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    Blog Posts (3)
    • Brexit and the Zealots

      A new blogpost: Un nouvel article sur le Brexit et les Zélotes:

    • Brexit: three overlooked facts

      The Brexit process is truly fascinating. Some new drama unfolds nearly every day. As a result, maybe, some very basic facts tend to be overlooked, probably because they would undermine the dramatically entertaining value of these events. It all seems crazy and, in a way it is, but the process is more reasonable than it looks. The first fact is that nothing much will happen on B-day, with or without a deal. As is often said, the focus of past negotiations has been on the divorce, not on future relations. This is why the deal foresees a two-year transition, to allow for negotiating future arrangements with the EU. There are zillions of decisions to be taken within the broad framework of the deal. They range from what exactly happens at the borders to the status of EU citizens working or living in the UK and of British citizens working or living in the EU and to mutual recognitions of standards for each and every good or service that will be traded. Without a deal, all of these things will also have to be negotiated, even if they is no explicitly agreed framework. Because geography implies that there will be a lot of trade and movement of people between the EU and the UK, a no-deal Brexit will require a transition period as well. During this period, little will actually change, simply because no one wants to see total disruption, even the hardest of the hard-Brexiters who still have to grasp the day-to-day implications of what they wish for. One way or another, a standstill will have to come. The second fact is that the British economy has become totally integrated into the EU economy over more than forty years. As a consequence, European laws govern everything that concerns trade within the UK and with the EU, commerce with third parties, consumer protection, anti-trust and more. The UK will have to build from scratch a new legal apparatus. British firms will have to disentangle a myriad of links with their European partners. Non-national residents will have to reorganize their lives. Even if the EU is not a perfect arrangement, it works reasonably well. This implies that it will be best for the UK to retain many of existing EU laws and for firms in the EU and in the UK to maintain much of existing links. Brexit is a huge disturbance with limited long-run practical effects. Meanwhile, firms face a massive uncertainty and postpone productive while some have relocated or downscaled their activities in the UK. Eventually post-Brexit UK will not differ much from what it now is. The third fact, which may be lost in the spectacular debates that we have seen over the last few weeks, follows from the previous observation: Brexit is impossible, or nearly so. Much has been said about the stability and pragmatism of the British democratic institutions but, all of a sudden, it seems to have become highly dysfunctional and irrational. Of course, the referendum should not have been called, or the question asked should have been better designed. So, yes, a huge mistake was made. It is worth asking how can a stable and pragmatic democracy manage an impossible task. A poorly functioning democracy would just have made Brexit happen, without second thoughts. The convulsions that we observe reveal the more or less conscious efforts of the British system to deal with the situation. Theresa May famously said that “Brexit is Brexit” but then she discovered that things are not so simple. Part of her predicament was to negotiate a reasonable deal, much more complex than what she had envisioned, but she also faced a Parliament that rejected every single proposal that she made. The inability of Parliament to come up with alternatives is often described as the ultimate proof that it is totally dysfunctional. Alternatively, it may be that it simply recognized that there is no good way of leaving the EU. Millions of citizens marched to ask for a second referendum, one where the alternatives would be well specified. The former fringe Tories who are now in power reject this natural step, but they seem overwhelmed by the resistance that they face. All of that makes a lot of sense. We do not know yet how it will all end up.

