EZ Crisis A Consensus Narrative

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Today’s situation: EZ Crisis: a long way from recovery The Eurozone Crisis is far from finished… • Lacklustre growth and bleak economic prospects • “Jobless Europe” for the youth • Extremist views and nationalistic tendencies …fragilities and imbalances are still present. • Non-performing banking loans • Feedback loops between banks and the sovereign via debt holdings • Risky interest rate normalization
The causes of the EZ crisis The core reality EZ crisis as a ‘sudden stop’ crisis • Abrupt end of capital flows slow growth increased public debt and deficit public debt crisis EZ Crisis amplifiers • No lender of last resort • No devaluation possibilities • Vicious feedback cycle between banks and government • Predominance of banking financing • Rigid labor and product market
Page 1: EZ Crisis: A Consensus Narrative Th
Page 5 and 6: Building up problems • Sharp drop
Page 7 and 8: Jan-1990 Oct-1990 Jul-1991 Apr-1992
Page 9 and 10: 1995 1996 1997 1998 1999 2000 2001
Page 11 and 12: 2000 2001 2002 2003 2004 2005 2006
Page 13 and 14: Total landing from core countries
Page 15 and 16: Summary of pre-crisis imbalances 19
Page 17 and 18: Sep-2008 Oct-2008 Nov-2008 Dec-2008
Page 19 and 20: Fiscal policy turned pro-cyclical f
Page 21 and 22: May-2010 Jun-2010 Jul-2010 Aug-2010
Page 23 and 24: Proximate causes, and causes of the
Page 25: The End

EZ Crisis A Consensus Narrative

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