Money talks: financing the periphery buys Berlin a leading role recasting the eurozone governance framework. The recent ‘six pack’ of legislative reforms hints at what’s to come: institutionalized fiscal discipline and an excessive imbalances procedure that protects against future moral hazard. The whole eurozone will tilt toward the German surplus model as we get more fiscal integration and more German leverage.

Political scientists don't work at banks—which is a problem. As political issues become more important for the markets, analysts at banks are asked all sorts of questions they don't have the ability to answer. And if you're getting paid to answer questions—as analysts at banks are—you never want to be in the position of saying you don't know.

The great thing about the U.S. economy right now is that we are the smart kids in the stupid-kid class. America has fiscal problems and gridlock issues and polarity and partisanship in Congress -- and yet, compared to Japan and Europe, the U.S. looks great.

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India and China offer intriguing mirror images. Modern India has long been open politically and, until recently, closed economically. Modern China has opened economically, but remains politically closed. The comparison reveals that, while politics and economics can never fully be separated, political openness is a better guarantor of long-term stability than economic openness.

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In the last 21 months, if you've learnt anything, it's that the state is back. If the free market fails, it's not because it's been defeated by state capitalism; the only people that can defeat the free market is us, we're the only ones who can destroy it.