• With Bailout of Greece, Eurozone Faces Important Test

    Greece's Prime Minister, George Papandreou , promised that his country will adhere to the European Union's rescue plan and will make spending cuts to bring down the deficit. Currently, the deficit is at 12.7% of GDP, and Papandreou has said his government will bring it down to 2% over the next three years. The recent struggles of Greece--along with other countries, like Spain--are taking a toll on the Eurozone. Wolfgang Munchau , columnist for the Financial Times , writes that the Euro Zone "is entering the most dangerous phase in its 11-year history." He sees the bailout of Greece as an important test. The political maneuvering must be in support of strong economic policy, and actions must be transparent in order to "achieve a maximum degree of legitimacy." Munchau: A good crisis-resolution system must also minimise moral hazard. Countries that benefit from help will have to accept a partial loss of sovereignty, and for this reason it is important that any such regime has wide political backing in all the member states. While eurozone members lack the political will for unconditional bail-outs, they accept that they need to help each other during a crisis. But this help is attached to the condition that the recipient takes corrective action. The second essential prerequisite for survival is a reduction in internal imbalances, which lie at the core of the current crisis. This is an issue that requires action both in countries with large current account deficits, such as Greece and Spain, and in those with large surpluses such as Germany. While Spain, for example, would need to reform its labour market to bring about adjustments in real wages, Germany should implement policies to stimulate consumption, including a long-overdue income tax reform. The build-up of these imbalances is the underlying reason why the Greek problem got out of hand. The place to handle this co-ordination is the eurogroup of the finance ministers of the eurozone, which now constitutes an official European Union institution under the Lisbon treaty. Jean-Claude Juncker , the prime minister of Luxembourg and chairman of the eurogroup, should make imbalances the defining issue of his agenda and propose binding policies. Read What the eurozone must do if it is to survive here .

  • The Street Poll on the Impact of Dubai Crisis

    The United Arab Emirates has "pledge[d] to lend money to banks operating in Dubai ," according to the New York Times , in an effort to prevent big disruptions on markets around the world after Dubai's announcement on Friday that the once-high-flying emirate needs to "reschedule" debt payments. The Street 's Eric Rosenbaum is now polling readers, asking who will be hit the hardest by the Dubai "sand trap," and he writes that the impact could be widespread: Big bank lenders to Dubai and the United Arab Emirates, including the Royal Bank of Scotland ( RBS Quote ) , HSBC ( HSBC Quote ) and Standard Chartered were throttled, as was the entire banking sector in the broad sell-off. However, the implications from the Dubai sand-trap could spread across many players, sectors and slices of the economy, and it's still anyone's guess as to the true significance of the debt crisis. There is already talk that the problems in Dubai could serve as an emerging-markets contagion, harkening back to Argentina in 2000 and Russia in the 1990s. Read the article and participate in the poll here .

  • Doing Business Country by Country

    The World Bank has a map that serves as a great reference for the relative ease of doing business around the globe. It covers 183 economies, and rates how easy or difficult it is to conduct business in each. Each country is rated easy, moderate, or difficult. Click on a country to get its exact ranking based on factors like "starting a business," "getting credit," "protecting investors," and "trading across borders" (there are 10 categories in all). Then keep clicking through for more and more precise and country-specific data. Here's a quick look at the map: Click here to use the interactive map.

  • OECD Report: 'Deepest and Most Widespread Post-War Recession'

    The Organisation for Economic Co-operation and Development released its Interim Economic Outlook report this week, ahead of tomorrow's G20 summit, and it is another dire report on the global economic crisis. The report's authors seem struck by the reach of the current crisis. The write, "the OECD economy is in the midst of its deepest and most wide-spread recession for more than 50 years." The OECD is made up of 30 different countries--mostly from Europe, but also major global economies like the United States, Australia, Japan, Canada and Mexico--and as the below chart shows, almost every member nation has had a downturn for at least the last two quarters: In the report, the OECD makes an urgent call for restoring confidence in the markets, and finding ways to unfreeze credit and get lending started up again. In the below interview, OECD Secretary General Angel Gurria emphasizes calls on G20 nations to focus on those goals at the summit tomorrow: Read the OECD's interim Economic Outlook report here, and a country-by-country analysis of the G7 nations here .