title: European debt crisis

text: In September 2011, Jürgen Stark became the second German after Axel A. Weber to resign from the ECB Governing Council in 2011. Weber, the former Deutsche Bundesbank president, was once thought to be a likely successor to Jean-Claude Trichet as bank president. He and Stark were both thought to have resigned due to "unhappiness with the ECB's bond purchases, which critics say erode the bank's independence".


title: European debt crisis

text: Stark was "probably the most hawkish" member of the council when he resigned. Weber was replaced by his Bundesbank successor Jens Weidmann, while Belgium's Peter Praet took Stark's original position, heading the ECB's economics department.


title: European debt crisis

text: On 22 December 2011, the ECB started the biggest infusion of credit into the European banking system in the euro's 13-year history. Under its Long Term Refinancing Operations (LTROs) it loaned to 523 banks for an exceptionally long period of three years at a rate of just one per cent. Previous refinancing operations matured after three, six, and twelve months. The by far biggest amount of was tapped by banks in Greece, Ireland, Italy and Spain.


title: European debt crisis

text: This way the ECB tried to make sure that banks have enough cash to pay off their own maturing debts in the first three months of 2012, and at the same time keep operating and loaning to businesses so that a credit crunch does not choke off economic growth. It also hoped that banks would use some of the money to buy government bonds, effectively easing the debt crisis. On 29 February 2012, the ECB held a second auction, LTRO2, providing 800 eurozone banks with further in cheap loans. Net new borrowing under the €529.5 billion February auction was around €313 billion; out of a total of €256 billion existing ECB lending (MRO + 3m&6m LTROs), €215 billion was rolled into LTRO2.


title: European debt crisis

text: ECB lending has largely replaced inter-bank lending. Spain has €365 billion and Italy has €281 billion of borrowings from the ECB (June 2012 data). Germany has €275 billion on deposit.


title: European debt crisis

text: On 16 June 2012 the European Central Bank together with other European leaders hammered out plans for the ECB to become a bank regulator and to form a deposit insurance program to augment national programs. Other economic reforms promoting European growth and employment were also proposed.<ref name="NYTECB6/16"></ref>


title: European debt crisis

text: On 6 September 2012, the ECB announced to offer additional financial support in the form of some yield-lowering bond purchases (OMT), for all eurozone countries involved in a sovereign state bailout program from EFSF/ESM. A eurozone country can benefit from the program if -and for as long as- it is found to suffer from stressed bond yields at excessive levels; but only at the point of time where the country possesses/regains a complete market access -and only if the country still complies with all terms in the signed Memorandum of Understanding (MoU) agreement. Countries receiving a precautionary programme rather than a sovereign bailout will, by definition, have complete market access and thus qualify for OMT support if also suffering from stressed interest rates on its government bonds. In regards of countries receiving a sovereign bailout (Ireland, Portugal and Greece), they will on the other hand not qualify for OMT support before they have regained complete market access, which will normally only happen after having received the last scheduled bailout disbursement. Despite none OMT programmes were ready to start in September/October, the financial markets straight away took notice of the additionally planned OMT packages from ECB, and started slowly to price-in a decline of both short-term and long-term interest rates in all European countries previously suffering from stressed and elevated interest levels (as OMTs were regarded as an extra potential back-stop to counter the frozen liquidity and highly stressed rates; and just the knowledge about their potential existence in the very near future helped to calm the markets).


title: European debt crisis

text: The European Stability Mechanism (ESM) is a permanent rescue funding programme to succeed the temporary European Financial Stability Facility and European Financial Stabilisation Mechanism in July 2012 but it had to be postponed until after the Federal Constitutional Court of Germany had confirmed the legality of the measures on 12 September 2012. The permanent bailout fund entered into force for 16 signatories on 27 September 2012. It became effective in Estonia on 4 October 2012 after the completion of their ratification process.


title: European debt crisis

text: On 16 December 2010 the European Council agreed a two line amendment to the EU Lisbon Treaty to allow for a permanent bail-out mechanism to be established including stronger sanctions. In March 2011, the European Parliament approved the treaty amendment after receiving assurances that the European Commission, rather than EU states, would play 'a central role' in running the ESM. The ESM is an intergovernmental organisation under public international law. It is located in Luxembourg.


title: European debt crisis

text: Such a mechanism serves as a "financial firewall". Instead of a default by one country rippling through the entire interconnected financial system, the firewall mechanism can ensure that downstream nations and banking systems are protected by guaranteeing some or all of their obligations. Then the single default can be managed while limiting financial contagion.


title: European debt crisis

text: In March 2011 a new reform of the Stability and Growth Pact was initiated, aiming at straightening the rules by adopting an automatic procedure for imposing of penalties in case of breaches of either the 3% deficit or the 60% debt rules. By the end of the year, Germany, France and some other smaller EU countries went a step further and vowed to create a fiscal union across the eurozone with strict and enforceable fiscal rules and automatic penalties embedded in the EU treaties. On 9 December 2011 at the European Council meeting, all 17 members of the eurozone and six countries that aspire to join agreed on a new intergovernmental treaty to put strict caps on government spending and borrowing, with penalties for those countries who violate the limits. All other non-eurozone countries apart from the UK are also prepared to join in, subject to parliamentary vote. The treaty will enter into force on 1 January 2013, if by that time 12 members of the euro area have ratified it.


title: European debt crisis

text: Originally EU leaders planned to change existing EU treaties but this was blocked by British prime minister David Cameron, who demanded that the City of London be excluded from future financial regulations, including the proposed EU financial transaction tax. By the end of the day, 26 countries had agreed to the plan, leaving the United Kingdom as the only country not willing to join. Cameron subsequently conceded that his action had failed to secure any safeguards for the UK. Britain's refusal to be part of the fiscal compact to safeguard the eurozone constituted a "de facto" refusal (PM David Cameron vetoed the project) to engage in any radical revision of the Lisbon Treaty. John Rentoul of "The Independent" concluded that "Any Prime Minister would have done as Cameron did".


title: European debt crisis

text: On 28 June 2012, eurozone leaders agreed to permit loans by the European Stability Mechanism to be made directly to stressed banks rather than through eurozone states, to avoid adding to sovereign debt. The reform was linked to plans for banking regulation by the European Central Bank. The reform was immediately reflected by a reduction in yield of long-term bonds issued by member states such as Italy and Spain and a rise in value of the Euro.


title: European debt crisis

text: There has been substantial criticism over the austerity measures implemented by most European nations to counter this debt crisis. US economist and Nobel laureate Paul Krugman argues that an abrupt return to "'non-Keynesian' financial policies" is not a viable solution. Pointing at historical evidence, he predicts that deflationary policies now being imposed on countries such as Greece and Spain will prolong and deepen their recessions. Together with over 9,000 signatories of ""A Manifesto for Economic Sense"" Krugman also dismissed the belief of austerity focusing policy makers such as EU economic commissioner Olli Rehn and most European finance ministers that "budget consolidation" revives confidence in financial markets over the longer haul. In a 2003 study that analysed 133 IMF austerity programmes, the IMF's independent evaluation office found that policy makers consistently underestimated the disastrous effects of rigid spending cuts on economic growth. In early 2012 an IMF official, who negotiated Greek austerity measures, admitted that spending cuts were harming Greece. In October 2012, the IMF said that its forecasts for countries which implemented austerity programmes have been consistently overoptimistic, suggesting that tax hikes and spending cuts have been doing more damage than expected, and countries which implemented fiscal stimulus, such as Germany and Austria, did better than expected. Also Portugal did comparably better than Spain. The latter introduced drastic austerity measures but was unable not meet its EU budget deficit targets. On the other hand, Portugal's leftist coalition fought austerity (it increased the minimum wage by 25 percent and took back cuts in the pension system and the public sector) and at the same time reduced its budget deficit to below three percent in 2016. According to historian Florian Schui from University of St. Gallen no austerity program has ever worked. Schui particularly notes Winston Churchill's attempt in 1925 and Heinrich Brüning's attempt in 1930 during the Weimar Republic. Both led to disastrous consequences.


title: European debt crisis

text: According to Keynesian economists "growth-friendly austerity" relies on the false argument that public cuts would be compensated for by more spending from consumers and businesses, a theoretical claim that has not materialised.


title: European debt crisis

text: The case of Greece shows that excessive levels of private indebtedness and a collapse of public confidence (over 90% of Greeks fear unemployment, poverty and the closure of businesses) led the private sector to decrease spending in an attempt to save up for rainy days ahead.


title: European debt crisis

text: This led to even lower demand for both products and labour, which further deepened the recession and made it ever more difficult to generate tax revenues and fight public indebtedness. According to Financial Times chief economics commentator Martin Wolf, "structural tightening does deliver actual tightening. But its impact is much less than one to one. A one percentage point reduction in the structural deficit delivers a 0.67 percentage point improvement in the actual fiscal deficit." This means that Ireland e.g. would require structural fiscal tightening of more than 12% to eliminate its 2012 actual fiscal deficit. A task that is difficult to achieve without an exogenous eurozone-wide economic boom. According to the Europlus Monitor Report 2012, no country should tighten its fiscal reins by more than 2% of GDP in one year, to avoid recession.


title: European debt crisis

text: Instead of public austerity, a "growth compact" centring on tax increases and deficit spending is proposed. Since struggling European countries lack the funds to engage in deficit spending, German economist and member of the German Council of Economic Experts Peter Bofinger and Sony Kapoor of the global think tank Re-Define suggest providing in additional funds to the European Investment Bank (EIB), which could then lend ten times that amount to the employment-intensive smaller business sector. The EU is currently planning a possible increase in the EIB's capital base. Furthermore, the two suggest financing additional public investments by growth-friendly taxes on "property, land, wealth, carbon emissions and the under-taxed financial sector". They also called on EU countries to renegotiate the EU savings tax directive and to sign an agreement to help each other crack down on tax evasion and avoidance. Currently authorities capture less than 1% in annual tax revenue on untaxed wealth transferred between EU members. According to the Tax Justice Network, worldwide, a global super-rich elite had between $21 and $32 trillion (up to 26,000bn Euros) hidden in secret tax havens by the end of 2010, resulting in a tax deficit of up to $280bn.


