Readers Question: What policies could Germany / the EU use to help save the Euro? The Euro has many problems. The most obvious outer problem is rising bond yields and the threat of sovereign debt default. Related to sovereign debt default is a banking default, e.g. from Spanish banks which would cause knock-on effects. But, …
Readers Question: Is the spectre of inflation the only reason the FED doesn’t simply print the US out of its economic troubles? By print, I mean at least print enough to pay down the debt to a manageable level, or create a major business incentive program using printed cash. Certainly, a big fear of the …
Typically, a recession will lead to a negative output gap and lower inflation. However, after the recession is over, the economy can usually bounce back and recover this temporary loss of output. However, this ‘great recession’ is different in that there has been no bounce – only a prolonged recession – suggesting the usual expectations …
We have frequently heard the statement that we are experiencing the worst recession since the 1930s, but data released from the ONS shows that the fall in GDP is actually more prolonged in the current 2008-12 recession than the Great Depression of the 1930s. source: Office of National Statistics (pdf): In terms of human misery …
Readers Question: There just seems to be many paradoxical actions taking place in markets and economies at the moment. How do we explain? Paradoxes of UK economy Low interest rates have not increased spending / economic growth Despite recession, inflation has been above target. Despite recession and depreciation of Pound, current account deficit increased in …
Readers Question: Economics is a social science, it contains graphs, diagrams and statistics to make strong evaluations and at university level it also often seems to have a strong Maths content which allows for even stronger analysis, calculation of events and evidence of theories. So how is it possible that often economic events such as …
Readers Question: The argument in Europe at the moment is whether the ECB should be able to buy bonds (new? old?) directly from governments as well as being able to buy old ones on the open market (“secondary market”?). Is it correct that in either case that the ECB would just the create Euros to …
Readers Question: What on Earth is the point of the Eurozone borrowing money from China when the ECB can print any amount of money it wants any time? Of course the effect of the ECB printing money donating it to indebted Euro countries and/or the banks holding those countries’ bonds is likely to be inflationary …