Euro: the challenge to governability. In:Enlarging the Euro-Zone: The Euro and the Transformation of East Central Europe - British Academy Conference (7-8 Feb 2005 : Cardiff University, Cardiff, UK).
Featherstone, Kevin (2005) Introduction: 'modernisation' and the structural constraints of Greek politics. West European politics, 28 (2). pp. 223-241. ISSN 1743-9655
Featherstone, Kevin (2005) 'Soft' co-ordination meets 'hard' politics: the European Union and pension reform in Greece. Journal of European public policy, 12 (4). pp. 733-750. ISSN 1350-1763
Featherstone, Kevin (2005) The challenge of modernisation: politics and policy in Greece [special issue]. West European politics, 28 (2). ISSN 1743-9655
Featherstone, Kevin (2004) The political dynamics of external empowerment: the emergence of EMU and the challenge to the European social model. In:Conference of Europeanists (11-13 Mar 2004 : Chicago, USA).
Featherstone, Kevin (2004) Still a "weak state"? Europeanization and structural reform in Greece. Kampos: Cambridge papers in modern Greek., 12 ISSN 1356-5109
Featherstone, Kevin (2004) The political dynamics of external empowerment: the emergence of EMU and the challenge to the European social model. In: Martin, Andrew and Ross, George, (eds.) Euros and Europeans: monetary integration and the European model of society. Cambridge University Press, Cambridge, pp. 226-247. ISBN 9780521835701
Featherstone, Kevin (2003) Greece and EMU: between external empowerment and domestic vulnerability. Journal of common market studies, 41 (5). pp. 923-940. ISSN 0021-9886
Featherstone, Kevin (2003) The politics of pension reform in Greece: modernization defeated by gridlock. In:Conference of the Modern Greek Studies Association (16-18 Oct 2003 : Toronto, Canada).
Featherstone, Kevin and Papadimitriou, Dimitris (2003) When do prisoners escape? The limits of consensus-building and labour market reform in Greece. In:Eighth Biennial International Conference of the European Union Studies Association (27-29 Mar 2003 : Nashville, USA).
Featherstone, Kevin (2003) Introduction: in the name of "Europe". In: Featherstone, Kevin and Radaelli, Claudio M., (eds.) The politics of Europeanisation. Oxford University Press, Oxford, UK, pp. 3-26. ISBN 0199252084
Featherstone, Kevin and Radaelli, Claudio M. (2003) A conversant research agenda. In: Featherstone, Kevin and Radaelli, Claudio M., (eds.) The politics of Europeanisation. Oxford University Press, Oxford, UK, pp. 331-341. ISBN 0199252084
Featherstone, Kevin and Radaelli, Claudio M., (eds.) (2003) The politics of Europeanization. Oxford University Press, Oxford, UK. ISBN 9780199252091
Featherstone, Kevin (2002) Greece and the European Union: the limits of Europeanization. In:Beyond the Greek Paradox: Greece in the Era of Globalization (6-7 Dec 2002 : Harvard University, Boston, USA).
Featherstone, Kevin (2002) Europeanization in theory and practice. In: Davidson, E. and Eriksson, A. and Hallenberg, J., (eds.) Europeanization of security and defence policy. Swedish National Defence College, Stockholm, Sweden.
Featherstone, Kevin and Kazamias, George (2001) Introduction: southern Europe and the process of "Europeanization". In: Featherstone, Kevin and Kazamias, George, (eds.) Europeanization and the southern periphery. Frank Cass, London, pp. 1-24. ISBN 0714650870
Featherstone, Kevin (2001) Cyprus and the onset of Europeanization: strategic usage, structural transformation and institutional adaptation. In: Featherstone, Kevin and Kazamias, George, (eds.) Europeanization and the southern periphery. Frank Cass, London, pp. 141-164. ISBN 0714650870
Featherstone, Kevin and Kazamias, George, (eds.) (2001) Europeanization and the southern periphery. Frank Cass, London. ISBN 0714650870
Featherstone, Kevin and Kazamias, Georgios and Papadimitriou, Dimitris (2001) The limits of external empowerment: EMU, technocracy and reform of the Greek pension system. Political studies, 49 (3). pp. 462-480. ISSN 0032-3217
Featherstone, Kevin and Kazamias, George (2000) Introduction: southern Europe and the process of 'Europeanization'. South European society & politics, 5 (2). pp. 1-24. ISSN 1360-8746
Featherstone, Kevin (2000) Cyprus and the onset of Europeanization: strategic usage, structural transformation and institutional adaptation. South European society & politics, 5 (2). pp. 141-164. ISSN 1360-8746
Featherstone, Kevin and Kazamias, Georgios and Papadimitriou, Dimitris (2000) Greece and the negotiation of economic and monetary union: preferences, strategies, and institutions. Journal of modern Greek studies, 18 (2). pp. 393-414. ISSN 0738-1727
Featherstone, Kevin (1999) The political dynamics of economic and monetary union. In: Cram, Laura and Dinan, Desmond and Nugent, Neill, (eds.) Developments in the European Union. Macmillan, London, UK, pp. 311-329. ISBN 9780333736326
Featherstone, Kevin (1999) The British Labour Party from Kinnock to Blair: Europeanism and Europeanization. In:Sixth Biennial International Conference of the European Community Studies Association (2-5 June 1999 : Pittsburgh, USA).