title: European debt crisis

text: Apart from arguments over whether or not austerity, rather than increased or frozen spending, is a macroeconomic solution, union leaders have also argued that the working population is being unjustly held responsible for the economic mismanagement errors of economists, investors, and bankers. Over 23 million EU workers have become unemployed as a consequence of the global economic crisis of 2007–2010, and this has led many to call for additional regulation of the banking sector across not only Europe, but the entire world.


title: European debt crisis

text: In the turmoil of the Global Financial Crisis, the focus across all EU member states has been gradually to implement austerity measures, with the purpose of lowering the budget deficits to levels below 3% of GDP, so that the debt level would either stay below -or start decline towards- the 60% limit defined by the Stability and Growth Pact. To further restore the confidence in Europe, 23 out of 27 EU countries also agreed to adopt the Euro Plus Pact, consisting of political reforms to improve fiscal strength and competitiveness; 25 out of 27 EU countries also decided to implement the Fiscal Compact which include the commitment of each participating country to introduce a balanced budget amendment as part of their national law/constitution. The Fiscal Compact is a direct successor of the previous Stability and Growth Pact, but it is more strict, not only because criteria compliance will be secured through its integration into national law/constitution, but also because it starting from 2014 will require all ratifying countries not involved in ongoing bailout programmes, to comply with the new strict criteria of only having a structural deficit of either maximum 0.5% or 1% (depending on the debt level). Each of the eurozone countries being involved in a bailout programme (Greece, Portugal, and Ireland) was asked both to follow a programme with fiscal consolidation/austerity, and to restore competitiveness through implementation of structural reforms and internal devaluation, i.e. lowering their relative production costs. The measures implemented to restore competitiveness in the weakest countries are needed, not only to build the foundation for GDP growth, but also in order to decrease the current account imbalances among eurozone member states.


title: European debt crisis

text: Germany has come under pressure due to not having a government budget deficit and funding it by borrowing more. As of late 2014, the government (federal and state) has spent less than it receives in revenue, for the third year in a row, despite low economic growth. The 2015 budget includes a surplus for the first time since 1969. Current projections are that by 2019 the debt will be less than required by the Stability and Growth Pact.


title: European debt crisis

text: It has been a long known belief that austerity measures will always reduce the GDP growth in the short term. Some economists believing in Keynesian policies criticised the timing and amount of austerity measures being called for in the bailout programmes, as they argued such extensive measures should not be implemented during the crisis years with an ongoing recession, but if possible delayed until the years after some positive real GDP growth had returned. In October 2012, a report published by International Monetary Fund (IMF) also found, that tax hikes and spending cuts during the most recent decade had indeed damaged the GDP growth more severely, compared to what had been expected and forecasted in advance (based on the "GDP damage ratios" previously recorded in earlier decades and under different economic scenarios). Already a half-year earlier, several European countries as a response to the problem with subdued GDP growth in the eurozone, likewise had called for the implementation of a new reinforced growth strategy based on additional public investments, to be financed by growth-friendly taxes on property, land, wealth, and financial institutions. In June 2012, EU leaders agreed as a first step to moderately increase the funds of the European Investment Bank, in order to kick-start infrastructure projects and increase loans to the private sector. A few months later 11 out of 17 eurozone countries also agreed to introduce a new EU financial transaction tax to be collected from 1 January 2014.


title: European debt crisis

text: In April 2012, Olli Rehn, the European commissioner for economic and monetary affairs in Brussels, "enthusiastically announced to EU parliamentarians in mid-April that 'there was a breakthrough before Easter'. He said the European heads of state had given the green light to pilot projects worth billions, such as building highways in Greece." Other growth initiatives include "project bonds" wherein the EIB would "provide guarantees that safeguard private investors. In the pilot phase until 2013, EU funds amounting to €230 million are expected to mobilise investments of up to €4.6 billion." "Der Spiegel" also said: "According to sources inside the German government, instead of funding new highways, Berlin is interested in supporting innovation and programs to promote small and medium-sized businesses. To ensure that this is done as professionally as possible, the Germans would like to see the southern European countries receive their own state-owned development banks, modeled after Germany's [Marshall Plan-era-origin] KfW [""] banking group. It's hoped that this will get the economy moving in Greece and Portugal."


title: European debt crisis

text: In multiple steps during 2012–2013, the ECB lowered its bank rate to historical lows, reaching 0.25% in November 2013. Soon after the rates were shaved to 0.15%, then on 4 September 2014 the central bank shocked financial markets by cutting the razor-thin rates by a further two thirds from 0.15% to 0.05%, the lowest on record. The moves were designed to make it cheaper for banks to borrow from the ECB, with the aim that lower cost of money would be passed on to businesses taking out loans, boosting investment in the economy. The lowered borrowing rates caused the euro to fall in relation to other currencies, which it was hoped would boost exports from the eurozone.


title: European debt crisis

text: Crisis countries must significantly increase their international competitiveness to generate economic growth and improve their terms of trade. Indian-American journalist Fareed Zakaria notes in November 2011 that no debt restructuring will work without growth, even more so as European countries "face pressures from three fronts: demography (an aging population), technology (which has allowed companies to do much more with fewer people) and globalisation (which has allowed manufacturing and services to locate across the world)".


title: European debt crisis

text: In case of economic shocks, policy makers typically try to improve competitiveness by depreciating the currency, as in the case of Iceland, which suffered the largest financial crisis in 2008–2011 in economic history but has since vastly improved its position. Eurozone countries cannot devalue their currency.


title: European debt crisis

text: As a workaround many policy makers try to restore competitiveness through internal devaluation, a painful economic adjustment process, where a country aims to reduce its unit labour costs. German economist Hans-Werner Sinn noted in 2012 that Ireland was the only country that had implemented relative wage moderation in the last five years, which helped decrease its relative price/wage levels by 16%. Greece would need to bring this figure down by 31%, effectively reaching the level of Turkey. By 2012, wages in Greece had been cut to a level last seen in the late 1990s. Purchasing power dropped even more to the level of 1986. Similarly, salaries in Italy fell to 1986 levels and consumption fell to the level of 1950.


title: European debt crisis

text: Other economists argue that no matter how much Greece and Portugal drive down their wages, they could never compete with low-cost developing countries such as China or India. Instead weak European countries must shift their economies to higher quality products and services, though this is a long-term process and may not bring immediate relief.


title: European debt crisis

text: Another option would be to implement fiscal devaluation, based on an idea originally developed by John Maynard Keynes in 1931. According to this neo-Keynesian logic, policy makers can increase the competitiveness of an economy by lowering corporate tax burden such as employer's social security contributions, while offsetting the loss of government revenues through higher taxes on consumption (VAT) and pollution, i.e. by pursuing an ecological tax reform.


title: European debt crisis

text: Germany has successfully pushed its economic competitiveness by increasing the value added tax (VAT) by three percentage points in 2007, and using part of the additional revenues to lower employer's unemployment insurance contribution. Portugal has taken a similar stance and also France appears to follow this suit. In November 2012 French president François Hollande announced plans to reduce tax burden of the corporate sector by within three years, while increasing the standard VAT from 19.6% to 20% and introducing additional eco-taxes in 2016. To minimise negative effects of such policies on purchasing power and economic activity the French government will partly offset the tax hikes by decreasing employees' social security contributions by and by reducing the lower VAT for convenience goods (necessities) from 5.5% to 5%.


title: European debt crisis

text: On 15 November 2011, the Lisbon Council published the Euro Plus Monitor 2011. According to the report most critical eurozone member countries are in the process of rapid reforms. The authors note that "Many of those countries most in need to adjust <nowiki>[...]</nowiki> are now making the greatest progress towards restoring their fiscal balance and external competitiveness".


title: European debt crisis

text: Greece, Ireland and Spain are among the top five reformers and Portugal is ranked seventh among 17 countries included in the report (see graph).


title: European debt crisis

text: In its Euro Plus Monitor Report 2012, published in November 2012, the Lisbon Council finds that the eurozone has slightly improved its overall health. With the exception of Greece, all eurozone crisis countries are either close to the point where they have achieved the major adjustment or are likely to get there over the course of 2013. Portugal and Italy are expected to progress to the turnaround stage in spring 2013, possibly followed by Spain in autumn, while the fate of Greece continues to hang in the balance. Overall, the authors suggest that if the eurozone gets through the current acute crisis and stays on the reform path "it could eventually emerge from the crisis as the most dynamic of the major Western economies".


title: European debt crisis

text: The Euro Plus Monitor update from spring 2013 notes that the eurozone remains on the right track. According to the authors, almost all vulnerable countries in need of adjustment "are slashing their underlying fiscal deficits and improving their external competitiveness at an impressive speed", for which they expected the eurozone crisis to be over by the end of 2013.


title: European debt crisis

text: Regardless of the corrective measures chosen to solve the current predicament, as long as cross border capital flows remain unregulated in the euro area, current account imbalances are likely to continue. A country that runs a large current account or trade deficit (i.e., importing more than it exports) must ultimately be a net importer of capital; this is a mathematical identity called the balance of payments.


title: European debt crisis

text: In other words, a country that imports more than it exports must either decrease its savings reserves or borrow to pay for those imports. Conversely, Germany's large trade surplus (net export position) means that it must either increase its savings reserves or be a net exporter of capital, lending money to other countries to allow them to buy German goods.


