{"id":3570,"date":"2012-02-07T11:57:28","date_gmt":"2012-02-07T16:57:28","guid":{"rendered":"http:\/\/www.multiplier-effect.org\/?p=3570"},"modified":"2012-02-07T11:57:56","modified_gmt":"2012-02-07T16:57:56","slug":"europes-bankers-first-approach","status":"publish","type":"post","link":"https:\/\/blogs.bard.edu\/multiplier-effect\/europes-bankers-first-approach\/","title":{"rendered":"Europe&#8217;s &#8220;Bankers First&#8221; Approach"},"content":{"rendered":"<p>&#8220;&#8230;while Europe&#8217;s leaders haven&#8217;t hit upon a way to forestall a years-long span of catastrophically high unemployment and falling living standards, they do appear to be really really really really committed to saving banks.&#8221;\u00a0 That&#8217;s <em>Slate<\/em>&#8216;s Matthew Yglesias, who <a href=\"http:\/\/www.slate.com\/blogs\/moneybox\/2012\/02\/06\/europe_s_elites_haven_t_saved_themselves_but_may_have_saved_america.html\">notes<\/a> that this (seemingly exclusive) focus among European elites on saving their banks likely ends up protecting the US economy from eurozone contagion more effectively than would policies focused on growth and easing the plight of those whose wellbeing depends on the &#8220;real&#8221; economy.<\/p>\n<p>The reason is that, as Gennaro Zezza <a href=\"http:\/\/www.multiplier-effect.org\/?p=2302\">points out here<\/a>, the US economy is not overly exposed to a slowdown in European growth; not overly exposed, that is, compared to the fallout from a European financial panic.\u00a0 As Dimitri Papadimitriou and Randall Wray <a href=\"http:\/\/www.levyinstitute.org\/pubs\/op_24.pdf\">indicate<\/a>, US finance is still entwined with the fate of European finance; at least in part due to the roughly $1.5 trillion invested in European banks by US money market mutual funds.<\/p>\n<p>In other words, comparatively speaking, the US economy will not suffer much from European policy elites&#8217; apparent relative disinterest toward the fate of their people, but may dodge a bullet if current efforts to save the European banking system work out.\u00a0 (At least in the short run.\u00a0 In the longer run, Ryan Avent is probably right to <a href=\"http:\/\/www.economist.com\/blogs\/freeexchange\/2012\/02\/euro-crisis-3\">worry<\/a> that this LTRO stuff may just amount to sweeping serious problems under the rug:\u00a0 &#8220;&#8230;when failure is never allowed the system becomes more brittle and the cost of a blow-up, which probably isn&#8217;t avoidable for ever, rises.&#8221;)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;&#8230;while Europe&#8217;s leaders haven&#8217;t hit upon a way to forestall a years-long span of catastrophically high unemployment and falling living standards, they do appear to be really really really really committed to saving banks.&#8221;\u00a0 That&#8217;s Slate&#8216;s Matthew Yglesias, who notes that this (seemingly exclusive) focus among European elites on saving their banks likely ends up [&hellip;]<\/p>\n","protected":false},"author":202,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15,8,116],"tags":[133,31,192,199,119],"class_list":["post-3570","post","type-post","status-publish","format-standard","hentry","category-eurozone-crisis","category-financial-crisis","category-international-trade","tag-banking","tag-eurozone","tag-ltro","tag-money-market-mutual-funds","tag-u-s-exports"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/3570","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/users\/202"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/comments?post=3570"}],"version-history":[{"count":17,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/3570\/revisions"}],"predecessor-version":[{"id":3591,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/3570\/revisions\/3591"}],"wp:attachment":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/media?parent=3570"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/categories?post=3570"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/tags?post=3570"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}