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What began as a relatively localized crisis in Greece in early 2010
soon escalated to envelop Ireland and Portugal. By the second half
of 2011, the contagion had spread to the far larger economies of
Italy and Spain. In mid-September the Peterson Institute and
Bruegel hosted a conference designed to contribute to the
formulation of policies that could help resolve the euro area debt
crisis. This volume presents the conference papers; several are
updated through end-2011. European experts examine the political
context in Greece (Loukas Tsoukalis), Ireland (Alan Ahearne),
Portugal (Pedro Lourtie), Spain (Guillermo de la Dehesa), Italy
(Riccardo Perissich), Germany (Daniela Schwarzer), and France (Zaki
Laidi). Lessons from past debt restructurings are then examined by
Jeromin Zettelmeyer (economic) and Lee Buchheit (legal). The two
editors separately consider the main current policy issues: debt
sustainability by country, private sector involvement and
contagion, alternative restructuring approaches, how to assemble a
large emergency financing capacity, whether the European Central
Bank (ECB) should be a lender of last resort, whether
joint-liability "eurobonds" would be feasible and desirable, and
the implications of a possible break-up of the euro area. The
luncheon address by George Soros and a description (by Steven R.
Weisman with Silvia B. Merler) of the policy simulation game played
on the second day of the conference complete the volume. Involving
market participants and experts representing the roles of euro area
governments, the ECB, IMF, G-7, and credit rating agencies, the
game led to a proposal for leveraging the capacity of the European
Financial Stability Facility through arrangements with the ECB.
Shifts in global economic dominance are by nature tectonic and
never precipitated by single events. The Great Recession of
2008-09, however, has presented the European Union, its common
currency the euro, and the United States with new global
challenges. The transatlantic partnership has dominated the world
economy since the early 20th century and, based upon US and
European values and interests, has designed and sustained all its
principal global political and economic institutions. But countries
outside the European Union and United States now account for about
half of the world economy, and in the aftermath of the Great
Recession their share is growing rapidly. Hence their increasing
role and concomitant demands for greater influence over global
economic governance pose a series of challenges and opportunities
to the European Union and the United States, as illustrated by the
eclipse of the G-8 by the G-20. The contributions in this volume by
subject area experts from the Peterson Institute for International
Economics and Bruegel ponder how or whether the rise of outside
actors of potentially equal, or even greater, economic weight will
invariably force a rethinking of not only how the European Union
and the United States should conduct policy externally towards the
new rising economic poles, but also of the substantive contents of
the EU-US bilateral economic and political relationship.
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