Lorenzo Bini Smaghi
The deep recession in Europe started with the euro crisis triggered by Greece. As volatility returns to Athens, the euro, already getting weaker, may face even more troubles.
The ECB has just taken steps that its traditionally inflation-wary presidents were averse to. But with the risk of deflation lurking, such risky moves will be needed to get Europe out of the doldrums.
Misunderstandings have led to skewed perceptions regarding the EU’s Fiscal Compact. A deeper knowledge of how it works shows that it is not the straightjacket many contend.
The EU bureaucracy has become a convenient scapegoat for all that ails the continent. A better understanding of the mechanisms that make it work will reveal how facile such knee-jerk reactions really are.