Featherstone, Kevin (1999) Citizenship, participation and legitimacy in the European Union. In: Campbell, David and Lewis, N. Douglas, (eds.) Promoting participation: law or politics?. Routledge, London, UK, pp. 157-174. ISBN 9781859414835
Featherstone, Kevin and Dyson, Kenneth (1999) The road to Maastricht: negotiating economic and monetary union. Oxford University Press, Oxford. ISBN 9780198280774
Featherstone, Kevin (1998) The governance of EMU: monetary power and political isolation. In:Workshop on EMU and the European Model of Society (December 1998 : Brandeis University, Waltham, USA).
Featherstone, Kevin (1998) The politics of economic and monetary union. In: Dinan, Desmond, (ed.) Encyclopedia of the European Union. Macmillan, Basingstoke, UK, pp. 113-115. ISBN 9780333712627
Featherstone, Kevin (1998) Cyprus. In: Dinan, Desmond, (ed.) Encyclopedia of the European Union. Macmillan, Basingstoke, UK, pp. 143-147. ISBN 9780333712627
Featherstone, Kevin (1998) 'Europeanization' and the centre periphery: the case of Greece in the 1990s. South European society & politics, 3 (1). pp. 23-39. ISSN 1360-8746
Featherstone, Kevin (1998) The Major Government and EMU: an analysis of a strategic failure. In:University Association for Contemporary European Studies 28th Annual Conference (5-7 Jan 1998 : University of Leicester, Leicester, UK).
Featherstone, Kevin (1998) Explaining the 'micro-history' of EMU: strategic, cognitive and institutionalist dimensions. In:Center for European Studies (Dec 1998 : Harvard University, USA).
Featherstone, Kevin (1998) Greece and the EU in the 1990s: the challenge to the domestic state. Byzantine and modern Greek studies, 22 pp. 121-135. ISSN 0307-0131
Dyson, Kenneth and Featherstone, Kevin and Michalopoulos, George (1998) Strapped to the mast: EU central bankers between global financial markets and regional integration. In: Goldman, William D. and Underhill, Geoffrey R., (eds.) Regionalism and global economic integration: Europe, Asia and the Americas. Routledge, London, pp. 174-196. ISBN 9780203274576
Featherstone, Kevin (1997) The British Government and EMU: retrospect and prospects. In:Lothian Foundation Conference on the British Presidency of the EU (December 1997 : London, UK).
Featherstone, Kevin (1997) Europe on course for a single currency: the challenge for the Blair Government. Credit management, July 1 ISSN 0265-2099
Dyson, Kenneth and Featherstone, Kevin (1997) Jacques Delors and the relaunch of economic and monetary union: a study of strategic calculation, brokerage and cognitive leadership. In:Fifth Biennial International Conference of the European Community Studies Association (29 May - 1 June 1997 : Seattle, USA).
Featherstone, Kevin (1997) Greece and the EU in the 1990s: the challenge to the domestic state. In:Conference on Greece and the EU (May 1997 : University of Birmingham, Birmingham, UK).
Featherstone, Kevin and Kazamias, George (1997) In the absence of charisma: the Greek elections of September 1996. West European politics, 20 (2). pp. 157-164. ISSN 1743-9655
Featherstone, Kevin (1997) Britain and EMU: an analysis of a strategic failure. In:UACES Conference on EMU (March 1997 : University of Leeds, Leeds, UK).
