Re-Define's efforts for the Eurozone to adopt a Growth Compact are succeeding, albeit haltingly. Having first laid out such a compact to sit aside the Fiscal Compact in January when we are a lonely voice, we have now been successful in getting most EU institutions and several key leaders to come out in support of such an agreement at least in principle. This post, which frist appeared on Business Insider on Thursday the 3rd of May reminds EU policy makers about what the esstential elements of an agreement to try kickstart growth need to be.
Unless the EU signs up to a Growth Compact soon, we face social, political and economic disaster. Swift action on tax, banking and investment is the way out of the crisis.
The future of the Euro area banking system hangs in balance. It would not be an exaggeration to say that were it not for more than a trillion Euros of implicit and explicit public support in the form of capital injections and funding guarantees from Member States & liquidity support from the European Central Bank, the Euro area banking system could well collapse.
While some may think that, four years after Lehman’s collapse, the biggest problems of European banks are now over, that may not be true. All things considered, the biggest challenges for Euro area banks still lie ahead. In particular, the combination of largely unreformed banking models, large scale regulatory changes and uncertainties around their final shape as well as the worsening Eurocrisis mean that Euro area banks face very large, potentially insurmountable challenges.
The Eurozone is stuck in a dumbbell trap where economies are socially, economically & politically diverging clustering on either side of a dumbbell. The longer this divergence continues, the more likely that the European construction, the bar that holds them together may collapse under the weight of contrasting and conflicting needs & perspectives.
The spreads between Spanish and Italian bonds and German bonds are once again on their way up. Even as the borrowing costs for Spain and Italy come dangerously close to Euro area records, the German government is able to fund itself at all-time record low interest rates with significantly negative yields.
Many of you have noticed that Re-Define has been apparently missing in action having not sent out comments, given interviews or published papers or Op-Ed’s on the Eurocrisis or Financial Reform since the beginning of March. This was deliberate. It’s not that we have stopped working on these issues, far from it. It’s that we decided it would be healthy for us, given our sharp, but constructively critical tone, to stay away from the headlines for a bit.
Given the premature complacence that was creeping into policymaking circles, we got heat for continuing to insist the problems were far from over. For example, we were criticized in some quarters for being too negative at the last European Council in March when we said “This European summit reeked of missed opportunities, premature celebration and undeserved backslapping. This may come back to haunt our leaders sooner than they think.” (2nd Mar)
By Re-Define Managing Director Sony Kapoor and Fabrizio Tassinari at the Danish Institute for international studies. Note: this has appeared as an op-ed in the European Voice
Ways that the EU could unleash the animal spirits of the markets to trigger self-financing green investments.
Can green growth shake Europe out of its economic stagnation? At face value, Denmark is not the most obvious candidate to answer this question. The UN climate summit that Copenhagen hosted in 2009 was supposed to herald a new era of international responsibility; instead, it has become a byword for discord between a declining West and emerging economies.
2 hours 6 min ago —
Potential #economic #social & #political costs of a #Greek exit r incalculable & worst case scenarios so bad that u don't want 2 go there
2 hours 35 min ago —
“@jmsardo: #G8: Development is the fourth priority for #UK Cameron, #eurocrisis the first one. Poor rich countries? http://t.co/7kU1IQid”
2 hours 37 min ago —
@Convertbond including or excluding #ecb smp holdings?
2 hours 39 min ago —
common sense prevails “@YanniKouts: Greece needs growth as well as debt cuts ~French PM Jean-Marc Ayrault http://t.co/0rNjJIby #Greece #EU”
2 hours 42 min ago —
I am glad most analysts r coming round 2 what I said abt a #Greek exit being 2 costly & a v bad idea. Now 2 get politicians 2 shut up!
Re-Define's 
The future of the Euro area banking system hangs in balance. It would not be an exaggeration to say that were it not for more than a trillion Euros of implicit and explicit public support in the form of capital injections and funding guarantees from Member States & liquidity support from the European Central Bank, the Euro area banking system could well collapse.