title: European debt crisis

text: The 2009 trade deficits for Italy, Spain, Greece, and Portugal were estimated to be $42.96bn, $75.31bn and $35.97bn, and $25.6bn respectively, while Germany's trade surplus was $188.6bn. A similar imbalance exists in the US, which runs a large trade deficit (net import position) and therefore is a net borrower of capital from abroad. Ben Bernanke warned of the risks of such imbalances in 2005, arguing that a "savings glut" in one country with a trade surplus can drive capital into other countries with trade deficits, artificially lowering interest rates and creating asset bubbles.


title: European debt crisis

text: A country with a large trade surplus would generally see the value of its currency appreciate relative to other currencies, which would reduce the imbalance as the relative price of its exports increases. This currency appreciation occurs as the importing country sells its currency to buy the exporting country's currency used to purchase the goods. Alternatively, trade imbalances can be reduced if a country encouraged domestic saving by restricting or penalising the flow of capital across borders, or by raising interest rates, although this benefit is likely offset by slowing down the economy and increasing government interest payments.


title: European debt crisis

text: Either way, many of the countries involved in the crisis are on the euro, so devaluation, individual interest rates, and capital controls are not available. The only solution left to raise a country's level of saving is to reduce budget deficits and to change consumption and savings habits. For example, if a country's citizens saved more instead of consuming imports, this would reduce its trade deficit. It has therefore been suggested that countries with large trade deficits (e.g., Greece) consume less and improve their exporting industries.


title: European debt crisis

text: On the other hand, export driven countries with a large trade surplus, such as Germany, Austria and the Netherlands would need to shift their economies more towards domestic services and increase wages to support domestic consumption.


title: European debt crisis

text: Economic evidence indicates the crisis may have more to do with trade deficits (which require private borrowing to fund) than public debt levels. Economist Paul Krugman wrote in March 2013: "... the really strong relationship within the [eurozone countries] is between interest spreads and current account deficits, which is in line with the conclusion many of us have reached, that the euro area crisis is really a balance of payments crisis, not a debt crisis". A February 2013 paper from four economists concluded that, "Countries with debt above 80% of GDP and persistent current-account [trade] deficits are vulnerable to a rapid fiscal deterioration. ..."


title: European debt crisis

text: In its spring 2012 economic forecast, the European Commission finds "some evidence that the current-account rebalancing is underpinned by changes in relative prices and competitiveness positions as well as gains in export market shares and expenditure switching in deficit countries". In May 2012 German finance minister Wolfgang Schäuble has signalled support for a significant increase in German wages to help decrease current account imbalances within the eurozone.


title: European debt crisis

text: According to the Euro Plus Monitor Report 2013, the collective current account of Greece, Ireland, Italy, Portugal, and Spain is improving rapidly and is expected to balance by mid 2013. Thereafter these countries as a group would no longer need to import capital. In 2014, the current account surplus of the eurozone as a whole almost doubled compared to the previous year, reaching a new record high of 227.9bn Euros.


title: European debt crisis

text: Several proposals were made in mid-2012 to purchase the debt of distressed European countries such as Spain and Italy. Markus Brunnermeier, the economist Graham Bishop, and Daniel Gros were among those advancing proposals. Finding a formula, which was not simply backed by Germany, is central in crafting an acceptable and effective remedy.


title: European debt crisis

text: US President Barack Obama stated in June 2012: "Right now, [Europe's] focus has to be on strengthening their overall banking system...making a series of decisive actions that give people confidence that the banking system is solid ... In addition, they're going to have to look at how do they achieve growth at the same time as they're carrying out structural reforms that may take two or three or five years to fully accomplish. So countries like Spain and Italy, for example, have embarked on some smart structural reforms that everybody thinks are necessary—everything from tax collection to labour markets to a whole host of different issues. But they've got to have the time and the space for those steps to succeed. And if they are just cutting and cutting and cutting, and their unemployment rate is going up and up and up, and people are pulling back further from spending money because they're feeling a lot of pressure—ironically, that can actually make it harder for them to carry out some of these reforms over the long term ... [I]n addition to sensible ways to deal with debt and government finances, there's a parallel discussion that's taking place among European leaders to figure out how do we also encourage growth and show some flexibility to allow some of these reforms to really take root."


title: European debt crisis

text: "The Economist" wrote in June 2012: "Outside Germany, a consensus has developed on what Mrs. Merkel must do to preserve the single currency. It includes shifting from austerity to a far greater focus on economic growth; complementing the single currency with a Banking union of the European Union (with euro-wide deposit insurance, bank oversight and joint means for the recapitalisation or resolution of failing banks); and embracing a limited form of debt mutualisation to create a joint safe asset and allow peripheral economies the room gradually to reduce their debt burdens. This is the refrain from Washington, Beijing, London, and indeed most of the capitals of the euro zone. Why hasn't the continent's canniest politician sprung into action?"


title: European debt crisis

text: The key policy issue that has to be addressed in the long run is how to harmonise different political-economic institutional set-ups of the north and south European economies to promote economic growth and make the currency union sustainable. The Eurozone member states must adopt structural reforms, aimed at promoting labour market mobility and wage flexibility, restoring the south's economies’ competitiveness by increasing their productivity.


title: European debt crisis

text: At the same time, it is vital to keep in mind that just putting emphasis on emulating LME's wage-setting system to CMEs and mixed-market economies will not work. Therefore, apart from wage issues, structural reforms should be focused on developing capacities for innovations, technologies, education, R&D, etc., i.e. all institutional subsystems, crucial for firms’ success. In economies of the south special attention should be given to creating less labour-intensive industries to avoid price competition pressure from emerging low-cost countries (such as China) via an exchange rate channel, and providing a smooth transition of workers from old unsustainable industries to new ones based on the so-called Nordic-style ‘flexicurity’ market model.


title: European debt crisis

text: The crisis is pressuring Europe to move beyond a regulatory state and towards a more federal EU with fiscal powers. Increased European integration giving a central body increased control over the budgets of member states was proposed on 14 June 2012 by Jens Weidmann, President of the Deutsche Bundesbank, expanding on ideas first proposed by Jean-Claude Trichet, former president of the European Central Bank. Control, including requirements that taxes be raised or budgets cut, would be exercised only when fiscal imbalances developed. This proposal is similar to contemporary calls by Angela Merkel for increased political and fiscal union which would "allow Europe oversight possibilities".


title: European debt crisis

text: European banks are estimated to have incurred losses approaching €1 trillion between the outbreak of the financial crisis in 2007 and 2010. The European Commission approved some €4.5 billion in state aid for banks between October 2008 and October 2011, a sum which includes the value of taxpayer-funded recapitalisations and public guarantees on banking debts. This has prompted some economists such as Joseph Stiglitz and Paul Krugman to note that Europe is not suffering from a sovereign debt crisis but rather from a banking crisis.


title: European debt crisis

text: On 6 June 2012, the European Commission adopted a legislative proposal for a harmonised bank recovery and resolution mechanism. The proposed framework sets out the necessary steps and powers to ensure that bank failures across the EU are managed in a way that avoids financial instability. The new legislation would give member states the power to impose losses, resulting from a bank failure, on the bondholders to minimise costs for taxpayers. The proposal is part of a new scheme in which banks will be compelled to "bail-in" their creditors whenever they fail, the basic aim being to prevent taxpayer-funded bailouts in the future. The public authorities would also be given powers to replace the management teams in banks even before the lender fails. Each institution would also be obliged to set aside at least one per cent of the deposits covered by their national guarantees for a special fund to finance the resolution of banking crisis starting in 2018.


title: European debt crisis

text: A growing number of investors and economists say eurobonds would be the best way of solving a debt crisis, though their introduction matched by tight financial and budgetary co-ordination may well require changes in EU treaties. On 21 November 2011, the European Commission suggested that eurobonds issued jointly by the 17 euro nations would be an effective way to tackle the financial crisis. Using the term "stability bonds", Jose Manuel Barroso insisted that any such plan would have to be matched by tight fiscal surveillance and economic policy coordination as an essential counterpart so as to avoid moral hazard and ensure sustainable public finances.


title: European debt crisis

text: Germany remains largely opposed at least in the short term to a collective takeover of the debt of states that have run excessive budget deficits and borrowed excessively over the past years.


title: European debt crisis

text: A group of economists from Princeton University suggest a new form of European Safe Bonds (ESBies), i.e. bundled European government bonds (70% senior bonds, 30% junior bonds) in the form of a "union-wide safe asset without joint liability". According to the authors, ESBies "would be at least as safe as German bonds and approximately double the supply of euro safe assets when protected by a 30%-thick junior tranche". ESBies could be issued by public or private-sector entities and would "weaken the diabolic loop and its diffusion across countries". It requires "no significant change in treaties or legislation.“


title: European debt crisis

text: In 2017 the idea was picked up by the European Central Bank. The European Commission has also shown interest and plans to include ESBies in a future white paper dealing with the aftermath of the financial crisis. The European Commission has recently introduced a proposal to introduce what it calls Sovereign Bond Backed Securities (SBBS) which are essentially the same as ESBies and the European Parliament endorsed the changes in regulations necessary to facilitate these securities in April 2019.


title: European debt crisis

text: On 20 October 2011, the Austrian Institute of Economic Research published an article that suggests transforming the EFSF into a European Monetary Fund (EMF), which could provide governments with fixed interest rate Eurobonds at a rate slightly below medium-term economic growth (in nominal terms). These bonds would not be tradable but could be held by investors with the EMF and liquidated at any time. Given the backing of all eurozone countries and the ECB, "the EMU would achieve a similarly strong position vis-à-vis financial investors as the US where the Fed backs government bonds to an unlimited extent". To ensure fiscal discipline despite lack of market pressure, the EMF would operate according to strict rules, providing funds only to countries that meet fiscal and macroeconomic criteria.


title: European debt crisis

text: Governments lacking sound financial policies would be forced to rely on traditional (national) governmental bonds with less favourable market rates.