Featherstone, Kevin and Kern, D. and Davies, S. and Staples, R. A. V. (1997) A single currency - good for Europe? Good for Britain?. RSA journal, 145 ISSN 0958-0433
Dyson, Kenneth and Featherstone, Kevin (1996) EMU and economic governance in Germany. German politics, 5 (3). pp. 325-355. ISSN 0964-4008
Featherstone, Kevin (1996) Cyprus and a multispeed Europe: the politics of differentiation. In:Conference on Cyprus in the EU (October 1996 : Hellenic Centre/LSE, London, UK).
Dyson, Kenneth and Featherstone, Kevin (1996) Italy and EMU as a 'Vincolo Esterno': empowering the technocrats, transforming the state. South European society & politics, 1 (2). pp. 272-299. ISSN 1360-8746
Featherstone, Kevin (1996) Italy and EMU: a fear of a multi-speed process. In:University Association for Contemporary European Studies 26th annual conference (May 1996).
Featherstone, Kevin (1996) In the absence of boldness: Britain and Cyprus in the 1990s. Analysis of current events, 7 (9). ISSN 1061-5911
Featherstone, Kevin (1996) Britain and EMU: just say 'no'? In:Political Studies Association Annual Conference (April 1996 : Glasgow, UK).
Featherstone, Kevin and Dyson, Kenneth (1996) Interlocking core executives: explaining the negotiation of economic and monetary union. In:24th European Consortium for Political Research - Joint Session of Workshops (April 1996 : Oslo, Norway).
Featherstone, Kevin (1996) Greece, Britain and the EU. In:Private seminar (April 1996 : Foreign & Commonwealth Office).
Verney, Susannah and Featherstone, Kevin (1996) Greece. In: Lodge, Juliet, (ed.) The 1994 elections to the European Parliament. Pinter, London, UK, pp. 107-121. ISBN 1855672804
Featherstone, Kevin and Ginsberg, Roy H. (1996) The United States and the European Union in the 1990s: partners in transition. Macmillan Press Ltd, London. ISBN 9780333650182
Featherstone, Kevin and Ifantis, Kostas, (eds.) (1996) Greece in a changing Europe: between European integration and Balkan disintegration? Manchester University Press, Manchester. ISBN 0719047668
Dyson, Kenneth and Featherstone, Kevin and Michalopoulos, George (1995) Strapped to the mast: EC central bankers between global financial markets and regional integration. Journal of European public policy, 2 (3). pp. 465-487. ISSN 1350-1763
Featherstone, Kevin (1995) Cyprus and the European Union: what kind of membership? The Cyprus review, 7 (1). pp. 69-76. ISSN 1015-2881
Featherstone, Kevin and Dyson, Kenneth (1995) Rescue of transformation of EU States? Bargaining models and EMU. In:European Consortium for Political Research Joint Workshops (27 Apr - 2 May 1995 : Bordeaux, France).
Featherstone, Kevin (1995) The power of the vote: lessons from Modern Greece. ELIAMEP: Hellenic Foundation for Foreign Policy and European Studies, Athens, Greece
Featherstone, Kevin (1995) EC central bankers, the Maastricht Treaty and global financial markets. In: Mayes, David G., (ed.) The evolution of rules for a single European Market: proceedings from the COST A7 workshop in Exeter, UK: 8 to 11 September 1994. EUR-OP, Luxembourg, pp. 296-329. ISBN 9282752933
Featherstone, Kevin and Yannopoulos, George N. (1995) The European Community and Greece: integration and the challenge to centralism. In: Jones, Barry and Keating, Michael, (eds.) The European Union and the regions. Clarendon Press, Oxford, pp. 249-268. ISBN 019827999X
Featherstone, Kevin (1994) Jean Monnet and the `democratic deficit' in the European Union. Journal of common market studies, 32 (2). pp. 149-170. ISSN 0021-9886
Featherstone, Kevin (1994) Introduction. In:Greece in a changing Europe: opportunities and constraints (June 1994 : London School of Economics, London, UK).
Featherstone, Kevin (1994) The Greek election of 1993: backwards or forwards? West European politics, 17 (2). pp. 204-211. ISSN 1743-9655
Featherstone, Kevin (1994) Political parties. In: Kazakos, Panos V. and Ioakimidis, Panayotis C., (eds.) Greece and EC membership evaluated. Pinter, London, UK, pp. 154-165. ISBN 0312121873
Featherstone, Kevin (1994) The challenge of liberalization: parties and the state in Greece after the 1993 elections. Democratization, 1 (2). pp. 280-294. ISSN 1351-0347
Featherstone, Kevin (1993) Jean Monnet and the democratic deficit in the EC. In:Political Studies Association Annual Conference (May 1993 : Leicester, UK).
