Paolo Savona

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For lack of political will

The geopolitical and economic conditions in Europe make it clear that the EU needs to grow and coordinate its policies. But instead of doing so, many member states have ridden a wave of nationalism that could further hobble their economies.

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The two-speed euro secret

Talk of either an imminent exit by one of the eurozone’s members, or an outright bifurcation of the common currency has many of its leaders concerned. But are they willing to use the tools at their disposal?

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Hoping to kill two birds with only one stone

Rarely have economies been rescued by hope alone. Europe’s must come to terms with empirical realities that require it to either reform the currency or dismantle the eurozone as we know it. 

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Beyond productivity and growth

The tremors felt in the world economy belie the recent optimism of the markets. Although a very modest growth continues, severe structural problems call for a radical overhaul of the monetary system and social organization.

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Between a rock and a hard place

The world’s monetary system requires a degree of independence for central banks that naturally entails a democratic deficit. But doubts about the need for such independence are making monetary policy prey to populism.

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Easy money and hyping a return to normalcy

Europe has tried to repeat America’s success in getting 
its economy back on track. 
But unfortunately it has disregarded some fundamental structural changes that would bring monetary and financial policy in line with the real economy.

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Yellen presents a new same-old

What Janet Yellen is selling as a new toolkit for the Federal Reserve can also be seen in light of the neoclassical economic assumptions that underlie it. Unfortunately those assumptions belie the real problem. 

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I told you so

To anyone who has repeatedly called for a renegotiation of EU rules, Brexit was no surprise. The shock, however, could offer Europe a chance to set things straight and make a stronger, more realistic Union.

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Turning a blind eye to the problem

here are some fundamental issues affecting the world economy, which no one wants to look at because no one is prepared to fix. As a result every major summit seeks to work around the biggest problems with an array of compromises.

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Obstacles to growth

The European economy is faced with a rather unique global economic picture as it struggles with slow growth. Various approaches are vying with one another in an attempt to find a solution.

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Money talks in Britain

A global market requires global rules that are currently lacking. A meeting held in Britain, which is mulling an exit from the EU, may just help bring the UK back into a leading position in global monetary policy.

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Money beset by a cultural crisis

The production crisis is based on an incorrect setting of global competition, mainly centered on international trade rather than on domestic consumption. What’s needed is decision-making courage

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Hard times for easy money

The trend of quantitative easing has greatly impacted the world economy. New dynamics and pressures have had economists scrambling to come to grips with contrasting approaches to monetary policy.

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Keeping the balance

The market may have found a precarious balance between the trends in financial and real wealth. But it might not last.
Monetary policy must regain its orthodox role of bringing finance growth back to the pace allowed by real economy growth. 

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The financial trifecta and the role of democracy

Moves on the part of central banks have determined the direction of the economy in recent years. But leaving such decisions to institutions inclined to “massage” the rule of law may bode ill for democracy.

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China’s challenge to America

Beijing has been very careful over the years about not losing control over its currency. But as the economy stabilizes and China prepares to float its currency freely, the US dollar will no doubt be affected.

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Dollar mechanics

The United States has led a monetary system that needs to be adjusted. But it is ambivalent about the very structures that have sustained it thus far. The result is a precarious balance that does neither America nor the international system good.
 

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Reflections on savings and euthanasia

The signs have been there for a while, now the stirrings of a perfect storm can be heard coming from China. All along, monetary policy has been feeding the gathering clouds.

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Europe’s watershed moment

Faced with the end of the illusion that the euro was irreversible, eurozone governments and Greece have come back from the brink. Europe is arguably stronger as a result, but the means by which it survived may bode ill for the EU down the road.

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How the rich get richer

Europe is pumping money into an economic system that is structurally ill-equipped for it. Without an understanding of economic consequences or a will to find an alternative, such actions will lead to a wider wealth gap.

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Obstacles to a new monetary system

Easy money and government job creation projects have not managed to spur the economy as desired. And now the dollar is getting stronger. Will China’s new development bank set things straight?

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The ups and downs of a weaker euro

The context in which the ECB pumps more euros into the system, should give a boost to stock prices. And while some exporting economies may benefit, other are looking at increased deficits. 

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Difficult easing

While the eurozone has made a move to implement something resembling the quantitative easing that worked in the US, it has missed the chance of creating a double-barreled approach to growth creation.

