You could argue there’s a link between the trouble institutions are in and their propensity to use Powerpoint. See under: the U.S. Army and Afghanistan.
Now try the European Central Bank and the euro crisis.
Italian economist, ECB board member, and noted detester of bank analysts Lorenzo Bini Smaghi used a bunch of slides to explain a talk on imbalances in the eurozone on Friday. These ones are actually pretty informative take on the big picture, though.
For example, here are a few graphs that help give background to why markets have put Spain and its banks in the same doghouse as their Greek peers (click to enlarge):
While here’s Smaghi on the ‘three don’ts’ of fixing the eurozone:
1. Don’t assume that all (agents/governments/markets) have learned the lesson from this crisis: Stronger surveillance and crisis prevention
2. Don’t assume that there will be no more crises: Crisis management
3. Don’t assume that there are “easy solutions” to complex problems (“orderly debt restructuring”; “expulsion”…)
And the solutions on offer here are all about adding more complexity on top of the eurozone’s institutional architecture.
‘Increasing the quasi-automaticity of the EDP [Excessive Deficit Procedure]‘, setting up independent budget offices at the national level, and so on. More fiscal union, in short. Easier powerpointed than done, however.
And it’s doubtful whether debt restructuring or eurozone exit really have been put forward as easy solutions — or whether they’ve just become politically realistic for the first time in the euro’s existence.
BNY Mellon’s Simon Derrick returned to the German question on Monday, for example (our link and emphasis):
Although we continue to struggle to see how, technically, the EUR could be broken up, we are also aware that it is not a complete impossibility (if it was then why would the ECB have bothered to publish a Legal Working Paper titled: “Withdrawal and expulsion from the EU and EMU: some reflections”). If this is true then we must also play devil’s advocate and ask which nation would likely leave first. We continue to believe that the most elegant solution would be a German exit.
…other Eurozone members might find Germany’s exit quite an attractive proposition. It is arguable that prior to the introduction of the EUR almost every European currency crisis of the 80’s and 90’s came down, in part, to German intransigence. Moreover, it seems clear that Germany has won few friends within Europe over the past few months. Hence, many might feel that without Germany the remaining members of the Eurozone could not only regain much of the competitiveness they have lost over the past decade… but also make a meaningful push towards fiscal union. Not only that but it could also finally have ECB policy that was more aligned towards the needs of its more southerly (and westerly) members.
Derrick still considers a German exit an unlikely end to the crisis, which is a fair assessment of the ties binding German banks to the eurozone. But then again, the extent of this crisis itself looked unlikely a year ago.
Related links:
The Crisis & the Euro – George Soros / NYRB
Why is the ECB shooting the Greek debt messengers? – FT Alphaville
Drowning in euros – FT Alphaville