Featherstone, Kevin (1993) The EC and the USA in the 1990s. Working papers, 4. Uniwersytet Ekonomiczny w Poznaniu, Poznan, Poland
Featherstone, Kevin (1993) The EC and the US: managing interdependence. In: Lodge, Juliet, (ed.) The European Community and the challenge of the future. Pinter, London, UK, pp. 271-282. ISBN 0312099789
Featherstone, Kevin and Ginsberg, Roy H. (1993) The United States and the European Union in the 1990s: partners in transition. St. Martin's Press, London. ISBN 9780333523469
Featherstone, Kevin and Dyson, Kenneth (1992) Who's ready? Research report [European Briefing Unit]. Horton Publishing, Bradford, UK
Featherstone, Kevin (1992) The EC and the Baltic States. Baltic briefing, 1 ISSN 0964-640X
Featherstone, Kevin (1991) The United States and the EC in the 1990s. In:Second Biennial International Conference of the European Community Studies Association (22-24 May 1991 : Virginia, USA).
Featherstone, Kevin (1991) 1992: the European challenge for U.S. business: issues and interests. Economic development quarterly, 5 (2). pp. 104-113. ISSN 0891-2424
Featherstone, Kevin and Hiden, John (1991) East meets West: policies for a common European home. Fabian Society, London, UK
Featherstone, Kevin (1991) Greece and the Single European Market: integration and liberalization. In:Modern Greek Studies Association Symposium (1991 : University of Florida, Gainesville, USA).
Featherstone, Kevin (1990) Electoral change and socialist party responses in Southern Europe. In:Political Studies Association Annual Conference (April 1990).
Featherstone, Kevin (1990) The 'party-state' in Greece and the fall of Papandreou. West European politics, 13 (1). pp. 101-115. ISSN 1743-9655
Featherstone, Kevin (1990) Political parties and democratic consolidation in Greece. In: Pridham, Geoffrey, (ed.) Securing democracy: political parties and democratic consolidation in Southern Europe. Routledge, London, UK, pp. 179-202. ISBN 9780415023269
Featherstone, Kevin and Verney, Susannah (1990) Greece. In: Lodge, Juliet, (ed.) The 1989 election of the European Parliament. Macmillan Press Ltd, London, pp. 90-106. ISBN 0333493621
Featherstone, Kevin (1990) The successful manager’s guide to 1992: working in the new Europe. Fontana, London, UK. ISBN 9780006375203
Featherstone, Kevin (1989) European internal market policy. Routledge, London, UK. ISBN 9780415038270
Featherstone, Kevin (1989) The Greek EC Presidency in retrospect. In:UACES Conference (May1989 : Centre for Mediterranean Studies, Bristol University, Bristol, UK).
Featherstone, Kevin (1989) Socialist parties and '1992'. In:Political Studies Association Conference (April 1989).
Featherstone, Kevin (1989) United States-European Community relations: an empirical inquiry focussing on the behaviour of national actors. In:Convention of the International Studies Association (March-April 1989 : London).
Featherstone, Kevin (1989) The Mediterranean challenge: cohesion and external preferences. In: Lodge, Juliet, (ed.) The European Community and the challenge of the future. Pinter, London, UK, pp. 186-201. ISBN 0861877241
Featherstone, Kevin (1989) Socialist parties in southern Europe and the enlarged European Community. In: Gallagher, Tom and Williams, Allan M., (eds.) Southern European socialism: parties, elections and the challenge of government. Manchester University Press, Manchester, UK, pp. 217-246. ISBN 0719025001
Featherstone, Kevin (1989) The European community and the Mediterranean: perspectives on the 1990s. In: Lodge, Juliet, (ed.) The European Community and the challenge of the future. Pinter, London, UK, pp. 186-201. ISBN 9780861877249
Featherstone, Kevin (1988) Socialist parties and European integration: a comparative history. Manchester University Press, Manchester. ISBN 9780719026737
Featherstone, Kevin (1987) Southern European socialist parties and the European Community. In:Conference, Centre for Mediterranean Studies, Bristol University (Sept 1987 : Bristol, UK).