    • Reform of the Stability Pact: political leaders simply give up

      Meeting ‘informally’ in mid-September, the Finance Ministers of the Eurozone considered reforms of the Stability Pact. They concluded that the task was too complicated, too controversial, sure to fail. Refusing to face up to the challenge is a sure way of laying ground for a future major turmoil. In 1997, shortly before the launch of the euro, Germany proposed what eventually became the Stability Pact. The proposal was directly inspired by the German federal experience but it had no chance to work in the European Union (and, anyway, it does not work well in Germany either). Yet, it was accepted without serious discussion. The view in Paris was that it was not worth a confrontation with Germany since the pact would not be respected anyway. This is indeed what happened. Beyond continuous frictions on the importance of abiding by accepted rules, the fraught pact is directly responsible for the sovereign debt crisis that erupted in 2010-12, coming close to scuttling the single currency. The consequences of bad economic policy choices rarely surface right away, but they eventually do. Even before the crisis, it had become increasingly difficult to ignore the pact’s weaknesses, a first reform was agreed in 2005. After the crisis, more reforms were agreed. Each time, the pact’s deep misconceptions were studiously set aside. Rather, the focus was to refine its strictures, mostly by adding bells and whistles. Today’s pact is extraordinarily complex et deeply bureaucratic, the result of multiple changes that aim at the symptoms, not the root causes of its failure. Am I exaggerating? For a long time, officialdom and many analysts thought so. The European Commission, in particular, staunchly defended the pact, which it was responsible for and from which it seemingly derived much authority. Not anymore. The Commission has finally accepted that the current pact is unlikely to adequately function. The recently created independent European Fiscal Board just published an official report that does not mince its words and largely validates the above criticism. The September meeting of Finance Ministers was presented with proposals by the Commission and by the European Fiscal Board. Mind you, these proposals do not challenge the fundamental architecture of the pact but, for the first time, some of its key aspects. They probably are the best that officialdom can suggest. The main suggestions aim at moving away from nitpicking about annual budgets towards a longer-term strategic appraisal, trying to combine short-term flexibility with long-term rigor. However, these proposals in effect challenge the pact’s logic, including the infamous limits of 3% for the deficits and 60% for the public debts. Were these objectives misleading? Yes. Do the new proposals stand to work better than the existing arrangements? You bet they do. Can we be sure that they will deliver fiscal discipline in each and every member country? We don’t. But for politicians, it is nigh impossible to recognize past mistakes. Risk taking (will it work 100%?) is terrifying, even if improvement is guaranteed. Anyway, they simply cannot fathom the opening of negotiations that are bound to be politically divisive and technically challenging. On the other side, they have no trouble kicking the can down the road and keeping in place an arrangement that stands to lead to yet another major crisis. This is not new, of course. This is what they did with earlier pact reforms. It delivered the sovereign debt crisis, which came about shortly after the Global Financial Crisis, itself the consequence of similar thinking. These crises delivered rising Euro-skepticism, they debased the credibility of the governing elites, which led to the current wave of populism and to the rise of extremism. Today’s politicians apparently fail to grasp the risk that they will lose power and that the survival of liberal democracies is at stake. ​ ​

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    • Media | Charles Wyplosz

