Category: European Union

The EU Poverty Bar is Moving Higher


Brexit caps off a turbulent decade for the EU. Many in the Eurozone will be hoping that it does not cause further economic turmoil, as it is becoming increasingly clear that the financial crisis of 2008-09 led to a substantial increase in poverty across the continent.

Not only did poverty intensify within those nations that were hardest hit during the crisis and required bailouts, but there has also been a dramatic change in the geography and types of poverty in Europe over the last decade.

The EU Crisis Prevention Rules Probably Need a Rethink


The European Union, still nursing wounds from its crisis over the euro and “Grexit,” is facing a much more severe threat that strikes at the very heart of the EU’s legitimacy. In addition, the problem concerns the very measures put in place to resolve the earlier crisis, which nearly led to a Greece exit from the Eurozone.

Europe Suffers Loss of Confidence on Brexit Result


The European Union’s collective credit rating was downgraded as mounting fears that the union will break up.  Credit rating agency Standard and Poor’s, which maintains credit ratings on companies and countries, slashed the EU’s credit rating to AA. It fears that the EU may lose more members in the future.

Over There


The Chair of the Federal Reserve testifies before Congress on Tuesday and Wednesday.  Given the recent FOMC meeting and Yellen’s press conference, it is unlikely new ground will be broken. It is difficult for the market to price out a July hike more than it already has done.

German Ruling could Pit National Court against ECJ


The assassination of the Jo Cox has broken the powerful momentum in the markets.  Investors recognize that the tragedy potentially injects a new element into consideration for the outcome of next week’s referendum.  The campaigns will be resume over the weekend, and new polls will be available.  Investors will place more weight on polls conducted after the assassination. 

The Senseless Attack on MP Jo Cox is Far-Reaching


The assassination of Jo Cox, a member of the UK parliament is a personal and political tragedy.  Her needless death provided an inflection point.  The suspension of the referendum campaigns and a steady stream of reports and speeches have the emotionalism of contest freeze.

Investors quickly understood that the Cox’s death injected a new unknown into the forces that seemed to build toward a decision to leave the EU.

EU Support Varies Dramatically by Age, Immigration Policy


One of the most profound criticisms of the EU that it remains, even at this late date, primarily an elite project.  The democratic deficit has grown, according to the latest Pew Research multi-country poll.

The Pew Research survey covered ten countries that represent 80% of the EU28 population and 82% of the region’s GDP.  The poll surveyed nearly 10.5k people between April 4 and May 12.

Why Someone Jumped off of the Brexit Bus


In 1997, a small number of academic economists in my country, the Netherlands, came out against the euro and were vilified by the authorities. I was one of them.  When my native country organised a (non-binding) referendum about adopting the so-called European “constitution”, in 2005, many again protested.

ECB Raises Eurozone Deflation Concerns


As inflation rates in the Eurozone fall to zero, the European Central Bank is bracing for deflation in early 2016.

ECB President Mario Draghi said in an interview Saturday that the ECB is bracing for the European Union’s low inflation rate to turn negative. “We expect inflation to remain close to zero, and maybe even to turn negative, at least until the start of 2016,” Draghi said.

Draghi Speaks and the Euro Sinks


The ECB is clearly the driver of the day, spurring a quick drubbing of the euro, pressing bond yields lower, and giving a fillip to equities.  The lower US yields and unwind of long euro cross-positions pushed the greenback below JPY120, though it has resurfaced above there.  There is scope for the dollar to rise back toward JPY120.50-70.