Featherstone, Kevin and Katsoudas, Dimitrios K., (eds.) (1987) Political change in Greece: before and after the colonels. Croom Helm, London. ISBN 0709910916
Featherstone, Kevin (1986) Socialist parties and European integration: variations on a common theme. In: Paterson, William E. and Thomas, Alastair H., (eds.) The future of social democracy: problems and prospects of social democratic parties in Western Europe. Clarendon Press, Oxford, UK, pp. 242-260. ISBN 0198761694
Featherstone, Kevin (1986) Greece. In: Lodge, Juliet, (ed.) Direct elections to the European Parliament 1984. Macmillan Press Ltd, London, pp. 117-137. ISBN 0333345274
Featherstone, Kevin and Katsoudas, Dimitrios K. (1985) Change and continuity in Greek voting behaviour. European journal of political research, 13 (1). pp. 27-40. ISSN 0304-4130
Sonntag, Niels and Featherstone, Kevin (1984) Looking towards the 1984 European elections: problems of political integration. Journal of common market studies, 22 (3). pp. 269-282. ISSN 0021-9886
Featherstone, Kevin (1984) Looking towards the 1984 European elections in Greece. In:European Consortium for Political Research Workshop (1984 : Salzburg, Austria).
Featherstone, Kevin (1983) The Greek socialists in power. West European politics, 6 (3). pp. 237-250. ISSN 1743-9655
Featherstone, Kevin (1983) What has happened to the European Community? Changing institutional relations in the European Community. In:24th Annual Convention of the International Studies Association (1983 : Mexico City, Mexico).
Featherstone, Kevin (1983) Socialists and European integration: changing approaches to a developing process. In:Political Studies Association Conference (1983 : University of Newcastle, Newcastle, UK).
Featherstone, Kevin (1982) Elections and parties in Greece. Government and opposition, 17 (2). pp. 180-194. ISSN 1477-7053
Featherstone, Kevin (1982) Recent changes in the Labour Party's constitution. In: Robins, Lynton, (ed.) Topics in British politics. Politics Association, London, pp. 49-62. ISBN 0950339490
Bound, Joy and Featherstone, Kevin (1982) The French Left and the European Community. In: Bell, David S., (ed.) Contemporary French political parties. Croom Helm, London, UK, pp. 165-189. ISBN 0709906331
Featherstone, Kevin (1982) Elite interviewing amongst Western European parliamentarians: some reflections from experience. In:European Consortium for Political Research Workshop (1982 : Aarhus, Denmark).
Featherstone, Kevin (1982) Left-wing opposition to the European Community in Britain, France and Greece. In:University Association for Contemporary European Studies Conference (Sept 1982 : University of Edinburgh, Edinburgh, UK).
Featherstone, Kevin (1981) Socialists and European integration: the attitudes of British Labour members of parliament. European journal of political research, 9 (4). pp. 407-419. ISSN 0304-4130
Featherstone, Kevin (1981) The British Labour Party: nationalism and the EEC. Contemporary review, 238 (1380). ISSN 0010-7565
Featherstone, Kevin (1979) Labour in Europe: the work of a National Party delegation to the European Parliament. In: Herman, Valentine and van Schendelen, Rinus, (eds.) The European Parliament and the National Parliaments. Saxon House, Farnborough, UK, pp. 81-110. ISBN 0566002515
Featherstone, Kevin and Hearl, D. and Sargent, J. (1978) Career perspectives of members of the European Parliament. In:Political Studies Association Conference (1978 : Warwick, UK).
Featherstone, Kevin (1978) The Labour Party in the European Parliament. In:European Consortium for Political Research Workshop (1978 : Grenoble, France).
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European leaders are dealing with growing debt problems that are rattling investors worldwide. Here is a visual guide to the crisis.
Arrows show imbalances of debt exposure between borrowers in one country and banks in another; arrows point from debtors to their bank creditors. Arrow widths are proportional to the balance of money owed. For example, French borrowers owe Italian banks $50.6 billion; Italian borrowers owe French banks $416.4 billion. The difference — their imbalance — shows France's banking system more exposed to Italian debtors by about $365.8 billion.
The risk to countries’ debts and economies is indicated by color:
More worrisome
Greece amassed a huge debt that it has scant hope of repaying. A chaotic Greek default could hurt all European banks and pension funds that have extended Greece credit and cause a wider bank panic. A financial firewall might halt contagion by backstopping the credit of four other shaky nations — Ireland, Portugal, Spain and Italy.
