IREF Europe

Our latest article about the GFC:

"In many ways we are back in a pre-crash scenario of 2007 and we are certainly no further forward than in 2010 when the worst of the crisis was supposed to have been mastered."

Enrico Colombatto

Government interventions and over-borrowing have prepared the way for a re-run of the Global Financial Crisis - IREF Europe EN We recently wrote that the enormous losses being handed to taxpayers by Western central banks were in effect the second part of the same bill for the Global Financial Crisis (GFC), only bigger than the first bill, with no chance of a recovery for taxpayers, and having caused a string of major proble...

Our latest article about minimum wage in Marocco by Mohamed Moutii:

"A recent paper [] presents strong evidence indicating job losses, especially among teenagers, young adults, and those with lower education levels."

Enrico Colombatto

Morocco's High Minimum Wage: A Recipe for Economic Disaster? - IREF Europe EN Soaring prices continue to weigh on Moroccan households, eroding their real income and causing growing discontent among unions. Over the past two years, consumer prices have risen by 6.6% and 6.1%, respectively. Faced with social pressure, the government had to reassess its strategy and commit to in...

Read our latest article by Bob Lyddon about the side effects and detriments of QE by the Western governments during the Global Financial Crisis.

Enrico Colombatto

Taxpayer bailouts of central banks and after the Global Financial Crisis - IREF Europe EN Governments made major interventions to shore up the financial system during the Global Financial Crisis, which lasted from 2007 until the end of the Eurozone crisis in 2012. These resulted in big rises in national debt and a promise that taxpayers would never again have to bail out the financial sy...

Our May Newsletter about European Fintechs:

"[Revolut] appears to be spending all its free cashflow on new employees and advertising in a dash for growth. In fact its revenue per customer is low and its private valuation looks dizzy."

Enrico Colombatto

European Fintechs - Few Signs of Renewed Public Financial Market Appetite - IREF Europe EN One titan of fintech private equity is New York based Tiger Global Management LLC, founded in 2001. However, the 2021 collapse in tech valuations, particularly Fintech, was disastrous for Tiger and by June 2022 its funds had haemorrhaged USD 25bn3. By comparison, Long Term Capital Management’s 199...

Read our latest article by Sergio Beraldo:

"The government cover[ed] the cost of renovations through a monetary transfer equal to 110% of the expenses, a mechanism that has fuelled a colossal problem of moral hazard and corruption [..]."

Enrico Colombatto

The Italian Economy and its inefficient public administration - IREF Europe EN A few days ago, the Italian leading business newspaper, Il Sole 24 Ore, published an article on economic growth in Europe. The article offered several interesting insights. Notably, it emphasized that Italy is expected to outperform many industrialized countries in 2024. In fact, in the first quarte...

Read our latest article by Mohamed Moutii about the CBAM:

"A joint study estimated that EU's Carbon Border Adjustment Mechanism would lower Africa's GDP by 0.5%"

Enrico Colombatto

EU Carbon Border Tax: A Misguided Approach to Climate Action - IREF Europe EN On October 1st, 2023, the EU's Carbon Border Adjustment Mechanism (CBAM) began its transitional phase, with reporting requirements starting in October 2023 and full charges scheduled for implementation by 2026. The CBAM was introduced as part of the European Green Deal in 2019 and officially adopted...

Read our latest article by Francesco Ramella:

"If they were truly interested in their wellbeing, the KlimaSeniorinnen should ask the Government to do nothing at all."

Enrico Colombatto

KlimaSeniorinnen and climate change - IREF Europe EN The European Court of Human Rights found the Swiss government guilty for not doing enough to protect the Swiss from climate change and, particularly, from heat waves that affect, above all, the elderly. The case was brought to the Court by a group of more than 2,000 Swiss women backed by Greenpeace....

"Bureaucrats, are thrilled by the possibility of devising cool interventions and tricks that induce people to act in the direction best for them."