      ARTICLES IN MEDIA I write in and talk to media, an activity that I consider as a payback from academia to society. Here is a selection of my articles. Articles in French appear below (les articles en français sont ). ici ​ WRITTEN MEDIA IN ENGLISH ​ Contributions during the Eurozone crisis - February 5, 2010 My big fat Greek conspiracy theory - February 22, 2010 Wading into Greek quicksand ​ ​ The voice of academic economists ​ - June 2020 So far, so good: And now don’t be afraid of moral hazard Olivier in Wonderland (a comment on the AEA presidential address by Blanchard) - June 2019 (with José de Gregorio, Barry Eichengreen and Taka Ito) - Sept. 11, 2018 IMF reform: The never-ending quest (with many co-authors) - March 20, 2018 Putting the Greek debt problem to rest - February 17, 2017 When the IMF evaluates the IMF - August 1, 2016 Dealing with public debt in the Eurozone (with Barry Eichengreen) - March 14, 2016 Minimal conditions for the survival of the euro (with Barry Eichengreen) - February 12, 2016 How the Euro Crisis was successfully resolved - September 7, 2015 The Eurozone crisis: Too few lessons learned ​ ​ ​ All my VoxEU columns are . here ​ ​ The Swiss financial newspaper. Articles in English from the international edition. .​ , September 9, 2020 Ever lucky dollar, Finanz und Wirtschaft , May 8, 2020 A Covid test for Europe , January 2020 Digital currencies behind the veil , October 23, 2019 Feuding Inside the ECB Fiscal Discipline; the Age of Benign Neglect?, August 2019 April 27, 2019 Is the Franco-German leadership of Europe doomed? - January 18, 2019 What is China up to? - August 27, 2018 The Italian puzzle - June 4, 2018 Moment of truth for Europe - February 8, 2018 Davos and inequalities - October 19, 2017 A fresh start for Europe? - July 21, 2017 My biggest concern are the debts - May 24, 2017 What does Macron mean for France and Europe? - January 24, 2017 What to make of Trump’s economic intentions? - August 24, 2016 The European consequences of Brexit - May 18, 2016 Central banks and Finance Ministries - February 12, 2016 Don’t be afraid of China - August 4, 2015 The Greek crisis: prejudices can be lethal - June 29, 2015 Without ECB’s help no more Euro in Greece - March 2, 2015 Lessons from and for the franc - Septembre 19, 2014 Are we asking too much from Central Banks? - May 16, 2014 Is the European Crisis Over ? - January 31, 2014 Is France changing? - July 16, 2013 Will the German Constitutional Court kill the euro? - March 7, 2013 The next big worry: exit ​ ​ ​ - August 11, 2107 The Deficit Tango - July 2017 Is the Shine Off Macron? - January 25, 2015 Why Russia’s Economy Will Not Collapse ​ All my columns are . here WRITTEN MEDIA IN FRENCH ​ ​ ​ Site animé par des universitaires ​ Articles récents , 20 octobre 2020 Le débat sur les contreparties est un faux sujet , 15 septembre 2020 Covid, il n'y pas plus le droit à l'erreur , Telos, 16 septembre 2020 Le plan de relance qui n'en est pas un , 10 juin 2020 La relance en Allemagne , 28 mars 2020 Où en sont la zone euro et la BCE? , 27 mars 2020 Faut-il se résoudre à annoncer des politiques non-chiffrées? , 10 février 2020 Les inquiétudes de la politique monétaire 9 lanvier 2020 ​ Une banque centrale verte? , 20 novembre 2019 En défense su PIB , Octobre 2019 Désunion ou fin de règne à la BCE , 12 juin 2019 Après les élections européennes, la balle est dans le camp de la France 2 mai 2019 Budget: mauvaise passe ou vieux démons, - 16 avril 2019 Les erreurs se payent aussi à crédit - 4 mars 2019 Retour de la politique industrielle - 9 janvier 2019 Déficits budgétaires, un mal français - 14 décembre 2018 Niveau de vie: qu'apporte l'Europe à ses peuples - 30 octobre 2018 Lutte contre le réchauffement climatique, les leçons de Nordhaus - 30 octobre 2018 Italie: moins désastreux que ça en a l'air ​ T ous mes articles . ici ​ ​ Le journal de Genève ​ ​​ ​​​ Articles récents ​ , 8 octobre Les marchés boursiers sont-ils sur un petit nuage? , 17 septembre 2020 La fin du tunnel , 11 juin 2020 Le spectre de la démondialisation Il n'y a pas de bonne solution, 21 mai 2020 Qui va payer la facture du confinement? 