title: European debt crisis

text: The econometric analysis suggests that "If the short-term and long- term interest rates in the euro area were stabilised at 1.5% and 3%, respectively, aggregate output (GDP) in the euro area would be 5 percentage points above baseline in 2015". At the same time, sovereign debt levels would be significantly lower with, e.g., Greece's debt level falling below 110% of GDP, more than 40 percentage points below the baseline scenario with market-based interest levels. Furthermore, banks would no longer be able to benefit unduly from intermediary profits by borrowing from the ECB at low rates and investing in government bonds at high rates.


title: European debt crisis

text: According to the Bank for International Settlements, the combined private and public debt of 18 OECD countries nearly quadrupled between 1980 and 2010, and will likely continue to grow, reaching between 250% (for Italy) and about 600% (for Japan) by 2040. A BIS study released in June 2012 warns that budgets of most advanced economies, excluding interest payments, "would need 20 consecutive years of surpluses exceeding 2 per cent of gross domestic product—starting now—just to bring the debt-to-GDP ratio back to its pre-crisis level". The same authors found in a previous study that increased financial burden imposed by ageing populations and lower growth makes it unlikely that indebted economies can grow out of their debt problem if only one of the following three conditions is met:


title: European debt crisis

text: The first condition, suggested by an influential paper written by Kenneth Rogoff & Carmen Reinhart has been disputed due to major calculation errors. In fact, the average GDP growth at public debt/GDP ratios over 90% is not dramatically different from when debt/GDP ratios are lower.


title: European debt crisis

text: The Boston Consulting Group (BCG) adds that if the overall debt load continues to grow faster than the economy, then large-scale debt restructuring becomes inevitable. To prevent a vicious upward debt spiral from gaining momentum the authors urge policymakers to "act quickly and decisively" and aim for an overall debt level well below 180% for the private and government sector. This number is based on the assumption that governments, non-financial corporations, and private households can each sustain a debt load of 60% of GDP, at an interest rate of five per cent and a nominal economic growth rate of three per cent per year. Lower interest rates and/or higher growth would help reduce the debt burden further.


title: European debt crisis

text: To reach sustainable levels the eurozone must reduce its overall debt level by €6.1 trillion. According to BCG, this could be financed by a one-time wealth tax of between 11 and 30% for most countries, apart from the crisis countries (particularly Ireland) where a write-off would have to be substantially higher. The authors admit that such programmes would be "drastic", "unpopular" and "require broad political coordination and leadership" but they maintain that the longer politicians and central bankers wait, the more necessary such a step will be.


title: European debt crisis

text: Thomas Piketty, French economist and author of the bestselling book "Capital in the Twenty-First Century" regards taxes on capital as a more favorable option than "austerity" (inefficient and unjust) and "inflation" (only affects cash but neither real estates nor business capital). According to his analysis, a flat tax of 15 percent on private wealth would provide the state with nearly a year's worth national income, which would allow for immediate reimbursement of the entire public debt.


title: European debt crisis

text: Instead of a one-time write-off, German economist Harald Spehl has called for a 30-year debt-reduction plan, similar to the one Germany used after World War II to share the burden of reconstruction and development. Similar calls have been made by political parties in Germany including the Greens and The Left.


title: European debt crisis

text: In 2015 Hans-Werner Sinn, president of German Ifo Institute for Economic Research, called for a debt relief for Greece. In addition, economists from London School of Economics suggested a debt relief similar to the London agreement. In 1953, private sector lenders as well as governments agreed to write off about half of West Germany’s outstanding debt; this was followed by the beginning of Germany's "economic miracle" (or ""). According to this agreement, West Germany had to make repayments only when it was running a trade surplus, that is "when it had earned the money to pay up, rather than having to borrow more, or dip into its foreign currency reserves. Its repayments were also limited to 3% of export earnings." As LSE researchers note, this had the effect that, Germany's creditors had an incentive to buy the country's goods, so that it would be able to afford to pay them.


title: European debt crisis

text: The European bailouts are largely about shifting exposure from banks and others, who otherwise are lined up for losses on the sovereign debt they have piled up, onto European taxpayers.


title: European debt crisis

text: The EU's Maastricht Treaty contains juridical language that appears to rule out intra-EU bailouts. First, the "no bail-out" clause () ensures that the responsibility for repaying public debt remains national and prevents risk premiums caused by unsound fiscal policies from spilling over to partner countries. The clause thus encourages prudent fiscal policies at the national level.


title: European debt crisis

text: The EU treaties contain so called convergence criteria, specified in the protocols of the Treaties of the European Union. As regards government finance, the states agreed that the annual government budget deficit should not exceed 3% of gross domestic product (GDP) and that the gross government debt to GDP should not exceed 60% of GDP (see ). For eurozone members there is the Stability and Growth Pact, which contains the same requirements for budget deficit and debt limitation but with a much stricter regime. In the past, many European countries have substantially exceeded these criteria over a long period of time. Around 2005 most eurozone members violated the pact, resulting in no action taken against violators.


title: European debt crisis

text: The international US-based credit rating agencies—Moody's, Standard & Poor's and Fitch—which have already been under fire during the housing bubble and the Icelandic crisis—have also played a central and controversial role in the current European bond market crisis. On one hand, the agencies have been accused of giving overly generous ratings due to conflicts of interest. On the other hand, ratings agencies have a tendency to act conservatively, and to take some time to adjust when a firm or country is in trouble. In the case of Greece, the market responded to the crisis before the downgrades, with Greek bonds trading at junk levels several weeks before the ratings agencies began to describe them as such.


title: European debt crisis

text: According to a study by economists at St Gallen University credit rating agencies have fuelled rising euro zone indebtedness by issuing more severe downgrades since the sovereign debt crisis unfolded in 2009. The authors concluded that rating agencies were not consistent in their judgments, on average rating Portugal, Ireland, and Greece 2.3 notches lower than under pre-crisis standards, eventually forcing them to seek international aid. On a side note: as of end of November 2013 only three countries in the eurozone retain AAA ratings from Standard & Poor, i.e. Germany, Finland and Luxembourg.


title: European debt crisis

text: European policy makers have criticised ratings agencies for acting politically, accusing the Big Three of bias towards European assets and fuelling speculation. Particularly Moody's decision to downgrade Portugal's foreign debt to the category Ba2 "junk" has infuriated officials from the EU and Portugal alike.


title: European debt crisis

text: State-owned utility and infrastructure companies like ANA – Aeroportos de Portugal, Energias de Portugal, Redes Energéticas Nacionais, and Brisa – Auto-estradas de Portugal were also downgraded despite claims to having solid financial profiles and significant foreign revenue.


title: European debt crisis

text: France too has shown its anger at its downgrade. French central bank chief Christian Noyer criticised the decision of Standard & Poor's to lower the rating of France but not that of the United Kingdom, which "has more deficits, as much debt, more inflation, less growth than us".


title: European debt crisis

text: Similar comments were made by high-ranking politicians in Germany. Michael Fuchs, deputy leader of the leading Christian Democrats, said: "Standard and Poor's must stop playing politics. Why doesn't it act on the highly indebted United States or highly indebted Britain?", adding that the latter's collective private and public sector debts are the largest in Europe. He further added: "If the agency downgrades France, it should also downgrade Britain in order to be consistent."


title: European debt crisis

text: Credit rating agencies were also accused of bullying politicians by systematically downgrading eurozone countries just before important European Council meetings. As one EU source put it: "It is interesting to look at the downgradings and the timings of the downgradings... It is strange that we have so many downgrades in the weeks of summits."


title: European debt crisis

text: Think-tanks such as the have criticised European powers such as France and Germany for pushing for the adoption of the Basel II recommendations, adopted in 2005 and transposed in European Union law through the Capital Requirements Directive (CRD), effective since 2008. In essence, this forced European banks and more importantly the European Central Bank, e.g. when gauging the solvency of EU-based financial institutions, to rely heavily on the standardised assessments of credit risk marketed by only two private US firms- Moody's and S&P.


title: European debt crisis

text: Due to the failures of the ratings agencies, European regulators obtained new powers to supervise ratings agencies. With the creation of the European Supervisory Authority in January 2011 the EU set up a whole range of new financial regulatory institutions, including the European Securities and Markets Authority (ESMA), which became the EU's single credit-ratings firm regulator. Credit-ratings companies have to comply with the new standards or will be denied operation on EU territory, says ESMA Chief Steven Maijoor.


title: European debt crisis

text: Germany's foreign minister Guido Westerwelle called for an "independent" European ratings agency, which could avoid the conflicts of interest that he claimed US-based agencies faced. European leaders are reportedly studying the possibility of setting up a European ratings agency in order that the private US-based ratings agencies have less influence on developments in European financial markets in the future. According to German consultant company Roland Berger, setting up a new ratings agency would cost €300 million.


title: European debt crisis

text: On 30 January 2012, the company said it was already collecting funds from financial institutions and business intelligence agencies to set up an independent non-profit ratings agency by mid-2012, which could provide its first country ratings by the end of the year. In April 2012, in a similar attempt, the Bertelsmann Stiftung presented a blueprint for establishing an international non-profit credit rating agency (INCRA) for sovereign debt, structured in way that management and rating decisions are independent from its financiers.


title: European debt crisis

text: But attempts to regulate credit rating agencies more strictly in the wake of the eurozone crisis have been rather unsuccessful. financial law and regulation experts have argued that the hastily drafted, unevenly transposed in national law, and poorly enforced EU rule on ratings agencies (Regulation EC N° 1060/2009) has had little effect on the way financial analysts and economists interpret data or on the potential for conflicts of interests created by the complex contractual arrangements between credit rating agencies and their clients"


title: European debt crisis

text: Some in the Greek, Spanish, and French press and elsewhere spread conspiracy theories that claimed that the U.S. and Britain were deliberately promoting rumors about the euro in order to cause its collapse or to distract attention from their own economic vulnerabilities. "The Economist" rebutted these "Anglo-Saxon conspiracy" claims, writing that although American and British traders overestimated the weakness of southern European public finances and the probability of the breakup of the eurozone breakup, these sentiments were an ordinary market panic, rather than some deliberate plot.