Enrico Colombatto

New Paternalism - IREF Europe EN Paternalism is characterized by one’s inclination to override another person's preferences. This requires that some have a superior understanding of what is in the best interest of the others. Of course, there is no role for paternalism among libertarians and classical-liberals. In his work «On L...

Our latest article by Bob Lyddon:

"Central banks – with the Bank itself in the vanguard - have made colossal mistakes and now their policies have blown up in their (or rather the taxpayer’s) face."

Enrico Colombatto

Bank of England makes the case for taxpayer bailouts of central banks: it’s mandatory - IREF Europe EN The Bank of England has taken the lead amongst the world’s central banks in issuing a working paper about how central banks can replenish their capital, now that they are crystallizing enormous losses: the paper analyses the current arrangements of seventy central banks.1 This time around it is no...

Our latest article about Green Protectionism by Mohamed Moutii:

"It hampers climate objectives by reducing returns, raising energy costs, and failing to deliver on decarbonization pledges.

These policies exacerbate poverty in poorer countries and hinder climate efforts."

Enrico Colombatto

Green Protectionism in Disguise: The Hidden Facets of the Inflation Reduction Act - IREF Europe EN In August 2022, US President Joe Biden signed the Inflation Reduction Act (IRA), which promises massive investment by the US government in US-built green infrastructure and industry. The IRA will provide $400bn-$1trn over the next decade in tax incentives, grants, and loans, most of which will be di...

Join our upcoming event on April th at the Warsaw School of Economics about the overregulation in the banking sector:

Enrico Colombatto

Event: Red tape (overregulation) in banking sector - IREF Europe EN The colloquium will attempt to answer the question whether the red tape (overregulation) in the banking sector has grown in recent years and whether this process is sustainable. The growing red tape shall not only be limited to the regulatory measures imposed via various types of regulations, but it...

Read our latest article by Samuele Murtinu:

"Governments must not face the advent of machines by implementing short-sighted policies to stabilize jobs [..], with the risk to distort market mechanisms [..], thus forcing companies move to other locations."

Enrico Colombatto

Why Taxing Robots Is Against Human Labor - IREF Europe EN “The robots are coming. And that’s a good thing”. This is the title of a very recent MIT Technology Review article written by Daniela Rus, director of MIT (Massachusetts Institute of Technology)’s Computer Science and Artificial Intelligence Lab, and the novelist Gregory Mone. The key idea o...

Read our march newsletter about the Central Bank Digital Euro: "Our somewhat perverse conclusion is that the ECB should perhaps launch a simply designed damp squib."

Enrico Colombatto

CBDCs: the hottest topic in central banking. What form of Central Bank Digital Euro should the ECB Launch? - IREF Europe EN Since we last reported on the ECB’s thinking about CBDCs1, multiple central banks have undertaken research in designing, operating and selling CBDCs. As of January, the Atlantic Council2 lists 103 central banks have research projects, 16 are at proof-of-concept stage, there are 14 pilots and 4 ful...

Read our latest article by Mohamed Moutii:
"Embracing free trade and allowing comparative advantage to guide agricultural practices will help the country in the water shortage crisis while providing the people with high-quality, affordable food. "

Enrico Colombatto

How Misplaced Government Policies Fueled Morocco's Water Crisis? - IREF Europe EN Morocco faces a pressing challenge in water scarcity, posing significant hurdles to its socio-economic progress. Ranked among the nations with the lowest water resources per person by the World Bank, Morocco's demographic growth, climate change, and agricultural demands exacerbate the strain on its....

Read our latest Working Paper by Dr. Karl-Friedrich Israel:

"This paper reviews the neglected contributions to the theory of index numbers in Gottfried Haberler’s (1927) habilitation thesis "Der Sinn der Indexzahlen" ("The Meaning of Index Numbers")."