30 avril 2020 , 9 avril 2020 Ce qui va changer , 19 mars 2020 Les gouvernements se hâtent trop lentement , 27 février 2020 La dette argentine, episode 9 , 6 février 2020 L'impact économique du coronavirus 16 janvier 202 La Suède et la Suisse, , 12 décembre 2019 La révolution des cryptomonnaies , 21 novembre 2019 La France est-elle au bord du gouffre? , 31 octobre 2019 Rigidité budgétaire , 10 octobre 2019 Climat. pourquoi faire compliqué quand on peut faire simple , 18 septembre 2019 Le grand théâtre du Brexit sans accord Une récession demain? Vraiment? 29 août 2019 - 13 juin 2019 Les banques centrales sur la sellette - 2 mai 2019 Mais où est passée l'inflation? - 11 avril 2019 Trump s'en prend aux dirigeants de la Fed - 28 février 2019 La fin du miracle allemand - 7 février 2019 Changement climatique - 17 janvier 2019 Bolsonaro sur les traces de Pinochet? - 20 décembre 2018 Le Brexit et la Suisse - 30 novembre 2018 Où en est le franc? ​ ​ ​ Juste un de mes articles sur Maastricht, datant de 1992 et republié en 2017: ​ 25 ans de Maastricht : « Douloureuses convergences » ​ ​ ​ Articles hebdomadaires entre 2014 et 2016. ​ 27 juin 2016: Brexit: comment négocier avec le Royaume-Uni 21 juin 2016: Brexit: bientôt la City à Paris? 30 mai 2016: Loi El Khomri: vers la fin du toujours plus de protection sociale 23 mai 2016: Réduction de la dette publique à Porto Rico 13 mai 2016: Le revenu minimum universel 3 mai 2016: Baisse du chômage: le résultat de la politique de François Hollande? 26 avril 2016: Crise de la zone euro: Schaeuble est-il coupable? 5 avril 2016: Le piège de la loi El Khomri 7 mars 2016: Crise de l'agriculture: arrêtez d'emmerder les paysans 22 février: Brexit: la fin du menu unique en Europe 16 février 2016: Crise financière: ce que révèle la panique des marchés 5 février 2016: Le projet de Sarkozy décrypté par un économiste 15 janvier 2016: Chine: bombe à retardement 4 janvier 2016: Chômage et croissance: les promesses de François Hollande 30 décembre 2015: De quoi l'ultra-libéralisme est-il le nom 21décembre 2015: Lutte contre le chômage: on n'a pas tout essayé 16 décembre 2015: Hausse des taux de la Fed: quelle influence sur la BCE? 28 novembre 2015: Le business du réchauffement climatique 24 novembre 2015: Argentine: les chantiers di Président Macri 17 novembre 2015: L'impact économique des attentats 2 novembre 2015: Superviseur européen: les grandes banques sous contrôle de l'UE 23 octobre 2015: Le modèle japonais n'en est pas un 14 octobre 2015: Hausse du taux d'intérêt américain: sans intérêt, vraiment? 6 octobre 2015: Volkswagen: l'envers du miracle économique allemand 9 septembre 2015: Les migrants peuvent-ils être une chance pour l'économie? 2 septembre 2015: Pourquoi la baisse d'impôts est une fausse bonne idée 13 juillet 2015: Pour éviter le Grexit on a détruit l'idéal européen 10 juillet 2015: Grèce: un tour d'horizon 6 juillet 2015: Grece-Europe: Renzi et Draghi peuvent empêcher la catastrophe 29 juin 2015: Referendum grec: il faut des semaines pour imprimer une nouvelle monnaie 23 juin 2015: Crise grecque: mais où est François Hollande? 