It has long been commonplace for Americans and Europeans to define their social models in opposition – with Americans priding themselves on having the most dynamic and upwardly mobile economy while Europeans emphasize their welfare states’ success in providing a more extensive safety net and limiting income inequality.
On February 13, 2012, The European Institute hosted a breakfast discussion of The World Bank’s recently released assessment of the strengths and weaknesses of European economies. Indermit Gill, Chief Economist for Europe and Central Asia at the World Bank, outlined the major findings of the compelling report: “Golden Growth: Restoring the Lustre of the European Economic Model” (available here). A panel discussion followed with Antonio de Lecea, Minister and Principal Advisor at the Delegation of the European Union; Nicolas Véron, Senior Fellow at Bruegel and Visiting Fellow at the Peterson Institute for International Economics; and Dr. Angel Ubide, Director of Global Economics at Tudor Investment Corporation and Visiting Fellow at the Peterson Institute for International Economics.
After weeks of agonizing negotiations among Greek government officials, private lenders and other international creditors, the governing coalition in Athens has finally given approval to the latest round of austerity measures in order to receive a second bail-out – in time to meet its deadline for preventing a messy and potentially contagious default on its national debt in March.
Despite the sovereign debt woes of some countries in the eurozone, the euro currency itself has stood up strongly (surprising so to many) in currency markets, particularly against the dollar. That rate has changed in recent weeks, in favor of the dollar: the euro has now depreciated by nearly 10 percent against the dollar. The falling euro's international value could make European exports more competitive globally, particularly those of Germany and Italy. The euro has been "devalued" slightly in currency markets as (1) the U.S. economy has shown signs of revival and as (2) the European Central Bank's policy of maintaining very low interest rates under the bank's new head, Mario Draghi. If it lasts for six months, a euro "devaluation" of this sort could add a point economic growth in some eurozone countries (and also make existing loans a little cheaper to pay off), analysts say. That, in turn, could spare the EU as a whole from sinking back into recession and facilitate the reform process in troubled eurozone economies such as convalescent Italy.
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