- There are basically three stories about the euro crisis in wide circulation: the Republican story, the German story, and the truth.
- What we’re basically looking at, then, is a balance of payments problem, in which capital flooded south after the creation of the euro, leading to overvaluation in southern Europe.
- And the key point is that the two false diagnoses lead to policies that don’t address the real problem. You can slash the welfare state all you want (and the right wants to slash it down to bathtub-drowning size), but this has very little to do with export competitiveness. You can pursue crippling fiscal austerity, but this improves the external balance only by driving down the economy and hence import demand, with maybe, maybe, a gradual “internal devaluation” caused by high unemployment.
- Now, if you’re running a peripheral nation, and the troika demands austerity, you have no choice except the nuclear option of leaving the euro, coming soon to a Balkan nation near you. But non-GIPSI European leaders should realize that what the GIPSIs really need is a general European reflation.
Hoje mesmo o nosso PR se congratulou com a emergencia de uma outra corrente de opinião entre os lideres europeus (ver post anterior), que não da pura austeridade fundamentalista, mas virada para o crescimento - ao mesmo tempo que o PM desdenhava disso mesmo e o desvalorizava.