16 juin 2015: Ukraine-Grèce: l'heure de payer les erreurs est arrivée 10 juin 2015: Pourquoi les grandes banques vont être obligées de se transformer 2 juin 2015: La stratégie d'Alexis Tsipras decryptée 25 mai 2015: ? La Grèce va-t-elle sortir de l'Europe 20 mai 2015: Retour de la croissance: la propagande politique c'est maintenant 7 mai 2015: La livre Sterling ou le secret de la baisse du chômage en Angleterre 1 mai 2015: Pourquoi la croissance revient en Italie et pas en France 23 avril 2015: Grèce le scénario du défaut de paiement 7 avril 2015: Reprise de la croissance: quand le bonheur des pays riches fait le malheur des Brics 24 mars 2015: Allemagne-Grèce: qui doit de l'argent à qui? 17 mars 2015: Du choc de simplification à la folie règlementaire 10 mars 2015: Negociations avec Bruxelles: l'Union Européenne va t'elle mettre Tsipras à genoux? 3 mars 2015: L'intransigeance de l'Allemagne face à la Grèce, un message envoyé à la France 19 février 2015: Comment va se terminer l'affaire grecque 12 février 2015: Grèce: la voie est étroite 5 janvier 2015 : Pourquoi Angela Merkel lache la Grèce 2 janvier 2015 : Comment Hollande va vous plumer en 2015 23 décembre 2014 : Le Président François à la manière du Pape François 19 décembre 2014 : La France: maillon faible de l'Europe? 8 décembre 2014 : Les cinq leçons d'économie de Jean Tirole 30 novembre 2014 : Mauvais départ de la Commission Juncker 24 novembre 2014 : Austerité, relance, deficits: ce que nous apprend l'échec des abenomics au Japon 14 novembre 2014 : G20: pourquoi les banques n'ont rien appris de la crise 6 novembre 2014 : Budget 2015: de l'art de bien couper dans les dépenses publique 27 octobre 2014 : Contrat unique: pourquoi Manuel Valls a raison 24 octobre 2014 : Pourquoi la vision économique allemande est désastreuse pour l'Europe 14 octobre 2014: Jean Tirole pour les nuls 14 octobre : Jean Tirole pour les nuls 10 octobre 2014: Budget 2015, le grand enfumage 3 octobre 2014: G20, cette grande messe inutile 22 septembre 2014: Manuel Valls: La grande désillusion 10 septembre 2014: François Hollande et Mario Draghi : l'occasion manquée 4 septembre 2014: Le casse-tête de l'encadrement des loyers 28 août 2014: Les astres de la reprise économique s'alignent ils? 21 août 2014: La politique budgétaire pour les nuls 15 août 2014: Halte aux politiques d'austérité budgétaire 5 août 2014: La chute de Banco Espirito Santo 31 juillet 2014: Le coût exorbitnant de la transition énergétique 25 juillet 2014: L'angoisse des banques centrales 17 juillet 2014: Croissance: comment faire mieux 8 juillet 2014: Chômage, emploi, dialogue social: sur quelle planète vit François Hollande? 24 juin 2014 Intermittents du spectacle: derrière les slogans 17 juin 2014 La grève à la SNCF pour les nuls 10 juin 2014 Ukraine: l'Occident a perdu. laissons-l'addition à Poutine 3 juin 2014 Réforme territoriale: la grande diversion 25 mai 2014 Le crépuscule des eurocrates 20 mai 2014 Hollande fait le gros dos et attend 16 mai 2014 Traité transatlantique: réalités et fantasmes 2 mai 2014 Et si les emplois aidés créaient encore plus de chômage? 25 avril 2014 SMIC allemand: quand Merkel s'inspire du modèle français 14 avril 2014 Quand et comment le BCE peut faire baisser l'euro 10 avril 2014 Pourquoi Manuel Valls a raison de critiquer la BCE 4 avril 2014 Comment Manuel Valls peut convaincre Bruxelles 27 mars 2014 Chômage, droit du travail / l'Etat n'a pas tout essayé 20 mars 2014 Rachat de SFR : pourquoi il faut supprimer le ministère du Redressement productif 17 mars 2014 Hollande l'avait promis, Renzi le fait ! 10 mars 2014 Pourquoi les déficits ont de belles années devant eux 28 février 2014 Qui va payer pour l'Ukraine? 24 février 2014 Pourquoi la zone euro est menacée par un arrêt de la cour constitutionnelle allemande 14 février 2014 Confédération hélvétique-Europe : la guerre n'aura pas lieu 7 février 2014 Pourquoi la croissance revient en Amérique et en Grande-Bretagne mais pas en France ​ RADIO AND TV ​ Radio Télévision Suisse Liste More later... Articles mensuels entre 1995 et 2003 ​ complète et accès. Liste

