The Key Battles of the Greek Bailout Saga

Greece's dramatic bailout negotiations will soon be coming to a head one way or the other. Although the Greek government has been painstakingly throwing a veil of uncertainty and misinformation over its real financial and fiscal position, most pundits would agree that state coffers are running bare and that, absent an interim, piece-meal, or final bailout agreement, Greece will not be able to pay off the consolidated IMF loan tranches coming up at the end of June. The government's finances have been stretched to their limit by dint of an internal payment moratorium and a raid on the cash reserves of local governments and pension funds.

New Governance in Europe and Greece

In the event of the forthcoming European elections, the always-existing scenario of an early Greek general election, the entry of new leaders in the EU institutions in 2014, a possible new Constitutional Convention, I would like to briefly put on the table a series of thoughts that may provoke further discussion.

The Political Economy of the Eurozone: The Short-term and the Long-term View

Introduction

The key point of my talk is that EMU has two very different types of problems, depending on whether you think of the short or the long term.

• The short-term one is a combination of excessively low growth, massive sovereign debt because of the links between weak banks and governments, and no way out (weak banks increase sovereign debt, which translates into weak banks).
• The long-term one is that two very different types of economies were integrated into EMU, without a political mechanism that compensates for the negative effects of these differences.