title: European debt crisis

text: Greek Prime Minister Papandreou is quoted as saying that there was no question of Greece leaving the euro and suggested that the crisis was politically as well as financially motivated. "This is an attack on the eurozone by certain other interests, political or financial". The Spanish Prime Minister José Luis Rodríguez Zapatero has also suggested that the recent financial market crisis in Europe is an attempt to undermine the euro. He ordered the Centro Nacional de Inteligencia intelligence service (National Intelligence Centre, CNI in Spanish) to investigate the role of the "Anglo-Saxon media" in fomenting the crisis. So far, no results have been reported from this investigation.


title: European debt crisis

text: Other commentators believe that the euro is under attack so that countries, such as the UK and the US, can continue to fund their large external deficits and government deficits, and to avoid the collapse of the US$. The US and UK do not have large domestic savings pools to draw on and therefore are dependent on external savings e.g. from China. This is not the case in the eurozone, which is self-funding.


title: European debt crisis

text: Both the Spanish and Greek Prime Ministers have accused financial speculators and hedge funds of worsening the crisis by short selling euros. German chancellor Merkel has stated that "institutions bailed out with public funds are exploiting the budget crisis in Greece and elsewhere".


title: European debt crisis

text: Goldman Sachs and other banks faced an inquiry by the Federal Reserve over their derivatives arrangements with Greece. The "Guardian" reported that "Goldman was reportedly the most heavily involved of a dozen or so Wall Street banks" that assisted the Greek government in the early 2000s "to structure complex derivatives deals early in the decade and 'borrow' billions of dollars in exchange rate swaps, which did not officially count as debt under eurozone rules." Critics of the bank's conduct said that these deals "contributed to unsustainable public finances" which in turn destabilized the eurozone.


title: European debt crisis

text: In response to accusations that speculators were worsening the problem, some markets banned naked short selling for a few months.


title: European debt crisis

text: Some economists, mostly from outside Europe and associated with Modern Monetary Theory and other post-Keynesian schools, condemned the design of the euro currency system from the beginning because it ceded national monetary and economic sovereignty but lacked a central fiscal authority. When faced with economic problems, they maintained, "Without such an institution, EMU would prevent effective action by individual countries and put nothing in its place." US economist Martin Feldstein went so far to call the euro "an experiment that failed". Some non-Keynesian economists, such as Luca A. Ricci of the IMF, contend that the eurozone does not fulfil the necessary criteria for an optimum currency area, though it is moving in that direction.


title: European debt crisis

text: As the debt crisis expanded beyond Greece, these economists continued to advocate, albeit more forcefully, the disbandment of the eurozone. If this was not immediately feasible, they recommended that Greece and the other debtor nations unilaterally leave the eurozone, default on their debts, regain their fiscal sovereignty, and re-adopt national currencies. Bloomberg suggested in June 2011 that, if the Greek and Irish bailouts should fail, an alternative would be for Germany to leave the eurozone to save the currency through depreciation instead of austerity. The likely substantial fall in the euro against a newly reconstituted Deutsche Mark would give a "huge boost" to its members' competitiveness.


title: European debt crisis

text: Iceland, not part of the EU, is regarded as one of Europe's recovery success stories. It defaulted on its debt and drastically devalued its currency, which has effectively reduced wages by 50% making exports more competitive. Lee Harris argues that floating exchange rates allows wage reductions by currency devaluations, a politically easier option than the economically equivalent but politically impossible method of lowering wages by political enactment. Sweden's floating rate currency gives it a short-term advantage, structural reforms and constraints account for longer-term prosperity. Labour concessions, a minimal reliance on public debt, and tax reform helped to further a pro-growth policy.


title: European debt crisis

text: British discount retailer Poundland chose the name Dealz and not "Euroland" for its 2011 expansion into Ireland because, CEO Jim McCarthy said, "'Eurozone' ... is usually reported in association with bad news — job losses, debts and increased taxes". His company planned to use Dealz in continental Europe; McCarthy stated that "There is less certainty about the longevity [of the currency union] now". "The Wall Street Journal" conjectured as well that Germany could return to the Deutsche Mark, or create another currency union with the Netherlands, Austria, Finland, Luxembourg and other European countries such as Denmark, Norway, Sweden, Switzerland, and the Baltics. A monetary union of these countries with current account surpluses would create the world's largest creditor bloc, bigger than China or Japan. "The Wall Street Journal" added that without the German-led bloc, a residual euro would have the flexibility to keep interest rates low and engage in quantitative easing or fiscal stimulus in support of a job-targeting economic policy instead of inflation targeting in the current configuration.


title: European debt crisis

text: There is opposition in this view. The national exits are expected to be an expensive proposition. The breakdown of the currency would lead to insolvency of several euro zone countries, a breakdown in intrazone payments. Having instability and the public debt issue still not solved, the contagion effects and instability would spread into the system. Having that the exit of Greece would trigger the breakdown of the eurozone, this is not welcomed by many politicians, economists and journalists. According to Steven Erlanger from The New York Times, a "Greek departure is likely to be seen as the beginning of the end for the whole euro zone project, a major accomplishment, whatever its faults, in the post-War construction of a Europe "whole and at peace". Likewise, the two big leaders of the Euro zone, German Chancellor Angela Merkel and former French president Nicolas Sarkozy have said on numerous occasions that they would not allow the eurozone to disintegrate and have linked the survival of the Euro with that of the entire European Union.


title: European debt crisis

text: In September 2011, EU commissioner Joaquín Almunia shared this view, saying that expelling weaker countries from the euro was not an option: "Those who think that this hypothesis is possible just do not understand our process of integration". The former ECB president Jean-Claude Trichet also denounced the possibility of a return of the Deutsche Mark.


title: European debt crisis

text: The challenges to the speculation about the break-up or salvage of the eurozone is rooted in its innate nature that the break-up or salvage of eurozone is not only an economic decision but also a critical political decision followed by complicated ramifications that "If Berlin pays the bills and tells the rest of Europe how to behave, it risks fostering destructive nationalist resentment against Germany and ... it would strengthen the camp in Britain arguing for an exit—a problem not just for Britons but for all economically liberal Europeans. Solutions which involve greater integration of European banking and fiscal management and supervision of national decisions by European umbrella institutions can be criticised as Germanic domination of European political and economic life. According to US author Ross Douthat "This would effectively turn the European Union into a kind of postmodern version of the old Austro-Hungarian Empire, with a Germanic elite presiding uneasily over a polyglot imperium and its restive local populations".


title: European debt crisis

text: "The Economist" provides a somewhat modified approach to saving the euro in that "a limited version of federalisation could be less miserable solution than break-up of the euro". The recipe to this tricky combination of the limited federalisation, greatly lies on mutualisation for limiting the fiscal integration. In order for overindebted countries to stabilise the dwindling euro and economy, the overindebted countries require "access to money and for banks to have a "safe" euro-wide class of assets that is not tied to the fortunes of one country" which could be obtained by "narrower Eurobond that mutualises a limited amount of debt for a limited amount of time". The proposition made by German Council of Economic Experts provides detailed blue print to mutualise the current debts of all euro-zone economies above 60% of their GDP. Instead of the break-up and issuing new national governments bonds by individual euro-zone governments, "everybody, from Germany (debt: 81% of GDP) to Italy (120%) would issue only these joint bonds until their national debts fell to the 60% threshold. The new mutualised-bond market, worth some €2.3 trillion, would be paid off over the next 25 years. Each country would pledge a specified tax (such as a VAT surcharge) to provide the cash." So far, German Chancellor Angela Merkel has opposed all forms of mutualisation.


title: European debt crisis

text: The Hungarian-American business magnate George Soros warns in "Does the Euro have a Future?" that there is no escape from the "gloomy scenario" of a prolonged European recession and the consequent threat to the Eurozone's political cohesion so long as "the authorities persist in their current course". He argues that to save the Euro long-term structural changes are essential in addition to the immediate steps needed to arrest the crisis. The changes he recommends include even greater economic integration of the European Union. Soros writes that a treaty is needed to transform the European Financial Stability Fund into a full-fledged European Treasury. Following the formation of the Treasury, the European Council could then authorise the ECB to "step into the breach", with risks to the ECB's solvency being indemnified.


title: European debt crisis

text: Soros acknowledges that converting the EFSF into a European Treasury will necessitate "a radical change of heart". In particular, he cautions, Germans will be wary of any such move, not least because many continue to believe that they have a choice between saving the Euro and abandoning it. Soros writes that a collapse of the European Union would precipitate an uncontrollable financial meltdown and thus "the only way" to avert "another Great Depression" is the formation of a European Treasury.


title: European debt crisis

text: Some protesters, commentators such as "Libération" correspondent Jean Quatremer and the Liège-based NGO Committee for the Abolition of the Third World Debt (CADTM) allege that the debt should be characterised as odious debt. The Greek documentary "Debtocracy", and a book of the same title and content examine whether the recent Siemens scandal and uncommercial ECB loans which were conditional on the purchase of military aircraft and submarines are evidence that the loans amount to odious debt and that an audit would result in invalidation of a large amount of the debt.


title: European debt crisis

text: In 1992, members of the European Union signed an agreement known as the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. Some EU member states, including Greece and Italy, were able to circumvent these rules and mask their deficit and debt levels through the use of complex currency and credit derivatives structures. The structures were designed by prominent US investment banks, who received substantial fees in return for their services and who took on little credit risk themselves thanks to special legal protections for derivatives counterparties. Financial reforms within the U.S. since the financial crisis have only served to reinforce special protections for derivatives—including greater access to government guarantees—while minimising disclosure to broader financial markets.


