Daily Archives: March 5, 2013

Nobel prize-winning economist Paul Krugman, during a visit to Brussels in 2009.

Nobel prize-winning economist Paul Krugman has in recent weeks emerged as something of a bête noir for EU economic chief Olli Rehn, singling out the understated Finn as the symbol of the austerity-led eurozone crisis response that Krugman blames for exacerbating Europe’s economic recession.

Last week, after “browsing through the collected speeches of Olli Rehn”, who he declares “the face of denialism when it comes to the effects of austerity”, he criticised the European Commission vice president for arguing that budgetary tightening is the reason for the recent eurozone market calm, when Krugman believes it was more European Central Bank action.

That followed a particularly nasty attack a few days earlier at what Krugman labelled a “Rehn of Terror”, saying that Rehn’s repeated predictions that economic growth was returning was misleading – and taking Rehn to task for a letter to EU finance ministers in which he said the recent academic debate over austerity and growth “has not been helpful”. Read more >>

It is all about to start. EU finance ministers will for the first time debate bankers’ bonuses. Brussels may say it loves democracy, but the meeting is fixed so the most contentious discussion is off-camera, in secret. George Osborne, UK chancellor, will gingerly defend his position against the planned bonus cap in the public debate afterwards, but by then the outcome of the negotiation will be clear. Think of it more like a post-match interview. This is a short guide to what to expect:

Will Osborne be able to overturn the bonus cap? Without wanting to ruin the suspense, the answer is no. The main terms of the political deal — a 1:1 bonus-to-salary ratio, which can raise to 2:1 with a shareholder vote — is here to stay. The European parliament is wedded to it. And apart from Britain, every other country is willing to compromise. Read more >>