If there is no firewall or if it is inadequate, it would be easy to imagine a run on banks. The euro zone’s single currency makes it easy to shift money across borders from risky economies to safer ones. That and the lack of central banks in each country -- those went away in 1999 with the arrival of the euro — make the euro zone “the ultimate contagion machine,” says Kenneth Rogoff, a Harvard economist.
If no preventative measures are taken, a chain of events like this could unfold: In reaction to a Greek collapse, investors become worried about their exposure to other risks in the region. Borrowing costs rise for Ireland, Italy, Portugal and Spain, adding to their debt loads.
Italy may not be able to protect its banks if there is a loss of confidence. French banks, burdened with all manner of Italian debt, could totter. Money could flee to safer countries like Germany in a matter of hours.
Losses could extend to American banks, which have large exposures to debt in France and Italy. On top of this, American exports to the European Union — collectively the biggest American trading partner — could suffer if the crisis slows European growth and causes the euro to depreciate against the dollar. Exposure to French banks could lead to other losses beyond the Continent.
Getting to grips with the long term implications of the sovereign debt debacle unfolding in the United States Congress involves understanding a lot of “d” words. Here’s a quick cheat sheet to help get you up to speed. The US government runs a budget deficit because each year it spends more than it raises in tax revenue. To fund this deficit, it must go into debt. Congress imposes a limit on how much the government can borrow. If Congress refuses to increase this debt ceiling by midnight next Tuesday, the US government will find itself with insufficient funds to meet regular payments to social security recipients, veterans, et cetera and will most likely default on its interest payments on debt.
This would provoke a downgrade of the nation’s AAA credit rating by rating agencies, which would almost certainly lead to a loss of business confidence and a double-dip recession in the US, and perhaps the world. And that is dumb.
So, has Uncle Sam finally lost his marbles? It does appear the snowy-haired symbol of stern-faced stability has descended into senility, spending more than he earns and not paying his debts. It is a far cry from America’s role over the past half century as the world’s economic superpower.
Indeed, after the dust has settled on next week’s potential default and subsequent credit downgrade, the long run legacy of this bout of Congressional insanity will likely be to accelerate the US greenback’s demise as the world’s reserve currency.
To understand why, you have to go back to fundamentals, about the role of financial markets and the role of the US in them. The financial market is, after all, just a marketplace where some people come to park money and others come to borrow it to do other stuff they want to do. Investors come in search of a safe place to put their money and in the hope of earning a return above inflation. Borrowers just want cash as cheaply as they can get it. The haggling that takes place between investors and borrowers determines the rate of interest one will charge the other.
For many decades, the safest place for investors to park their money has been US Treasury bonds. Bonds are just contracts which stipulate that, in return for an investor’s money, a borrower, such as the US government, will pay a rate of return each year – a “yield” – and eventually give the original sum of money back at some agreed point in the future.
Investors have valued the stability offered by these US Treasury bonds – issued by the world’s most powerful democratic government – so highly that they have been, and still are, prepared to accept an annual return of just 3 per cent to park their money in them, compared to the 5 per cent investors demand from the Australian government.
But this entire system is built on trust – trust from investors that they will be paid a steady rate of return on their money, and, eventually, get it back.
Shenanigans in the US Congress threaten to throw this entire system into doubt. It is hard to overstate the potentially dire consequences that could flow from this.
Worst case scenario, the US government defaults unexpectedly next Tuesday, spooking financial market participants who largely expect Congress will cobble together a last minute deal to increase the debt ceiling. A default could see investors suddenly lose faith in financial markets, withdraw their funds altogether or refuse to lend them at anything but exorbitant rates. Businesses the world over would be starved of funds to do the things they want to do, including employing the workers they need to do it. Economies would shrink, unemployment would skyrocket.
If you think that sounds far-fetched, it’s exactly what happened the day the US investment bank Lehman Brothers collapsed in September 2008.
Most investors doubt things will get to this stage this time around, believing that if Congress fails to pass a last minute deal to increase the debt ceiling, the US President, Barack Obama, will enact powers to unilaterally increase it, or, failing that, issue orders giving priority to interest payments over other payments, such as social security cheques.
But a growing number of economists think the US government will lose its gold-plated AAA credit rating anyway, thanks to the complete lack of a credible plan to bring divergent revenue and spending growth paths back into line.
