Eurozone Watch

For a few weeks now, the debate about whether a bail out of an EMU country is a likely option has accelerated. A few days after we had argued in a syndicated piece for Project Syndicate which was printed by a number of papers across the world that the no-bail-out clause has no relevance in the current crisis and EU member states would bail out a EMU member with solvency or liquidity problems. Germany’s Finance Minister recently added flavour to the debate. Only yesterday, it was reported that Steinbrück confirmed that EMU countries might bail-out a fellow euro-area country (read for instance Bloomberg on this).

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Fourth part of our series on the winners and losers of the current crisis

Before the financial crisis struck, the German finance minister Peer Steinbrück had a very ambitious goal. He wanted to enter history books as the finance minister who managed to oversee the first federal budget in Germany without new borrowings in a generation.

This dream is now shattered. As the Financial Times Deutschland pointedly remarked a few weeks back, Mr. Steinbrück is now entering history books as the finance minister who has overseen the largest federal budget deficit ever: With the government's stimulus package of about €50bn, the German government is now set to borrow as much as never before in euro terms.

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Third part of our series on the winners and losers of the current crisis

Despite certain doubts about the Eurozone's ability to tackle the crisis, the attraction of the Euro as a "safe haven" in an era of turbulence has risen considerably for the non-participating EU countries. Even the UK and Denmark, which have negotiated an Opt-Out in the Maastricht Treaty, debate a possible EMU membership.

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Second part of our series on the winners and losers of the current crisis 

Only a few months ago, most observers would have been very sceptical whether the Lisbon Treaty could be saved with a second Irish referendum. While now property prices in Dublin are falling like bricks and unemployment and the budget deficits are skyrocketing, also the mood towards the Lisbon Treaty has changed.

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