Larry Summers: Europe May Be Next Japan

[PabloZed]

This interview is from today in Davos. It mostly concerns the anticipated QE policy announcement, but at the end of the interview Summers describes why the Eurozone is in real danger of becoming the next Japan in terms of stagnation.

http://www.bloomberg.com/video/euro...-lawrence-summers-lg41lmswTE6THH7CPP_~qA.html

Interestingly, the ECB proposal seems to follow much of what he suggests. The proposal as reported by bloomberg is $1.3 trillion with monthly purchases of approx $50 billion.

 

[AlucardNatasrd]

The obsession with retaining the Euro is also dooming Europe. It would be much more rational for Germany and France to consider retaining a unified currency, while cutting out most of the rest of the Eurozone.

or how about...Germany just goes back to a national currency, as the EU really is just the Germany economy writ large?

 

[Which Doctor]

The obsession with retaining the Euro is also dooming Europe. It would be much more rational for Germany and France to consider retaining a unified currency, while cutting out most of the rest of the Eurozone.

or how about...Germany just goes back to a national currency, as the EU really is just the Germany economy writ large?

This.

 

[Lee978]

So looks like the ECB will be buying up €60 billion a month as opposed to the €50 billion most analysts and experts thought.

ECB President Mario Draghi said the ECB will buy a total of €60 billion ($69 billion) a month in assets including government bonds, debt securities issued by European institutions and private-sector bonds. The purchases of government bonds and those issued by European institutions will start in March and run through September 2016, Mr. Draghi said. The risks associated with the bonds of EU institutions will be shared, but purchases of other government bonds won’t be subject to loss sharing, Mr. Draghi said.

http://www.wsj.com/articles/ecb-announces-stimulus-plan-1421931011?mod=WSJ_hpp_LEFTTopStories

I guess the question now is what government bonds is the ECB plan on buying and for how long?

 

[drstrangelov]

I don't want to hear about economics from a guy who blows 20-30 bucks a week on boating magazines. It's a little creepy.

 

[PabloZed]

So looks like the ECB will be buying up

 

[SammyPops]

Not so sure.

The EU could very well break up/drop the euro before a 20 year recession.

 

[Jack V Savage]

I don't want to hear about economics from a guy who blows 20-30 bucks a week on boating magazines. It's a little creepy.

I don't get it.

 

[drstrangelov]

I don't get it.

It's just a weird ritual for a guy to have, I don't get it either. Makes him a little suspect in my eyes.

 

[ultramanhyata]

As Joseph Stiglitz has pointed out, few economists deserve more blame for the financial trainwreck of the last five years than Summers. In a blog for the New York Times a few days ago, Stiglitz, who won the Nobel prize for economics in 2001, commented: