See this thread:

Very interesting first roundup of the year from Eurointelligence: A year of truth for the eurozone

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Is Merkel ready to drop Axel Weber for the ECB job?

Frankfurter Allgemeine has an interesting if speculative article about why Merkel might drop Weber in the race for the ECB presidency. The theory goes like this: Merkel is getting closer to Sarkozy on the euro because Germany wants the ECB to help out where governments are constrained for political reasons  - through bond purchases, continuation of flexible lending policies, and low interest rates. For example, Germany opposes an extension of the EFSF's size and mandate, while the ECB wants governments to solve the problem. Weber might not be the most conducive candidate for a compliant ECB. The paper quotes an official close to Merkel as saying that Germany was no longer pushing for a German central banker at the top of the ECB, but for the most qualified central banker. The authors of the Herdentrieb blog predicted that Klaus Regling would get the job.

Who is Klaus Regling? Would we like him as a Central Banker?

his past experience also recommends Mr Regling for the job. The 59-year-old has spent the better part of four decades flitting between the IMF, Germany's finance ministry and Brussels. He played a key role in drawing up the Stability and Growth Pact in the 1990s while based at the German finance ministry. The pact, which was a condition Germany insisted on before agreeing to give up its precious D-mark, was intended to rein in profligacy among countries using the euro and prevent the mess that they are now in. Mr Regling then spent much of the past decade trying to enforce it as the director-general for economic and financial affairs at the European Commission.

Yglesias: The Latvian Catastrophe

Klaus Regling, chief executive of the European Financial Stability Facility, wants you to know that monetary union without fiscal integration is workable after all and he offers, as an example, Latvia:

Latvia which has a currency pegged to the euro, testifies to the success of this policy. Contrary to commentators who predicted disaster for Latvia early last year unless it gave up its hard peg - in line with advice from the commission - it did not devalue its exchange rate. A real effective devaluation was achieved through severe cuts in nominal income. Today its economy is growing again. Those outside "experts", who always seem to know what is good for Europe, should take note.

So to be clear about this, the Latvian economy suffered a 4.2 percent contraction in 2008. By way of comparison, in the horrible year of 2009 the US economy contracted 2.44 percent. So that was a very bad recession, much worse than the American recession. At this point, so called "outside `experts'" predicted disaster for Latvia in early 2009 unless it devalued its exchange rate. Latvia declined to devalue and its GDP shrunk 18 percent! That's the disaster right there. Overall GDP growth for 2010 is forecast to be slightly negative again. So, yes, Latvia has returned the growth. But the toll was terrifyingly high.

I despair, I truly do.

The hard-hitting reports by the new Central Bank governor Patrick Honohan and international banking experts Klaus Regling and Max Watson published yesterday heavily criticised misguided government economic policies, a weak system of financial regulation and poor bank lending.