Greece and Europe: Is Europe holding up its end of the bargain? | Ben Bernacke – Brookings Institution

This is a really interesting article, by Ben Bernancke, former chairman of the Fed, published by think-tank Brookings Institution. Check it out!

via Greece and Europe: Is Europe holding up its end of the bargain? | Brookings Institution.

Bernancke contrasts the Eurozone’s recovery with the US since the financial crisis of 2008. He shows graphically that Europe has been very disappointing in contrast to the US. He highlights three factors:

  1. Political constraints on the ECB (largely from Germany in my view)
  2. Excessively conservative fiscal policy, especially in Germany; and
  3. Delays in introducing effective stress tests for European banks (the most exposed banks were in France & Germany).

In his view, structural reform is of limited value, especially with so much unemployment and weak demand.

He offers two excellent proposals:

1. Linking Greece’s fiscal constraints to overall European growth, and

2. Broadening the scope of the Stability Growth Pact (which deals with fiscal deficits) to include sustained trade imbalances/

On balance, the article questions Germany’s economic policy and effectively holds Germany responsible for the current state of the Eurozone.

The article is very easy to read and makes a lot of sense.

Thoughts?

Auditors unaware if “Youth Guarantee” has provided a single job yet | EurActiv

This is a worrying although not entirely surprising story reported by EurAct.

via Auditors unaware if “Youth Guarantee” has provided a single job yet | EurActiv.

Personally, I have been suspicious of some of the European Commission’s initiatives for some time – with big marketing budgets and little in demonstrable results.

For me this provides evidence to cut back the Brussels bureaucracy.

I’m not a politician but the solution to youth unemployment with more attractive policy options seems clearly visible.

Firstly, provide a massive fiscal stimulus, especially for capital spending.

Secondly, provide large tax incentives for training, re-skilling and languages.

Thirdly, let the unemployed do a form of ‘national service’, where they can learn new skills.

Thoughts?