title: European debt crisis

text: The revision of Greece's 2009 budget deficit from a forecast of "6–8% of GDP" to 12.7% by the new Pasok Government in late 2009 (a number which, after reclassification of expenses under IMF/EU supervision was further raised to 15.4% in 2010) has been cited as one of the issues that ignited the Greek debt crisis.


title: European debt crisis

text: This added a new dimension in the world financial turmoil, as the issues of "creative accounting" and manipulation of statistics by several nations came into focus, potentially undermining investor confidence.


title: European debt crisis

text: The focus has naturally remained on Greece due to its debt crisis. There have been reports about manipulated statistics by EU and other nations aiming, as was the case for Greece, to mask the sizes of public debts and deficits. These have included analyses of examples in several countries


title: European debt crisis

text: On 18 August 2011, as requested by the Finnish parliament as a condition for any further bailouts, it became apparent that Finland would receive collateral from Greece, enabling it to participate in the potential new support package for the Greek economy. Austria, the Netherlands, Slovenia, and Slovakia responded with irritation over this special guarantee for Finland and demanded equal treatment across the eurozone, or a similar deal with Greece, so as not to increase the risk level over their participation in the bailout. The main point of contention was that the collateral is aimed to be a cash deposit, a collateral the Greeks can only give by recycling part of the funds loaned by Finland for the bailout, which means Finland and the other eurozone countries guarantee the Finnish loans in the event of a Greek default.


title: European debt crisis

text: After extensive negotiations to implement a collateral structure open to all eurozone countries, on 4 October 2011, a modified escrow collateral agreement was reached. The expectation is that only Finland will utilise it, due, in part, to a requirement to contribute initial capital to European Stability Mechanism in one instalment instead of five instalments over time. Finland, as one of the strongest AAA countries, can raise the required capital with relative ease.


title: European debt crisis

text: At the beginning of October, Slovakia and Netherlands were the last countries to vote on the EFSF expansion, which was the immediate issue behind the collateral discussion, with a mid-October vote. On 13 October 2011 Slovakia approved euro bailout expansion, but the government has been forced to call new elections in exchange.


title: European debt crisis

text: In February 2012, the four largest Greek banks agreed to provide the €880 million in collateral to Finland to secure the second bailout programme.


title: European debt crisis

text: Finland's recommendation to the crisis countries is to issue asset-backed securities to cover the immediate need, a tactic successfully used in Finland's early 1990s recession, in addition to spending cuts and bad banking.


title: European debt crisis

text: The handling of the crisis has led to the premature end of several European national governments and influenced the outcome of many elections:


title: Before We Go

text: Before We Go is a 2014 American romantic drama film directed by Chris Evans in his directorial debut. It stars Evans (who also co-produced) and Alice Eve as two strangers stuck in Manhattan, New York City for the night.


title: Before We Go

text: The film had its world premiere in the Special Presentations section of the 39th Toronto International Film Festival on September 12, 2014. It was released on video on demand on July 21, 2015 and had a limited theatrical release in the United States on September 4, 2015.


title: Before We Go

text: While busking in Grand Central Terminal, Nick Vaughan (Chris Evans) sees a woman, Brooke Dalton (Alice Eve), drop her phone while running to catch a train. She misses the train and returns to the station where Nick returns her broken phone. When he finds her standing outside the terminal she confesses that she has just been robbed and is trapped in the city. He offers to pay for a cab to take her to Boston but his debit card is declined and his credit card has expired. When he tries to call a friend to come lend him the money he finds his phone has died. Nick offers to try to pay for a room for Brooke for the night, but she insists that she needs to reach Boston by morning.


title: Before We Go

text: Nick decides to help Brooke find her missing purse. They are able to track it down at a sweatshop that deals in stolen purses. Nick heads inside to retrieve the purse while Brooke uses a payphone to call her husband. After using the phone, she then gets a couple of police officers passing by to investigate the building Nick is in. The sweatshop owners get spooked, punch Nick, and run out along with the bag. Nick and Brooke then head for the wedding of a friend of Nick's, hoping to borrow money. Along the way, Nick and Brooke open up more about why they're in New York. Brooke had just sold a painting and was going to surprise her husband by coming home early. Nick has an audition for a band that he has wanted to play with for a while. Instead of ending up at the wedding, they stumble upon an event where they are mistaken for members of the band. Nick and Brooke perform "My Funny Valentine" and flee when the real band shows up. After their last-ditch attempt to get a bus to Boston fails for lack of funds, Brooke borrows a man's phone, calls a friend, and begs her to retrieve a letter she has left for her husband that she does not want him to read.


title: Before We Go

text: Elated that her problem is now solved, Brooke offers to go to Nick's friend's wedding and pretend to be his girlfriend in front of his ex, Hannah. At the reception, Nick sees Hannah, but after being introduced to her new boyfriend, he leaves abruptly. Outside, Nick tells Brooke that this was the first time he had seen Hannah since she rejected his marriage proposal and broke up with him six years ago. At Brooke's insistence, Nick goes back to speak to Hannah and discovers that she is pregnant and that their relationship is truly over. Wandering around the city, the two find a psychic who is still open. After he reads her future, he allows Brooke to use his phone and she learns her friend could not get into her home to retrieve the letter.


title: Before We Go

text: After they leave the psychic, Brooke reveals to Nick that she discovered that her husband was cheating on her. Though he ended the relationship, she discovered that he was going to see his mistress again. Devastated, she wrote him a letter ending the marriage and went to New York for work. However, during her trip she received a phone call from her husband saying he was coming home early and realized that he had ended the relationship with his mistress for good.


title: Before We Go

text: At a restaurant, Nick tells Brooke that her husband will most likely understand why she wrote him the letter and that if he doesn't, that's that. Brooke, worried about the possible end of her marriage, sneaks out the back of the restaurant and tries to hail a cab to the airport to fly to her mother's in Indiana. Nick appears, frustrated that she tried to bail on him, and they argue about their relationships. They then go to Nick's friend's hotel room. Together, they unwind from the night's adventures. They then share a kiss, write on the back of paintings in the room (a reference to an earlier encounter with a painting with erotic writing on the back of it) and reflect on their night.


title: Before We Go

text: In the morning, they return to the train station where they are about to part. Nick picks up a phone from a phone booth and, like an earlier joke, uses it as a "time machine" and pretends to call himself in the past, saying that he will meet a woman and "you will need her more than she needs you". They share one last kiss and finally depart. On her way home, Brooke finds a guest service paper that she and Nick filled out at the hotel. On the bottom it says, "Turn over". After reading what was on the back, she smiles.


title: Before We Go

text: The film, originally titled "1:30 Train", was first announced in August 2013, when Chris Evans signed on to star, as well as make his directorial debut. In October Alice Eve signed on to play the female lead.


title: Before We Go

text: In July 2014, it was announced that the film would premiere at the 2014 Toronto International Film Festival, and that the title had been changed to "Before We Go".


title: Before We Go

text: The film had its world premiere at the 2014 Toronto International Film Festival on September 12, 2014. Prior to the premiere it was announced Radius-TWC had acquired all distribution rights to the film. The film then went on to screen at the Seattle International Film Festival on May 22, 2015. The film was released on video on demand on July 21, 2015, and in theaters in a limited release on September 4, 2015.


title: Before We Go

text: "Before We Go" was released on DVD and Blu-ray on November 3, 2015 and was added to Netflix Instant Streaming on March 1, 2016.


title: Before We Go

text: On review aggregator website Rotten Tomatoes, the film holds an approval rating of 27% based on 30 reviews, with an average rating of 2.7/10. The site's critics consensus reads, "Chris Evans' directorial debut is modest to a fault, with a threadbare story and minimal style leaving his and Alice Eve's likable performances adrift in New York City with nowhere to go." Metacritic assigned the film a weighted average score of 31 out of 100, based on 10 critics, indicating "generally unfavorable reviews".


title: Imageboard

text: An imageboard is a type of Internet forum that focuses on the posting of images, often alongside text and discussion. The first imageboards were created in Japan as an extension of the textboard concept. These sites later inspired the creation of a number of English-language imageboards.


title: Imageboard

text: Imageboards, similar to bulletin board systems, are used for discussions of a variety of topics. The primary focus of imageboards, however, is directed away from text posts, and is instead placed on picture posts. The two share many of the same structures, including separate forums for separate topics, as well as similar audiences. Imageboards are much more transitory with content—on some boards (especially highly trafficked ones), the thread deletion time can be as little as 10 minutes. In Japan, where imageboards are more common, topics will vary widely, ranging from trains to current news. The most popular English language imageboard, 4chan, similarly has a large variety of topics.


title: Imageboard

text: Imageboards are also different from online galleries in that most of the works posted are not made by the poster, but instead are taken from other online sources: galleries, other imageboards, and edited pictures.


title: Imageboard

text: Most imageboards and 2channel-style discussion boards allow (and encourage) anonymous posting and use a system of "tripcodes" instead of registration. A tripcode is the hashed result of a password that allows one's identity to be recognized without storing any data about users. Entering a particular password will let one "sign" one's posts with the tripcode generated from that password. Trying to take another user's tripcode and compute their password from it (for instance, to make posts that appear to come from a particular person) is somewhat computationally difficult. For those who want a custom tripcode, however, there are custom tripcode generators (which are technically tripcode crackers) available, such as Meriken's Tripcode Engine and MTY_CL. In general, anonymity is considered to be one of the advantages of an imageboard, and some boards have from time to time removed the ability to post with a name altogether (known as "forced anonymous/anonymity").


