Bershidsky On Europe: No U-turn On Euro From Merkel

Merkel vows not to change her euro policy. German Chancellor Angela Merkel declared her party’s weekend election victory a very strong vote for a united Europe, and said that once she forms a new coalition government it will pursue the same European policy as the old one. A coalition it definitely will be: Merkel ruled out forming a minority government, although her Christian Democratic Party and its Bavarian sister are just five votes short of an absolute majority in parliament. The main opposition party, the Social Democrats, have called a convention to determine whether its membership favors a grand coalition, and Merkel said she is waiting for the outcome of the convention to open talks. Though the negotiations will be difficult politically, it will be easier for the two major parties to agree on policy: German economists point out that Merkel has gradually moved towards a center-left agenda. The Social Democrats have demanded higher taxes for wealthier Germans and a higher minimum wage, and Merkel is likely to compromise on that front. ECB considering new cash injection. European Central Bank President Mario Draghi said the bank was willing to provide a new large long-term loan to banks in order to keep money-market interest rates from rising. In 2011 and 2012, the ECB pumped more than $1.3 trillion into the market through long term refinancing operation, creating more than $1 trillion in excess liquidity. Early repayment of these loans has cut that down to about $300 billion, close to the level at which the ECB believes interest rates may start edging up. That’s something the euro-area’s monetary authority does not want to see, for fear of undercutting Europe’s timid economic growth. If the ECB decides to increase liquidity, however, it will need to persuade banks to take it: They have been repaying emergency loans early precisely because they have plenty of cash and precious few ideas on what do with more.

What Europe can teach us about keeping the Internet open and free

As the market flourished with more ISPs, according to the New America Foundation’s Danielle Kehl, some of those providers even began building their own Internet infrastructure that could compete with the big carriers. As a result, a 100 megabit-per-second, triple-play bundle now costs around $35 which is 17 times as fast and roughly half as expensive as the most cost-effective Internet plan in the United States. The U.S. market could have turned out much like that. In fact, with the telephone industry, it did. But then the FCC decided not to regulate broadband the same way. Whereas telecom providers had to practice unbundling, Internet providers didn’t the better to encourage them to build more infrastructure , or so the logic went. If all the companies expected to freeload, nobody would take the responsibility to lay the cables. Today, that means every ISP owns its own network. But it also means there are fewer competitors in the marketplace. “In the year 2000, there were 9,000 ISPs in the United States,” Kehl told me. After the FCC steered clear of unbundling for broadband, she said, the number fell by 74 percent to less than 2,500 in 2005. Now that the market for broadband has become so empty, net neutrality is one of the few policies that can keep the Internet open and affordable, Kehl said.