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July 2011

Norway Atrocities Raise Challenges About Europe's Far-Right (7/29)

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Last week’s atrocities in Norway were an act of far-right violence on a scale unknown in Western Europe in the post-World War II era, and they have scalded European politics with sudden fear about the possible extreme consequences of anti-Muslim populist rhetoric.
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Both EU and U.S. Have Debt Crises But Their Economic Outlooks Differ (7/28)

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Rhetoric about the debt threats sounds similar on both sides of the Atlantic, focusing on political leaders’ apparent inability to cope with the crises. In fact, the resemblances and comparisons are superficial, argues prominent economist Simon Johnson in a trenchant article entitled: “Who Is In Worse Shape – The United States or Europe?”

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Perspectives: Credit Ratings Should Not Be Used/Abused As Bad Crutches (7/26)

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The recent events in the eurozone have raised questions about the appropriate role of independent credit ratings in the financial system and prompted a flurry of suggestions from European policymakers, from intervening in ratings methodologies to suspending certain sovereign ratings.

The bigger question for the financial system is how ratings are used by regulators and policymakers. Their reliance on ratings in determining regulatory and policy decisions may be encouraging excessive focus on rating agency opinions.

Deven Sharma – president of Standards & Poor’s – explores the right way to use the agencies in a July 25. Financial Times article that you can read here (or here). What is needed, according to Sharma, is a more thoughtful way to reduce what some perceive as the excessive influence of ratings in financial markets and the financial policy process.

He says that rating agencies do not claim to be the sole voice expressing reasoned views about the future. (The Federal Reserve appears to agree as it said on Monday (25 July) that the U.S. government is trying to reduce any undue reliance on credit ratings.)

The head of S&P believes that a better approach is to drop regulatory mandates to use ratings and avoid making ratings the sole criteria for policy decisions. That would reduce their impact on markets and on public policy. And it would free rating firms to compete entirely on quality. Investors, in turn, would have the discretion to choose which are useful and which are not, without being compelled to refer to particular benchmarks by regulatory or policy measures.

Standard & Poor’s is a subsidiary of McGraw-Hill Companies – a corporate member of the European Institute.

Perspectives is an occasional forum of The European Institute reflecting member views on topical issues.

 

Perspectives: Priorities of Polish Presidency of EU (7/22)

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Poland has taken over the rotating presidency of the EU for the first time since it joined the bloc in 2004. Poles are largely "pro-Europe" and are enjoying an economic growth rate of about 3.5%.  So even though the country is not part of the eurozone, Poland has indicated that it will use its six months in the EU guidance role both to strengthen the single market and help set up the next EU budgets with more sources of revenue. The group, Cicero Consulting, says that Warsaw will also pursue reforms in economic governance, including the implementation of new regulatory authority for improved EU-wide oversight in banking and broader financial services. There are also new taxation issues for the EU to be tackled by the Polish presidency. Cicero has produced a clear outline of these challenges in a report to be read here.

Cicero Consulting is a member of The European Institute.

Perspectives is an occasional forum of The European Institute reflecting member views on topical issues.

 

"Bail-out 2.0" for Greece Set by Eurozone; Step Risks Temporary Default by Athens (7/21)

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Leaders of the eurozone countries have agreed a new bailout package for Greece worth 109bn euros ($155bn). It includes, for the first time, support from private lenders, including banks, which will give Greece easier repayment terms.

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"Bail-out 2.0" for Greece: Emergency EU Meeting Has New Ideas (7/20)

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Ahead of an emergency eurozone meeting on a second Greek bail-out on July 21 in Brussels, a mix of new options has emerged in an effort to shift part of the costs to creditor banks – without triggering a default call by international ratings agencies.

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French Feminism Appears Re-Energized by DSK Affair of Alleged Rape (7/18)

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The “DSK affair” of alleged rape seems to have triggered a feminist awakening in France. Women’s organizations that had fallen out of view suddenly are getting renewed attention in the political sphere and the media. Suddenly, issues like rape, incest and sexual harassment have become worthy of public debate, according to the New York Times' Elaine Sciolino, author of a new book about France entitled "La Seduction."

More quietly, militancy about women’s rights already had been regaining ground in France in recent years, but the focus then was mostly on the poorer Arab-dominated “banlieues” where women’s basic rights have often been suppressed. Forty feminist organizations met at a conference in the Paris suburb of Évry and pledged to make the war against rape their main cause in the coming year.

-- European Affairs

 

U.S. Space Shuttle Termination May Lead to Joint Project with EU's ESA (7/13)

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The space shuttle Atlantis – an iconic vehicle in the history of U.S. aerospace activity – lifted off on its last trip to the International Space Station (ISS), on July 8, closing an era of manned space flight for NASA (the National Aeronautics and Space Administration).

 

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“South Sudan” – Succesful Secession Backed by EU and U.S. (7/13)

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The world’s newest country, South Sudan, acquired statehood on July 9 as a result of a partition of Sudan that was strongly encouraged by the U.S. (over many years) and ultimately by the EU as a last resort for ending civil war between the largely-Arab north and the sub-Saharan south.

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