Enrico Colombatto

Gottfried Haberler’s Contributions to the Theory of Index Numbers: A Blueprint for Revealed Preference Theory - IREF Europe EN This paper reviews the neglected contributions to the theory of index numbers in Gottfried Haberler’s (1927) habilitation thesis "Der Sinn der Indexzahlen" (The Meaning of Index Numbers). Haberler was the first to present an argument for why the rates of change of the Paasche and Laspeyres indices...

Read our latest article by Francesco Ramella:

"Air matters, but wealth, genes and lifestyles are more important. That is why one should pay attention to the cost of improving air quality."

Enrico Colombatto

The same air quality doesn’t fit all - IREF Europe EN Is there an air pollution emergency in Northern Italy? That's what you might have thought if you had read the news or watched tv a couple of weeks ago.A Swiss air quality website (owned by IQAIR, a company that produces air purifiers) ranks Milan as the third worst city in the world for pollution. A...

Our latest article by Sergio Beraldo about the ESM:

"Moreover, [Italy's] refusal [of the ESM revision] could set an example for other member states and undermine the unity of economic policies across the Union."

Enrico Colombatto

Stability or Sovereignty? Italy's Challenging Relationship with the European Stability Mechanism - IREF Europe EN The European Stability Mechanism (ESM) is an intergovernmental organization founded in 2012 by the euro area member states. Its primary objective consists in ensuring long-term financial stability in the euro area. The ESM operates by granting aid to member states facing severe financial distress or...

Read our latest article by Mohamed Moutii:

"Rather than promoting an [..] competitive market for AI solutions, the executive order will create an environment where bureaucratic preferences shape innovation [..]."

Enrico Colombatto

Biden's AI Executive Order - IREF Europe EN On Oct 30, 2023, President Biden signed the Executive Order on AI, requiring AI developers and cloud providers to share safety tests and other crucial information with the government. It also instructs agencies to create safety standards, address cybersecurity and civil rights, and consider the impa...

Our latest article about Evergrande by Bob Lyddon:

"The weak position of the international creditors ironically ensures that the bloodbath will be more acute and last longer as they exhaust all possible angles for getting their money back."

Enrico Colombatto

Winding-up order issued against Evergrande - what does this mean for the Chinese authorities? - IREF Europe EN On January 29th 2024 international creditors gained a winding-up order against China Evergrande Group (‘Evergrande’) in the Hong Kong courts.1 This is a test case for the rights and remedies available to international investors in China. The Chinese authorities, inactive up to now, face two equa...

The January Newsletter by Gordon Kerr and John Butler:

"Jacques Delors was clearly a man who cared passionately about Europe, but was clearly wrong in assuming that centralisation and regulation would be a source of prosperity."

Enrico Colombatto

The Passing of Jacques Delors, Architect of the Euro. How will his Legacy Play Out? - IREF Europe EN Born in the interwar years, Jacques Delors joined France’s central bank aged 20, where he worked for seventeen years. He then became an academic, teaching economics at the Ecole Nationale d’ Administration, but also moved into politics as social and cultural adviser to Prime Minister Jacques Cha...

A 2023 recap by Francesco Ramella:

"Wealth and adaptation have been and will be the main factors affecting our well-being. For sure, there are more important things on Earth than average surface temperature."

Enrico Colombatto

2023: annus horribilis or best year ever? - IREF Europe EN Surface and satellites measurements agree: 2023 has been the warmest year on record at 1.43°C above the preindustrial level and around 1°C since 1970.The effects of El Niño, a climate phenomenon that warms the atmosphere and affects weather patterns around the globe, the eruption of the Hunga Ton...

Read our latest article about the BRICS:

"Even the most obvious policy for those challenging the U.S. hegemony, namely replacing the dollar with the Chinese currency in intra-group transactions, is not backed by unanimous agreement."

Enrico Colombatto

The BRICS and the Challenge of Challenging the Global Order - IREF Europe EN The so-called BRICS have become a formidable collective force with a shared ambition to reshape the prevailing global order and bring about a multipolar world where power is distributed more evenly among (groups of) nations.In the short term, the BRICS’s vision confronts substantial challenges ari...

