In this fascinating, insightful, and thought-provoking collection of essays—which includes letters and private memos to both American and Greek officials, as well as other previously unpublished material—Galbraith examines the crisis, its causes, its course, and its meaning, as well as the viability of the austerity program imposed on the Greek citizenry. It is a trenchant, deeply felt commentary on what the author calls “economic policy as moral abomination,” and an eye-opening analysis of a contemporary Greek tragedy much greater than the tiny economy of the nation itself.
In fits and starts, to varying degrees on varying issues, this project has managed to achieve extraordinary success over the past seven decades, enabling Europe to reach levels of peace and prosperity at which previous generations could only have marveled. But the endeavor has always been more popular with elites than with the masses, has lurched from crisis to crisis, and has struggled to deal with the differences that keep Europe’s disparate parts from forming a seamless whole.
Foreign Affairs has been covering the effort closely from the beginning, and as the Greek crisis comes to a head, we’ve decided to pull together highlights of our analysis of the quest for economic union in particular. This collection provides an unparalleled look at the past, present, and future of Europe’s common currency, showcasing more than two dozen of the world’s leading experts on European economics and politics to help you better understand the story behind the headlines.
Both the curious reader and the specialist will find interesting information and explanations on the recent events, and a basis for investigating Greece's structural inadequacies further.
The last section of the book analyses the outcomes of the negotiations between Greece and its creditors--the Eurogroup, other EU institutions and the International Monetary Fund--and providers commentary on the possible next movements of Athens. It also discusses how the incumbent government, headed by Alexis Tsipras, may turn the challenges his country faces, after the signature of a third bailout on 14 August 2015, into a golden opportunity to effect true change and achieve eradication of the chronic ills of Greece, which is the surest path towards future competitiveness and prosperity.
Building on his work as a leading member of the renowned Research on Money and Finance group, Costas Lapavitsas argues that European austerity is counterproductive. Cutbacks in public spending will mean a longer, deeper recession, worsen the burden of debt, further imperil banks, and may soon spell the end of monetary union itself.
Crisis in the Eurozone charts a cautious path between political economy and radical economics to envisage a restructuring reliant on the forces of organized labour and civil society. The clear-headed rationalism at the heart of this book conveys a controversial message, unwelcome in many quarters but soon to be echoed across the continent: impoverished states have to quit the euro and cut their losses or worse hardship will ensue.
Is Greece hopelessly corrupt and lazy as a matter of national character? This book starts out by refuting these widespread cultural stereotypes with hard empirical data. It then offers a more refined and complex explanation for Greece’s troubled present by taking a scientific, international political economy based approach in a language that is accessible even to non economists. Hard data and graphs are used to illustrate arguments, as opposed to subjective opinions.
The author takes a longer term perspective, reminding readers that in the post war decades Greece was the super high growth star economy of the time, posting solid 7-9% per cent growth rates annually for three continuous decades, with almost do debt. After the change to democracy in 1974, Greece decided to enter the European Communities, at which point its growth rate immediately dropped to almost zero, and the country deindustrialised in the face of fierce competition from Northern member states. Left wing populist prime minister Andreas Papandreou is often blamed for this collapse, but the author uses hard evidence to challenge the view that the original sin of reaching a debt level of above 100% of GDP in this period could be blamed squarely on him.
The book then describes how, by the early nineties Greece was already in a state of sovereign debt crisis, twenty years prior to the present disaster. Participation in the Eurozone enabled Athens to avoid the impeding default. The critical (and still not corrected) birth defects of the Eurozone construction even fuelled a long decade of artificial boom, hiding from a generation of Greeks the fact that the economy of their country has severe structural weaknesses in an international economic context that turned increasingly unfavourable. A corrupt political class allowed special interests to capture the Greek state against the wishes of uninformed voters.
The bubble burst in 2009, after which the EU and the IMF attempted to cure Greece’s troubles by causing even more harm with austerity and a debt ‘haircut’. They shifted the burden to ordinary citizen, but failed to address crucial issues that play a critical role in the Greek crisis, such as offshore tax havens, untaxed shipping, excessive military spending, one sided economic structure and inadequate investment into human capital.
Sandbu traces the origins of monetary union back to the desire for greater European unity after the Second World War. But the euro’s creation coincided with a credit bubble that governments chose not to rein in. Once the crisis hit, a battle of both ideas and interests led to the failure to aggressively restructure sovereign and bank debt. Ideologically informed choices set in motion dynamics that encouraged more economic mistakes and heightened political tensions within the eurozone. Sandbu concludes that the prevailing view that monetary union can only work with fiscal and political union is wrong and dangerous—and risks sending the continent into further political paralysis and economic stagnation.
Contending that the euro has been wrongfully scapegoated for the eurozone’s troubles, Europe’s Orphan charts what actually must be done for the continent to achieve an economic and political recovery.
This revised edition contains a new preface addressing the economic and political implications of Brexit, as well as updated text throughout. Europe’s Orphan charts what actually must be done for the continent to achieve a full recovery.
How did this happen? The anticipation of the European catastrophe has already fundamentally changed the European landscape of power. It is giving birth to a political monster: a German Europe.
Germany did not seek this leadership position - rather, it is a perfect illustration of the law of unintended consequences. The invention and implementation of the euro was the price demanded by France in order to pin Germany down to a European Monetary Union in the context of German unification. It was a quid pro quo for binding a united Germany into a more integrated Europe in which France would continue to play the leading role. But the precise opposite has happened. Economically the euro turned out to be very good for Germany, and with the euro crisis Chancellor Angela Merkel became the informal Queen of Europe.
The new grammar of power reflects the difference between creditor and debtor countries; it is not a military but an economic logic. Its ideological foundation is ‘German euro nationalism’ - that is, an extended European version of the Deutschmark nationalism that underpinned German identity after the Second World War. In this way the German model of stability is being surreptitiously elevated into the guiding idea for Europe.
The Europe we have now will not be able to survive in the risk-laden storms of the globalized world. The EU has to be more than a grim marriage sustained by the fear of the chaos that would be caused by its breakdown. It has to be built on something more positive: a vision of rebuilding Europe bottom-up, creating a Europe of the citizen. There is no better way to reinvigorate Europe than through the coming together of ordinary Europeans acting on their own behalf.
Little has been written about the instability of the Euro, but it’s a very real threat to investors worldwide, as well as to the global economy. In The Fall of the Euro, the Global Head of Currency Strategy at Nomura describes why the breakup of the Eurozone remains a real risk and outlines investment strategies for the most likely scenarios.
Over the last two years, swings in global asset markets have been increasingly driven by developments in Europe. This is something new: in the past, Europe was one of the most stable parts of the global economy, and its typically minor economic fluctuations would have little bearing on US equity markets. In the new environment of European turbulence, Europe's economic and political developments will be a persistent source of shocks for global financial markets. If the path ahead involves a disorderly breakup of the Eurozone, the instability to come will be much more intense than what we have seen to date. As an investor, you need a roadmap. This book provides it.
Jens Nordvig is Managing Director, Head of Fixed Income Research, Americas and Global Head of Currency Strategy at Nomura, the global investment bank. Previously, Nordvig worked as a Senior Currency Strategist for investment management firm Bridgewater Associates, the largest hedge fund in the world.