    • Charles Wyplosz Economics and Europe

      NEW: Personal blog In English and in French Recent papers What's wrong with fiscal space? Creating a decentralized Europe Public Debt Sustainability Fiscal rules for Europe (a comment on the AEA presidential address by Blanchard) Olivier in Wonderland Recent media articles (in English) , September 9, 2020 Ever lucky dollar, Finanz und Wirtschaft - VoxEU, June 2020 So far, so good: And now don’t be afraid of moral hazard , Finanz und Wirtschaft, May 2020 A Covid test for Europe Recent media articles (in French) , Telos, 20 octobre 2020 Le débat sur les contreparties est un faux sujet , Telos, 15 septembre 2020 Covid, il n'y pas plus le droit à l'erreur , Le Temps, 8 octobre 2020 Les marchés boursiers sont-ils sur un petit nuage , Le Temps, 17 septembre 2020 La fin du tunnel , Telos, 16 septembre 2020 Le plan de relance qui n'en est pas un NEW: Two VoxEU volumes on coronavirus: and . Here here

    • 2020.3.2 Coronavirus | Charles Wyplosz

      The good thing about coronavirus ​ March 2, 2020 ​ ​ ​ It is far too early to know whether the coronavirus epidemic will have been just a huge scare or a major disaster. Some epidemiologists fear that half of the world population may be infected. With a mortality rate of 2%, this means that 1% of the currently living could be wiped out. The toll would be 78 million people, a bit less than the size of the population of Germany or Turkey. There are no words to describe such a threat. How can one think of a “good thing” about this immense threat, then? So far at least, the epidemic looks like a giant Rohrschach test, you know these colored inkblots that reveal your personality, except that it reveals the nature of governments and, more widely, societies. It is fascinating to observe how governments react to the threat. Even if the epidemic soon disappears, eventually its fallout could be spectacular, for better or for worse. Take China, a country whose government has been keen to promote worldwide its autocratic and secretive regime. The initial cover-up was unsustainable and forced the government to a U-turn that all citizens could see, a rare event. The famous hospital built in ten days looked like a massive achievement, until it backfired when the health system became visibly overwhelmed, in effect abandoning scores of sick people. The tight limitations imposed on the population may eventually be efficient but it has violated elementary human rights. Even though most citizens are under no illusion about the nature of the regime, this is a traumatic experience. Similar observations apply to other autocratic and secretive regimes. Iran’s unbelievable numbers of reported cases and deaths will eventually blow up. Russia is likely to follow the same path, as it did with AIDS a while ago. As we know from the Chernobyl case, people are deeply hurt when they discover that their governments chose to protect the regime over their own lives. There is always a price to pay, sooner or later. Trump’s initial denial of the issue will be soon be revealed as yet another lie. Maybe the US health system is better equipped to deal with the epidemic than most others, but the President will suffer badly if it emerges that his early denial has led to scores of avoidable deaths. The Italian and South-Korean governments also reacted very slowly. Either they were not aware of what was going on or they were clueless about what to do, they were just incompetent. In France, politicized trade unions of health workers immediately blamed the government for a lack of resources, even though it is acting fast, forcefully and transparently. Divisions will rise in an already deeply divided country. The cruise ship moored in Yokohama has been turned into a Petri dish. Amazingly, the Japanese health authorities tested a minority of the stranded passengers, officially due to a lack of equipment. At the same time, another cruise ship was quarantined in Hong Kong and all passengers were promptly tested. Japan hardly qualifies as a poor country short on technical skills, but its narrow political elite and its bureaucracy are well-known for their bad habits, as the Fukushima disaster already revealed. A telling contrast is Switzerland. As soon as the first two cases were identified, the government built up testing centers and required that large events (more than 1000 people) be cancelled. Highly expensive exhibitions, like the Geneva auto show or the prestigious watch show, were instantly cancelled. For a country frequently derided for being slow at everything (maybe except downhill skiing), its speed of reaction stands to reduce the extent of the epidemic even though its borders remain widely open. Then look at Israel, which turns its back to foreigners coming from some infected countries when they land at the airport, where they are not even allowed to disembark, while Israeli citizens coming in from the same countries are immediately taken care of. If that is not a fortress mentality, then what is? Epidemiologists worry about the impact of the epidemic in poor, ill-equipped countries. Kazakhstan and Côte d’Ivoire have built brand new capital cities but they may lack elementary health systems, like many other countries whose armies sport advanced weaponry. Development economists have long identified health systems as a priority that public and private donors should focus on. They stand to be proven right, but the proof might be cruel. These examples, and many more will occur in the coming weeks, should not go unnoticed when the epidemic finally tempers down. They all will reveal what is deeply wrong, sometimes reassuringly good, in each country. These things mostly went unnoticed because they have been part of the landscape for a very long time, just a normal fact of life. If many lives are lost, they will be exposed for all to see. Hopefully, it will be much more difficult to ignore the facts or blame foreigners for national failings. This could be the silver lining of the disaster that awaits the world. It would be a tragic failure if the lessons that we are about to learn end up wasted.

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