Ian Bunn | Political & Popular Culture Arts

Peter Frankopan the British historian and Director of the Oxford Centre for Byzantine Research has published an article in The Guardian titled ‘The Byzantine empire’s own ‘eurozone’ crisis offers a lesson for the EU today’, in which he states “…the Byzantine empire has the distinction of being one of the very few realms to survive for more than a millennium, from the foundation of Constantinople in 330 to its fall in 1453. …Like the EU, the Byzantine empire was a multilingual, multi-ethnic commonwealth that spread across different climates and varied local economies, ranging from bustling cities to market towns, from thriving ports to small rural settlements. Not only that, but it also had a single currency – one, furthermore, that did not fluctuate in value for centuries. Contrary to popular opinion expressed on an almost daily basis in the House of Commons, where MPs queue up to describe over-regulation or over-complex legislation as “Byzantine”, the Byzantine empire was in fact a model of sophistication – particularly when it came to the sorts of areas where the EU has been found wanting. Unlike the European Union, Byzantium was not riddled with inefficiency and disparity when it came to tax: profits could not be parked in a more attractive region, thereby undermining the empire’s structure. Government in Byzantium was lean, simple and efficient. …If Eurocrats could learn from the structure of the empire, then so too could they benefit from looking at how it dealt with a chronic recession, brought on by the same deadly combination that has crippled western economies today. In the 1070s, government revenues collapsed, while expenditure continued to rise on essential services (such as the military); these were made worse by a chronic liquidity crisis. So bad did the situation become that the doors of the treasury were flung open: there was no point locking them, wrote one contemporary, because there was nothing there to steal. Those responsible for the crisis were shown no mercy…”

Inspired by Peter Frankopan, The Guardian ow.ly/j4uLh Image source Twitter ow.ly/j4vh6

Jean Pisani-Ferry the 61 year old French Professor, economist and public policy expert, currently the Director of Bruegel a Brussels-based economic think tank, has published an article on the Project Syndicate titled ‘Is the Euro Crisis Over?’. Pisani-Ferry states “Financial crises tend to start abruptly and end by surprise. Three years ago, the euro crisis began when Greece became a cause for concern among policymakers and a cause for excitement among money managers. Since the end of 2012, a sort of armistice has prevailed. Does that mean that the crisis is over? By the usual standards of financial crises, three years is a long time. A year after the collapse of Lehman Brothers in September 2008, confidence in the United States’ financial system had been restored, and recovery had begun. A little more than a year after the 1997 exchange-rate debacle triggered Asian economies’ worst recession in decades, they were thriving again. Has the eurozone, at long last, reached the inflection point? Many battles were fought in the last three years – over Greece, Ireland, Spain, and Italy, to name the main ones. The European Union’s financial warriors are exhausted. Hedge funds first made money betting that the crisis would worsen, but then lost money betting on a eurozone breakup. Policymakers first lost credibility by being behind the curve, and then recouped some of it by embracing bold initiatives. Recent data suggest that capital has started returning to southern Europe. The current change in market sentiment is also motivated by two significant policy changes. First, European leaders agreed in June 2012 on a major overhaul of the eurozone. By embarking on a banking union, which will transfer to the European level responsibility for bank supervision… Second, by launching its new “outright monetary transactions” scheme in September, the European Central Bank took responsibility for preserving the integrity of the eurozone…”

Inspired by Jean Pisani-Ferry, Project Sync ow.ly/j4ps2 Image source Twitter ow.ly/j4p4X

Jeffrey Alexander Frankel the 60 year old American Professor of Capital Formation and Growth at Harvard University’s Kennedy School of Government, and former member of the Council of Economic Advisors under President Bill Clinton has published an article on Project Syndicate titled ‘Will Europe’s Fiscal Compact Work?’. Frankel states “At the start of 2013, the eurozone’s “fiscal compact” entered into force… The compact – technically called the Treaty on Stability, Coordination, and Governance in the Economic and Monetary Union – requires member countries to introduce laws limiting their structural government budget deficits to less than 0.5 % of GDP (or less than 1% of GDP if their debt/GDP ratio is “significantly below 60%”). So, will this new approach work? A limit on the “structural deficit” means that a country can run a deficit above the limit to the extent – and only to the extent – that the gap between revenue and spending is cyclical (that is, its economy is operating below potential due to temporary negative shocks). In other words, the target is cyclically adjusted. …The aim is to fix Europe’s long-term fiscal problem, which has been exacerbated by three factors: the failure, since the euro’s inception, of the eurozone-wide Stability and Growth Pact (SGP) to enforce deficit and debt limits; the crisis that erupted in Greece and other countries on the eurozone periphery in 2010; and the various bailouts that have followed. …Ever since the eurozone was established, its members have issued official fiscal forecasts that are systematically biased in the optimistic direction. Other countries do this, too, but the bias among eurozone countries is, if anything, even worse than it is elsewhere. …if forecasts are biased, fiscal rules will not constrain budget deficits. In any given year, governments can forecast that their growth rates, tax revenues, and budget balances will improve in subsequent years, and then argue the following year that the shortfalls were unexpected.”

Inspired by Jeffrey Frankel, Project Syndicate ow.ly/hnJJp Image source Harvard ow.ly/hnJIm