Here are two very interesting papers:
The Systemic Crisis of the Euro - True Causes and Effective Therapies; by Heiner Flassbeck and Costas Lapavitsas
Cross of Euros; by Keven H. O'Rourke and Alan M. Taylor
Since I am not an economist and certainly not a monetarist, and since my brain is getting older with every passing day, I cannot profess to have understood every detail of these papers. But I think I got the gist of both of them (and, in fact, I think their positions are relatively similar).
What I liked the best was the absence of extensive discussions about debt and debt restructurings. I have always argued that the debt is the 'derivative' and that one can't solve the problem of the 'underlying' by playing around with the derivative.
To me, the underlying is the macro-economic imbalances within the Eurozone. In short, structural and chronic current account surpluses/deficits which lead to net cross-border capital flows beyond control.
I was positively surprised that Flassbeck/Lapavitsas argued that neither a political nor a fiscal union would be a realistic option to pursue. I agree. Those would be pipe dreams as of now.
Both papers discuss possiblities for re-balancing the imbalances. Sounds simple, but I did not have the impression that either paper had a simple solution.
O'Rourke/Taylor seem to be very, very pessimistic (or realistic?) about the future of the Eurozone.
The Systemic Crisis of the Euro - True Causes and Effective Therapies; by Heiner Flassbeck and Costas Lapavitsas
Cross of Euros; by Keven H. O'Rourke and Alan M. Taylor
Since I am not an economist and certainly not a monetarist, and since my brain is getting older with every passing day, I cannot profess to have understood every detail of these papers. But I think I got the gist of both of them (and, in fact, I think their positions are relatively similar).
What I liked the best was the absence of extensive discussions about debt and debt restructurings. I have always argued that the debt is the 'derivative' and that one can't solve the problem of the 'underlying' by playing around with the derivative.
To me, the underlying is the macro-economic imbalances within the Eurozone. In short, structural and chronic current account surpluses/deficits which lead to net cross-border capital flows beyond control.
I was positively surprised that Flassbeck/Lapavitsas argued that neither a political nor a fiscal union would be a realistic option to pursue. I agree. Those would be pipe dreams as of now.
Both papers discuss possiblities for re-balancing the imbalances. Sounds simple, but I did not have the impression that either paper had a simple solution.
O'Rourke/Taylor seem to be very, very pessimistic (or realistic?) about the future of the Eurozone.
There are no simple solutions to that problem. But I think that in case the weak countries do not voluntarily leave the Eurozone the strong countries will leave.
ReplyDeleteH. Trickler
If you read the 2 papers, you will find that I used the term 'simple' with tongue in cheek.
DeleteHerr Klaus
ReplyDelete"I was positively surprised that Flassbeck/Lapavitsas argued that neither a political nor a fiscal union would be a realistic option to pursue"
TODAY the real question is political or fiscal union whether are realistic options or not?
Sometimes the road and the difficulties for the weak or the strong develop a problematic. This problematic will create solutions.Modifications in policies may be understood differently in 1-2 years.
I don't know about Flassbeck but Lapavitsas is a kind of H Sinn and support Greece exit the euro as a mutually accepted agreement. His perspective a more socialistic view of Greek economy, without saying a single word why Greece cannot improve significantly eg easing of doing business.
To their research emphasize monolithically only to some terms and find some correlations, but mainly their analysis do not adress why still Germany, Austria has industries and not Greece.
Finally why they use 1999 as "base year" and not eg 2005?
MS
This one takes 10 minutes to read and suggest a more simple, limpid, and attractive solution than anything else i found: http://www.social-europe.eu/2013/07/the-euro-dividend/
ReplyDelete