A lower credit rating would mean the US government would have to pay investors a higher rate of interest on its borrowings.
How much higher is unclear. But any increase would add to the ballooning interest bill the US has already racked up on its debts.
US Treasury bonds have traditionally served as a safe-haven for investors in times of economic uncertainty. But what happens when what investors are trying to hide from is the US itself?
The Australian dollar broke $US1.10 this week in part because investors have already begun the search for alternative safe-havens to US Treasury bonds. (Foreigners can only buy Australian bonds with Australian dollars, so when demand for Australian bonds rises, so too does the demand for Australian dollars, pushing up the price). The escape path towards another traditional safehaven, gold, is already well worn, with gold striking another record of $US1625 an ounce.
Make no mistake; investors, including private banks and central banks, are still buying and holding a lot of US government debt, about $US11 trillion all up. But the scale of the stupidity gripping US Congress is hard to ignore.
The Chinese government has for some time called for a new international currency to replace the dollar, offering the renminbi in its place. As investors watch the disarray unfolding in Congress, they could be forgiven for preferring the strong-armed embrace of a single party state.
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DEBTOCRACY // ΧΡΕΟΚΡΑΤΙΑ
For the first time in Greece, a documentary produced by the audience. “Debtocracy” seeks the causes of the debt crisis and proposes solutions, sidelined by the government and the dominant media. The documentary is distributed online under creative commons licence since April 6, 2011, subtitled in six languages.
Directors/Writers Katerina Kitidi
Aris Chatzistefanou
Scientific Research Leonidas Vatikiotis Animation Magda Plevraki
Sokratis GaliatsakosMusic
Giannis Agelakas
Ermis Georgiadis
Aris RSNEdit Aris Triantafillou Camera Aris Papastefanou
Julia ReineckeColoring Thanos Tsantas PR Michalis Alimanis Contributors Aggeliki Gaidatzi
Fani Gaidatzi
Ioulia Kileri
Margarita TsomouProduction Costas Efimeros
2011 - BitsnBytes.gr
Department of Economics public lecture
Date: Wednesday 26 October 2011
Time: 5-6pm
Venue: Sheikh Zayed Theatre, New Academic Building
Speaker: Nemat Shafik
Chair: Professor George GaskellNemat Shafik is the Deputy Managing Director of the International Monetary Fund, a position she has held since April 2011.
Prior to this Nemat was Permanent Secretary of the UK Department for International Development (DFID). She was chief executive of the department responsible for all UK development efforts including a bilateral aid programme in over 100 countries, multilateral policies and financing for the United Nations, European Union and international financial institutions, and overall development policy and research. Before her appointment as Permanent Secretary, she was Director General for Country Programmes where she was responsible for DFID's programmes across Africa, the Middle East, Asia, Latin America, and Eastern Europe.
Nemat Shafik was the youngest ever Vice President at the World Bank where she was responsible for a private sector and infrastructure portfolio of investments worth about $50 billion. She led the Bank's work on energy, water, transport and urban sectors, private sector development as well as infrastructure economics and finance. Prior to this, she held a number of appointments at the World Bank working on macroeconomic and structural reform issues in the Middle East and North Africa, in Central Europe, on the environment, and on international economic issues including global economic modeling and forecasting.
She has held a number of academic appointments at the Wharton Business School of the University of Pennsylvania and the Economics Department at Georgetown University. Ms Shafik attained her BA in Economics and Politics from the University of Massachusetts-Amherst and her MSc in Economics from the London School of Economics and Political Science. She also holds a DPhil in Economics from St. Antony's College, Oxford University. She has authored, edited, and co-authored a number of books, including Prospects for the Middle East and North African Economies: from Boom to Bust and Back?, Challenges Facing Middle Eastern and North African Countries: Alternative Futures, and Reviving Private Investment in Developing Countries. She has also written articles for a number of publications, including Oxford Economic Papers, Colombia Journal of World Business, The Middle East Journal, Journal of African Finance and Economic Development, World Development, and the Journal of Development Economics. She was named "Woman of the Year" for Global Leadership and Global Diversity in 2009.
Suggested hashtag for this event for Twitter users: #lseeconomy
Slides
A copy of Nemat Shafik's powerpoint presentation is available to download. Download The World Economy: How did we get here and where are we going? (pdf)|
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A podcast of this event is available to download from the LSE Public Lectures and Events: podcasts and videos channel|.
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