Krugman, Roubini, and the Eurozone
Krugman highlights but provides no link to Nouriel Roubini’s address to the 2006 Davos meeting (direct link to Economonitors here).
What I would say is that this incident exemplified something that was going on all along the march to the eurodebacle. Serious discussion of the risks and possible downsides was simply not allowed. If you were an independent economist expressing even mild concerns about the project, you were labeled an enemy and shut out of the discussion.
and in the same op ed It’s Not About Welfare States (via truthout) reviews election rhetoric and disinformation on the economic crisis in Europe being mainly welfare oriented countries:
Whenever a disaster happens, people rush to claim it as vindication for whatever they believed before. And so it is with the euro.
As an aside, the interesting thing about the introduction of the euro from a political point of view is the way it cut across the ideological spectrum. It was hailed by the Wall Street Journal crowd, who saw it as a sort of milestone on the way back to gold, and by many on the British left, who saw it as a way to create an alliance of social democracies. It was criticized by Thatcherites, who wanted to be free to move Britain in an American direction, and by American liberals, who believed in the importance of discretionary monetary and fiscal policy.
But now that the thing is in trouble, people on the right are spinning this as a demonstration that … strong welfare states can’t work.
It was not the safety net in Europe, and none of them were required by the CRA to lend in underserved communities.
The PIIGS went wild on easy Euros, with as Krugman shows a lot of ECB ‘policy’ into the Germans’ current account surpluses with the PIGS (less Eire).
The PIIGS government borrowing has spiked to cover their insolvent banks. This has kept German banks appearing solvent when they are depending on the PIIGS’ keeping them looking solvent.
When the PIIGS default will the ECB begin to print for the Germans’ insolvent banks?
There are people who say this is a power struggle between the banking sector and Germany She insisted on a 50% haircut for the banks, surely they don’t like that. So they fight back. Who would really gain if the Euro tanked? How much manipulation and speculation is going on? Merkel must have support at home, she could easily be removed from office with a no confidence vote. Like ILSM said, it is not the social safety net, nations above the Alps with strong safety nets like Germany are not the problem. Besides that, all nations have gained being in the EU and using the Euro. Wars would cost a lot more than the safety net and a common currency.
Serious discussion of the risks and possible downsides was simply not allowed. If you were an independent economist expressing even mild concerns about the project, you were labeled an enemy and shut out of the discussion.
now where else have i seen that happen?
Professor Stiglitz, 2001 Nobel Prize winning economist, accepted to participate this week in a private meeting with a group of people from the Faculty of Business and Economics of Universidade da Coruña and I had the immense pleasure to be one of them. We asked him about the Euro crisis, market fundamentalism, public banking, energy and renewable technologies… You can read a summary of our conversation at http://www.dpeon.com/index.php/english/8-prof-stiglitz-in-a-coruna.html
Thank you for sharing your conversation with Professor Stiglitz and your perspectives.
Whether you like or agree with most of what Roubini says or not, you have to admit that he usually says what he wants to say and what he truly believes in. That is worth way more than it should be in today’s world of time servers and yes men trying to make it to the next level by saying the “right thing.” In the beginning, most people thought the Euro was a pipe dream, then it became a possibility and finally a reality, at which time it became the gold standard which, of course, is nonsense.
Matthew from Britain Loans