title: Imageboard

text: Due to the fact tripcodes can be cracked given enough time, some imageboards, such as 4chan and 8chan, implement a "secure" tripcode. Such tripcodes are not reproducible across different imageboards; they work by prepending a secure salt to the tripcode, barring intrusion, known only to the server owner. They therefore function closer to a username than to a cryptographic signature; this is why QAnon could not verify themselves on another website when 8chan went down in late 2019.


title: Imageboard

text: There are two primary types of imageboard software packages in widespread use: linearly directed imageboards modeled closely after Futaba Channel (in which content is posted through hierarchical subsections of topical interest, usually denoted by a forward slash such as "/f" for female), and nonlinear imageboards modeled after Danbooru (usually indicated by the usage of controlled folksonomic vocabulary for topical tagging and search).


title: Imageboard

text: There are currently several Futaba-inspired imageboard software packages in widespread usage today, including "Vichan", "Kusaba/Kusaba X", and "TinyIB".


title: Imageboard

text: "Futallaby" is a PHP script based on the Futaba script from Futaba Channel. Although the Futallaby source is still freely available at 1chan, it is no longer in development, and the download page recommends using Wakaba instead, stating that "Wakaba can do everything Futallaby does and so much more." Futallaby started as a translation of Futaba, later retooled to support XHTML and customizable CSS styles.


title: Imageboard

text: "Wakaba" is a Perl imageboard script with a SQL backend to store thread information. It is designed to be more efficient and cleanly written than other scripts that are available, while preserving the same kind of functionality. Because of its focus on bare-bones functionality, Wakaba lacks many of the modern amenities provided by 4chan's Yotsuba, and newer imageboard scripts. A few users have attempted to remedy this by forking the original project and adding in features they consider beneficial. Two FOSS examples of this are frankusr's Wakaba fork, and the user experience focused "Glaukaba".


title: Imageboard

text: "Kusaba" was a PHP-based modular imageboard software, which used MySQL. The creator has discontinued the project, in favor of developing TinyIB instead.


title: Imageboard

text: "Kusaba X" was a continuation of Kusaba by a separate developer. Like Kusaba, Kusaba X was written in PHP, and was designed with modularity in mind. It requires a MySQL or SQLite database to run. Kusaba and its derivatives were at one time some of the most popular imageboard solutions. Kusaba X has been implicitly discontinued, as it has not been updated since 2013, and the website is unavailable.


title: Imageboard

text: "Tinyboard" is a PHP based imageboard script with a MySQL backend. It was eventually discontinued and forked into "vichan". Tinyboard (and its forks) notably feature extensibility with JavaScript.


title: Imageboard

text: "Infinity" is a fork of Vichan that allows user board creation. It is the basis for 8kun. Infinity has been discontinued, however it has been forked into "OpenIB", which remains supported.


title: Imageboard

text: "Taimaba" is 420chan's proprietary continuation of Wakaba, overhauling it with many modern features and a public API. It is a hybrid Perl and PHP platform, as compared to Wakaba's static html output. This fork remains in use today, however the source has never been released.


title: Imageboard

text: "TinyIB" is a PHP-based imageboard software from the original developer of Kusaba, intended to be "lightweight and efficient". It supports MySQL, PostgreSQL, SQLite, and the lack of a database completely ("Flatfile"). Started in 2009, it still sees major active development as of 2021.


title: Imageboard

text: "Vichan" is a fork of Tinyboard "with more features and that receives security patches". It officially supports up to PHP 7.0, and though it has security support, the development team strongly urges users to "consider other imageboard packages" due to having "next to no active development".


title: Imageboard

text: "LainChan" is a fork of Vichan, intending to "actively build on it and add a lot of features and other improvements". It supports up to PHP 7.3.


title: Imageboard

text: Usually referred to as a "booru" (plural "boorus"). Unlike Futaba-inspired imageboard software packages, Danbooru and derivatives aim for a non-hierarchical semantic structure in which users are able to post content and add tags, annotations, translations, artist commentary, and comments.


title: Imageboard

text: Dvach, is a Russian imageboard that replaced 2ch.ru imageboard (originally known as dvach) which was shut down earlier on January 17, 2009; it thoroughly copied original layout and was heavily advertised over the internet and managed to succeed the original one in popularity. According to its owners number of posts left in the /b/ board exceeded 150 million. In September 2016 a pro-Russian government organisation, MAIL.RU, helped to organize "defense" against alleged DDOS attacks that took place during the same month; events raised concerns and speculations among users who grew suspicious over alleged takeover committed by the mail.ru and who criticized the owner's controversial decision to accept "help". As of October 2018 It was widely believed that imageboard was simply "sold" on undisclosed terms to pro-government organisation. The decision was met with high criticism of risks of disclosure of users' credentials in inherently anonymous-community to the government body that could potentially violate principles of anonymity, causing many to leave the board by the end of 2016. By 2019 it remains among the largest active Russian-speaking imageboards.


title: Imageboard

text: An English-language imageboard based on cannabis culture which was created on 20 April 2005 by Aubrey Cottle. The name is a reference to the larger 4chan and the code term "420" of the cannabis subculture. Its boards include various drug-specific boards, as well as a board featuring a chatbot named Netjester.


title: Imageboard

text: 4chan is an English-language imageboard based on the Japanese imageboard Futaba Channel. This imageboard is based primarily upon the posting of pictures (generally related to a wide variety of topics, from anime and popular culture to politics and sports) and their discussion. "The Guardian" describes it as "at once brilliant, ridiculous and alarming."


title: Imageboard

text: The site and its userbase have received attention from the media for a number of reasons, including attacks against Hal Turner on his Internet shows, distributed denial-of-service attacks against eBaum's World, taking part in Project Chanology, and multiple cases of anti-animal abuse reports.


title: Imageboard

text: 8chan (or Infinitechan) was a primarily English-language imageboard, although it has sub-boards dedicated to other languages. Just like 4chan, 8chan is based on posting pictures and discussion anonymously, but unlike 4chan, 8chan lets its users decide what they want to discuss by allowing any user to create their own board dedicated to any topic, a concept first made popular by news bulletin boards like Reddit. 8chan also claims to have a strong dedication to freedom of speech and allows all content—so long as the discussion and board creation abides by United States law. However, local moderators enforce the rules of their own boards and may delete posts as they see fit. It is currently partnered with the Japanese textboard 2channel.


title: Imageboard

text: "Futaba Channel" (ふたば☆ちゃんねる), or "Futaba" for short, is a popular, anonymous BBS and imageboard system based in Japan. Its boards usually do not distinguish between "not safe for work" and "clean" content, but there is a strict barrier between two-dimensional (drawn) and three-dimensional (computer graphics (CG) and photographic) pictures that is heavily enforced and debated.


title: Imageboard

text: Hispachan was launched in November 2012 as a global imageboard for all Spanish-speaking countries. "Vice Magazine" describes it as "a site for completely anonymous Spanish-language discussion that has proven popular among hackers since its launch in 2012".


title: Imageboard

text: In May 2022, Hispachan officially announced its closure on Twitter, it was temporarily available for a few days until all of its content was permanently deleted, it is currently known as lolnada.


title: Imageboard

text: Karachan is the largest Polish imageboard at 20 million posts, founded in 2010. Karachan has received attention from the Polish media after many trolling actions targeting Polish politicians, journalists and the Pope John Paul II. As of July 2019 the site consists of a (Polish-language) faux page claiming the site is "blocked" due to "invalid content". However, a manual is known to exist, informing how to enter the actual forum and browse its contents. Its name comes from the Polish word "karaczan", which means a cockroach, an insect that is used as Karachan's logo.


title: Imageboard

text: A primarily German-language imageboard that was founded in 2007. The name is an allusion to the ethnophaulism "Kraut" for Germans. Unlike most imageboards, posters on Krautchan didn't publish their postings under the generic name "Anonymous". The German name "Bernd" was used instead, and the Krautchan community identified themselves as "Bernds" instead of "Anons". In 2009, after the Winnenden school shooting, the interior minister of Baden-Württemberg cited a post on the imageboard in a press conference that appeared to forewarn of the shooting, but was later found to be fake. The site also featured a popular English-language board, /int/, which was also the origin of the Polandball internet phenomenon and a number of other popular memes such as Wojak in August the same year. On March 21, 2018, the imageboard was shut down. Two days later the imageboard "kohlchan" was founded as a replacement.


title: Imageboard

text: Wizardchan is an imageboard primarily dedicated to male virgin culture and topics including anime, hobbies, and depression. Users on the depression board often discuss suicide or self-harm, and a controversy emerged in the board's community about whether to refer users to suicide prevention hotlines.


title: Apple Lisa

text: Lisa is a desktop computer developed by Apple, released on January 19, 1983. It is one of the first personal computers to present a graphical user interface (GUI) in a machine aimed at individual business users. Its development began in 1978. It underwent many changes before shipping at with a five-megabyte hard drive. It was affected by its high price, insufficient software, unreliable Apple FileWare floppy disks, and the immediate release of the cheaper and faster Macintosh. Only 10,000 were sold in two years.


title: Apple Lisa

text: Considered a commercial failure (albeit one with technical acclaim), Lisa introduced a number of advanced features that reappeared on the Macintosh and eventually IBM PC compatibles. Among them is an operating system with protected memory and a document-oriented workflow. The hardware was more advanced overall than the forthcoming Macintosh 128K; the Lisa included hard disk drive support, capacity for up to 2 megabytes (MB) of random-access memory (RAM), expansion slots, and a larger, higher-resolution display.


title: Apple Lisa

text: The complexity of the Lisa operating system and its associated programs (most notably its office suite), as well as the ad hoc protected memory implementation (due to the lack of a Motorola MMU), placed a high demand on the CPU and, to some extent, the storage system. As a result of cost-cutting measures designed to bring it more into the consumer market, advanced software, and factors such as the delayed availability of the 68000 and its impact on the design process, Lisa's user experience feels sluggish overall. The workstation-tier price (albeit at the low end of the spectrum at the time) and lack of a technical software application library made it a difficult sell for much of the technical workstation market. Compounding matters, the runaway success of the IBM PC and Apple's decision to compete with itself, mainly via the lower-cost Macintosh, were further impediments to its acceptance.