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What the eurozone really needs

Europe has consistently been tackling its crises with a series of stopgap measures. What is needed, at the least, is to overhaul the monetary structure in a way that necessary actions can be taken promptly and without subterfuge.

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Breaking the digital divide

The new on-demand economy may be one of the keys to alleviating unemployment in Europe. But the EU is still fixated on the old economy.
A concerted effort to dissolve the digital divide between the generations will be crucial.

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Daylight between monetary policy and the real economy

Quantitative easing on the part of the ECB should help stimulate growth in Europe. Unfortunately, it is by no means a cure-all, because if the process gets bogged down, its effects on the real economy may be negligible. 

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Outdated econometrics

One reason why the US has begun to recover is that the Fed abandoned some orthodox methods of economic forecasting. Europe is still struggling with old methods that do not account for the financialization of the economy.

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The functions of a central bank

The functions of central banks have evolved over the past century to accommodate the complexity of the economic system. The ECB seems to resist certain functions that other central banks have embraced – to the detriment of the eurozone. 

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Managing national sovereignty

The nation-state in Europe is at risk. Moving forward in the EU project will not only require improving the economy, but managing national sovereignty so that community oversight can make the nation even stronger.­­­

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Money’s architectural shifts

Although the international economy is still wholly dominated by the dollar, the future will no doubt see the balance altered by both the euro and the Chinese renminbi.

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­­­Coming to terms with the real economy

The ECB has taken measures to get the eurozone economy back on track. But it might not be enough, particularly because it cautiously sidesteps one of the pillars of economic growth: the building industry.

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Making the exchange rate work for Europe

The euro is overvalued according to many economists. So what can the ECB do to bring the common currency to levels that could ensure growth without backfiring?

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Floating China’s money

As the Chinese government sets the conditions for making its currency fully convertible, the rest of the world must come to grips with flaws in the monetary system that could undermine globalized economic interaction.

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History’s lessons

How did we get to where we are now? It’s hard to tell when economics and politics have taken on the traits of an increasingly elaborate scam, in which the impulse toward globalization conflicts with national interests.

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Tapering away from disaster

As quantitative easing policies taper off, the developing countries have begun to experience decelerated growth. To avoid a new recession more international coordination of monetary policy is necessary.

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Looking on the bright side

It is easier for politicians to take credit for recovery, however feeble, than to push through painful reforms. This reluctance may ultimately undermine the recovery that is the cause for optimism.

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The transatlantic trade tightrope

A free trade area between North America and Europe is expected to be beneficial to both sides. Yet with the currency exchange rate regime in place now, both sides may be in for a rude awakening.

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The reins of free market

Some of us like to think of the market as a free animal spirit that bridles at any external control. But this is an illusion. The power of the state has always set the tone for the economy. What’s needed is wise management.

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The vicious circle holding back growth

While competition can drive an economy, it can also lead to policies based on national egotism, thereby limiting the kind of cooperation necessary for a globally interdependent economic system to work most efficiently.

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Breathing a sigh of relief

As the easy money days of the Fed’s quantitative easing programs taper off, the real economy will force the hand of politicians to reform the institutions, lest countries now in difficulty get even worse.

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Killing the small saver softly

Changes in monetary policy have proved inadequate to the task of stabilizing the economy. But rather than reject those changes, central banks are choosing a path that could have implications even more dramatic than the crises they have contributed to thus far.

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The Bernanke effect on Europe

Central banks can influence markets by controlling expectations. This is exactly what Fed Chairman Ben Bernanke is doing. Will it be enough, however, to move the structural obstacles keeping the eurozone in recession?

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Printing press alchemy

 

The US and Japan have been printing money to jump-start their economies. So far, it’s been working. But the real fallout from such a heavy- handed monetary policy will be seen in Europe, where the ECB has more constraints.

 
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BRICS at the vanguard of reform

As the BRICS gain economic clout, one would assume that political clout will follow. But in order to reform economic institutions these nations need
to overcome their own differences.

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More power to central banks

The days when central banks were independent of government may be numbered. In some cases these banks are the only institutions that can set the economy straight without getting stuck by democratic inertia.

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Hoping for peace and preparing for war

Again there is the fear of an imminent currency war. Everyone insists that the value of money should be determined by the markets, but at the same time governments and central bankers do what they can to shift matters to their favor.

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A new revolution in monetary policy

As the economic recovery struggles to gain momentum, economists have almost entirely disregarded the specter of inflation. Is this negligently wishful thinking or does it really not matter?