Our latest article is about globalization:
"The push by rich nations to boost domestic production could negatively affect developing economies by limiting job opportunities and the transfer of efficient management practices and technologies —a historically significant source of growth."

Enrico Colombatto

Homeland Economics: Is the End of the Age of Globalization? - IREF Europe EN In the aftermath of the Cold War, a global village was emerging, driven by a belief in market power and the surge of globalization in the 1990s. Governments relaxed travel, investment, and trade restrictions. Poverty reduction and increased political freedom followed. However, globalization also mad...

Our latest article by Francesco Ramella is about the European transport policy:

"If rail freight traffic doubled, road freight traffic would fell by a mere 2%, and the impact on road congestion would be negligible."

Enrico Colombatto

Time to rethink the European transport policy? - IREF Europe EN Cars and trucks are polluting, dangerous, generate congestion and consume a lot of energy. Trains are clean, safe and energy efficient. A single convoy can replace up to 500 cars or more and 50 trucks. Yet, when people and goods travel on land, most of them stay away from trains. The so-called “mo...

Read our latest article:

"The UK government is incompetent when it comes to engaging in banking business [,..] it tries to cover its tracks by breaking basic banking and legal principles."

Enrico Colombatto

Greensill Capital case damages the UK’s credit standing on the world stage - IREF Europe EN The UK government has cancelled its guarantees to a private lender - Greensill Capital – under the UK’s coronavirus support, without the obligation that was guaranteed having been discharged. This puts a major question mark against the UK’s good faith in its financial dealings: if the UK can d...

Our November Newsletter ist published, including
- an analysis of Ms Schnabels statements about money supply
- our outlook for 2024: euro area recession and challenges for banks

Enrico Colombatto

The Outlook for Europe’s banks and economies in the light of Money Supply Increases and potential Reductions - IREF Europe EN Followers of US monetary policy are raising concerns about the consequences of the Federal Reserve’s efforts to reverse the 17% growth in the money supply (M21) in the two-year period starting from the emergency Covid liquidity measures, March 2020. In the last twelve months this injection has all...

Read our latest article by Mohamed Moutii:
"Not surprisingly, the EU Parliamentary Research Service suggests that by 2030, and despite the Act, Europe's share of global chip production will remain at levels similar to the present [..]."

Enrico Colombatto

Why is the European Chips Act doomed to fail? - IREF Europe EN In the past, Europe held a prominent position in the semiconductor industry, accounting for 44% of the global chip market share. However, soon after the turn of this century, manufacturers began to shift their supply chains to East Asia to capitalize on investment opportunities and lower labor costs...

Read our latest article by Sergio Beraldo and David Stadelmann:
"If migration flows are to be controlled, it is better to use the relatively market-oriented approach with an entry fee."

Enrico Colombatto

Addressing migration challenges with an entry fee - IREF Europe EN Free movement of people, i.e., the ability of individuals to move freely and without bureaucratic restrictions to the country where they want to live and work, could have a highly beneficial freedom effect and it could easily increase overall welfare. Nevertheless, immigration is met with skepticism...

"The key message should focus on why climate change is dangerous for our own lives and those of our children and descendants – what I call a form of egoism “shifted in time”."

Enrico Colombatto

We must avoid morality to solve societal problems - IREF Europe EN Every day, we are literally “bombarded” by media, politicians, experts and activists who teach us how to behave “morally” and what we must do to fight societal problems, such as climate change and poverty. These “moral campaigns” are often centrally planned and informed by social movemen...

Read our latest article about ESM:

"European authorities need to go further and disclose how large the issue is and what is the chance of its materializing."

Enrico Colombatto

New task bolted on to European Stability Mechanism – with how much extra risk? - IREF Europe EN The European Stability Mechanism (ESM) will now be backstop-of-last-resort to the Eurozone banking system, in addition to backstopping the Eurozone member states and the currency itself. Its resources have not been increased, though, despite its credibility and firepower already hanging by a thread,...