title: Apple Lisa

text: In 1982, after Steve Jobs was forced out of the Lisa project by Apple's board of directors, he appropriated the Macintosh project from Jef Raskin, who had originally conceived of a sub-$1,000 text-based appliance computer in 1979. Jobs immediately redefined Macintosh as a less expensive and more focused version of the graphical Lisa.


title: Apple Lisa

text: When Macintosh launched in January 1984, it quickly surpassed Lisa's sluggish sales. Jobs then began assimilating increasing numbers of Lisa staff, as he had done with the Apple II division after assuming control over Raskin's project. Newer Lisa models were eventually introduced to address its shortcomings but, even after lowering the list price considerably, the platform failed to achieve favorable sales numbers compared to the much less expensive Mac. The final model, the Lisa 2/10, was rebranded as the Macintosh XL to become the high-end model in the Macintosh series.


title: Apple Lisa

text: Though the documentation shipped with the original Lisa only refers to it as "The Lisa", Apple officially stated that the name was an acronym for "Locally Integrated Software Architecture" or "LISA". Because Steve Jobs's first daughter was named Lisa Nicole Brennan (born in 1978), it was sometimes inferred that the name also had a personal association, and perhaps that the acronym was a backronym invented later to fit the name. Andy Hertzfeld states the acronym was reverse engineered from the name "Lisa" in late 1982 by the Apple marketing team, after they had hired a marketing consultancy firm to come up with names to replace "Lisa" and "Macintosh" (at the time considered by Jef Raskin to be merely internal project codenames) and then rejected all of the suggestions. Privately, Hertzfeld and the other software developers used "Lisa: Invented Stupid Acronym", a recursive backronym, while computer industry pundits coined the term "Let's Invent Some Acronym" to fit the Lisa's name. Decades later, Jobs would tell his biographer Walter Isaacson: "Obviously it was named for my daughter."


title: Apple Lisa

text: The project began in 1978 as an effort to create a more modern version of the then-conventional design epitomized by the Apple II. A ten-person team occupied its first dedicated office, which was nicknamed "the Good Earth building" and located at 20863 Stevens Creek Boulevard next to the restaurant named Good Earth. Initial team leader Ken Rothmuller was soon replaced by John Couch, under whose direction the project evolved into the "window-and-mouse-driven" form of its eventual release. Trip Hawkins and Jef Raskin contributed to this change in design. Apple's cofounder Steve Jobs was involved in the concept.


title: Apple Lisa

text: At Xerox's Palo Alto Research Center, research had already been underway for several years to create a new humanized way to organize the computer screen, today known as the desktop metaphor. Steve Jobs visited Xerox PARC in 1979, and was absorbed and excited by the revolutionary mouse-driven GUI of the Xerox Alto. By late 1979, Jobs successfully negotiated a payment of Apple stock to Xerox, in exchange for his Lisa team receiving two demonstrations of ongoing research projects at Xerox PARC. When the Apple team saw the demonstration of the Alto computer, they were able to see in action the basic elements of what constituted a workable GUI. The Lisa team put a great deal of work into making the graphical interface a mainstream commercial product.


title: Apple Lisa

text: The Lisa was a major project at Apple, which reportedly spent more than $50 million on its development. More than 90 people participated in the design, plus more in the sales and marketing effort, to launch the machine. "BYTE" credited Wayne Rosing with being the most important person on the development of the computer's hardware until the machine went into production, at which point he became technical lead for the entire Lisa project. The hardware development team was headed by Robert Paratore. The industrial design, product design, and mechanical packaging were headed by Bill Dresselhaus, the Principal Product Designer of Lisa, with his team of internal product designers and contract product designers from the firm that eventually became IDEO. Bruce Daniels was in charge of applications development, and Larry Tesler was in charge of system software. The user interface was designed in a six-month period, after which the hardware, operating system, and applications were all created in parallel.


title: Apple Lisa

text: In 1982, after Steve Jobs was forced out of the Lisa project, he appropriated the existing Macintosh project, which Jef Raskin had conceived in 1979 and led to develop a text-based appliance computer. Jobs redefined Macintosh as a cheaper and more usable Lisa, leading the project in parallel and in secret, and substantially motivated to compete with the Lisa team.


title: Apple Lisa

text: In September 1981, below the announcement of the IBM PC, "InfoWorld" reported on Lisa, "McIntosh", and another Apple computer secretly under development "to be ready for release within a year". It described Lisa as having a 68000 and 128KB RAM, and "designed to compete with the new Xerox Star at a considerably lower price". In May 1982, the magazine reported that "Apple's yet-to-be-announced Lisa 68000 network work station is also widely rumored to have a mouse."


title: Apple Lisa

text: Lisa's low sales were quickly surpassed by the January 1984 launch of the Macintosh. Newer versions of the Lisa were introduced that addressed its faults and lowered its price considerably, but it failed to achieve favorable sales compared to the much less expensive Mac. The Macintosh project assimilated a lot more Lisa staff. The final revision of the Lisa, the Lisa 2/10, was modified and sold as the Macintosh XL.


title: Apple Lisa

text: The high cost and the delays in its release date contributed to the Lisa's discontinuation although it was repackaged and sold at $4,995, as the Lisa 2. In 1986, the entire Lisa platform was discontinued.


title: Apple Lisa

text: In 1987, Sun Remarketing purchased about 5,000 Macintosh XLs and upgraded them. In 1989, with the help of Sun Remarketing, Apple disposed of approximately 2,700 unsold Lisas in a guarded landfill in Logan, Utah, in order to receive a tax write-off on the unsold inventory. Some leftover Lisa computers and spare parts were available until Cherokee Data (who purchased Sun Remarketing) went out of business.


title: Apple Lisa

text: The Lisa was first introduced on January 19, 1983. It is one of the first personal computer systems with a graphical user interface (GUI) to be sold commercially. It uses a Motorola 68000 CPU clocked at 5 MHz and has 1 MB of RAM. It can be upgraded to 2 MB and later shipped with as little as 512 kilobytes. The CPU speed and model was not changed from the release of the Lisa 1 to the repackaging of the hardware as Macintosh XL.


title: Apple Lisa

text: The real-time clock uses a 4-bit integer and the base year is defined as 1980; the software won't accept any value below 1981, so the only valid range is 1981–1995. The real-time clock depends on a 4 x AA-cell NiCd pack of batteries that only lasts for a few hours when main power is not present. Prone to failure over time, the battery packs could leak corrosive alkaline electrolyte and ruin the circuit boards.


title: Apple Lisa

text: Among the printers supported by Lisa are the Apple Dot Matrix Printer, Apple Daisy Wheel Printer, the Apple ImageWriter dot matrix, and a Canon inkjet printer. Inkjet printing was quite new at the time. Despite having a monochromatic monitor, Apple enabled software to support some color printing, due to the existence of the Canon printer.


title: Apple Lisa

text: The use of the slowest-clocked version of Motorola's 68000 was a cost-cutting measure, as the 68000 was initially expensive. By the time the price had come down, Apple had already designed the Lisa software around the timing of the 5 MHz processor. Lisa had been in development for such a long time that it was not initially developed for the 68000 and much of its development was done on a pre-chip form of the 68000, which was much slower than the shipping CPU.


title: Apple Lisa

text: Lisa software was primarily coded in Pascal to save development time, given the high complexity of the software.


title: Apple Lisa

text: The sophistication of the Lisa software (which included a multitasking GUI requiring a hard disk), coupled with the slow speed of the CPU, RAM, lack of hardware graphics acceleration coprocessor, and protected memory implementation, led to the impression that the Lisa system was very slow. However, a productivity study done in 1984 rated the Lisa above the IBM PC and Macintosh, perhaps countering the high degree of focus on UI snappiness and other factors in perceived speed rather than actual productivity speed.


title: Apple Lisa

text: Lisa was designed to use slower (albeit more reliable) parity memory, and other features that reduced speed but increased stability and value. Lisa is able to operate when RAM chips failed on its memory boards, unlike later Macintosh systems, reducing the cost to owners by enabling the usage of partially-failed boards. The Lisa system isolates the failed chip or chips and uses the rest of the board's RAM. This was particularly important given the large number of individual RAM chips Lisa used in 1983 for a consumer system (at around $2,500 in cost to Apple per machine). RAM could be upgraded to 2 MB.


title: Apple Lisa

text: The original Lisa, later called the Lisa 1, has two Apple FileWare 5.25-inch double-sided variable-speed floppy disk drives, more commonly known by Apple's internal code name for the drive, "Twiggy". They had, for the time, a very high capacity of approximately 871 kB each, but proved to be unreliable and required nonstandard diskettes. Competing systems implementing that level of per-diskette data storage had to utilize much larger 8" floppy disks. These disks were seen as cumbersome and old-fashioned for a consumer system. Apple had worked hard to increase the storage capacity of the minifloppy-size disk by pioneering features that Sony perfected shortly after with its microfloppy drives. Although it used a Twiggy drive in the prototype stage, the first Macintosh was launched the following year with one of the Sony 400 KB 3.5" "microfloppy" disk drives. 1984 also saw the release of the first revision of Lisa, the Lisa 2, which also included a single Sony drive. Apple provided free upgrades for Lisa 1 owners to Lisa 2 hardware, including the replacement of the Twiggy drives with a single Sony drive. The Sony drive, being only single-sided, could not store nearly as much data as a single Twiggy, but did so with greater reliability. The IBM PC shipped with a minifloppy (5.25-inch) drive that stored even less data: 360 KB. It was also slower and did not have the protective shell of the Sony microfloppy drive diskettes, which improves reliability.