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Toward a global currency agreement

As long as the dollar rules, there will be an imbalance in the international monetary system. A convergence of the euro crisis and new Chinese leadership can provide the necessary impetus to mitigate the disequilibrium.

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Adrift on the currencies

The marriage of money and growth is a difficult one. The world economy has been kept from chaos lately through unstable means: currency manipulation, which increases the danger of inflation. What’s needed is more coordinated approach.

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Growth on the ropes

Reserve currency disequilibria are straining whatever feeble growth there may be. So why isn’t a rebalancing at the top of politicians and economists’ agendas?

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The fever drops, but the illness remains

Some clever maneuvering at the ECB has managed to keep speculative attacks at bay – for the time being. Yet the underlying issues are sure to crop up again if they are not addressed.

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The euro, a stateless currency

Europe’s is a misunderstood currency. Created despite a lack of political integration, it is now the world’s problem. And the world economy hinges on the political will of Europe’s unwilling politicians.

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The euro’s slippery path

A cloud of uncertainty hovers over Europe’s common currency. With a resilient exchange rate, considering the pressure, political actions may nevertheless come too late to thwart speculative attacks.

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Girding up for the solution

As representatives of the world’s biggest economies meet and propose noble paths toward sounder economic policies, the real way out of the crisis will hover quietly above the formalities and protocol: an overhaul of the monetary system.

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How deficits can kindle a currency war

Currency manipulation is one of the most effective tools for adjusting foreign balance deficit. But the fact that the world’s reserve currency is also that of a country with a massive deficit has many analysts sounding alarm bells.

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Easy money

At the peak of the crisis the ECB managed to sneak its own brand of Quantitative Easing through the back door to relieve pressure. Now the eurozone must find a delicate balance in its return to orthodoxy.

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Unfinished business

Recent agreements and maneuvers among the EU leadership have calmed the markets – for now. But the underlying problems still exist, and Europe seems to feel it might be better off just keeping quiet about them.

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Forestalling a currency war

Despite the fact that talk of replacing the dollar as the international reserve currency is considered a non-starter in economic circles, some kind of currency reform is necessary and inevitable.

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The euro: still on the brink

EU leaders are making bold statements regarding fiscal and political unity, as if there were no alternative to a recession. But an alternative does exist, and it may be up to the markets to force decisive action.

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A more imperfect union

Now that markets are dictating political decisions, Europe is forced to make choices that fly in the face of its philosophical traditions.  
 

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To print or not to print

As central banks debate the virtues and vices of quantitative easing and the potential for a return to stagflation, they are in a sense deciding our political future.
 

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­The underlying money problem

In the heat of so many economic wildfires, the problem of monetary policy has managed to keep a relatively low profile. And yet, this may be one aspect of the economy most in need of reform.
 

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More muscle for the ECB

The eurozone’s sovereign debt problems are exacerbated by a reluctance to move ahead on a unified fiscal policy. But if the governments involved intend to break out of the dysfunction that markets have seized upon, they will need to give the ECB more power.
 

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A vicious circle

Sovereign debt, bailouts, freezing Libyan funds: these are all examples of how a seemingly arbitrary approach to the world’s financial wildfires risks undermining any hope of getting to the root of the problem.
 

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Europe’s unmentionable union

Sooner or later, the EU will need to address the issue of a political union to buttress the existing monetary union. The problem is that the inevitable public wrangling over details may undermine the very union they are trying to fortify.

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Looking for a break in the clouds

The outgoing ECB president has done well to stave off disaster in Europe. But there are still many glaring institutional pitfalls that promise to make his successor’s task a daunting one.

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The end of easy money

While the ECB’s decision to raise interest rates should have predictable results, there have been many surprises of late. Factors beyond central banks’ control underscore the need for political cooperation.

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Imbalance indicators: fixing weather vanes in a hurricane

While improving the means for measuring a phenomenon is often useful, it won’t help fix the thing it is measuring. In fact, it might prove a convenient distraction to make up for what would otherwise be considered inaction.

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The rising price of green ink

While the US effectively prints more money and the Chinese shore up domestic demand, the eurozone countries keep close watch on the inflation that the ECB has kept at bay since the introduction of the common currency.

The Euro play
Caught in the eye of the euro storm

The global market contradicts the structure of the nation-state. More than a new economic agreement, we need a new political accord.­