At its birth, economist soothsayers predicted a short life for the euro. For once, the economists might well be right. The man who might have the best paternity claim for the euro, Oskar Lafontaine, the finance minister for Germany at the time of its creation, recently repudiated it and called for a breakup of the currency zone as essential to diverting the southern European countries from “disaster.” Now, a book by economics professor Joao Ferreira do Amaral of Insituto Superior de Economia e Gestao called “Why We Should Leave the Euro” is sitting on top of the best-seller lists in Portugal, and generating a lively debate in that country about the costs of eurozone membership.… Seguir leyendo »
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Along with the cherry blossoms, hordes of bureaucrats descended on Washington for the spring meeting of the World Bank and the International Monetary Fund (IMF). The meeting concluded with, among other things, a communique from the International Monetary and Financial Committee urging the United States and the European countries, including the United Kingdom, to keep the money spigots flowing and ease up on austerity.
The question, though, is: What austerity? Whatever the policies implemented by the debt-racked, recession-prone countries, public austerity isn’t among them, as government spending has not, in fact, declined in most countries. Expansive monetary policy has pushed interest rates to historic lows, and neither the European Central Bank, nor the Federal Reserve has been able to make that translate into economic growth and the kind of job creation that would really put a dent in unemployment levels.… Seguir leyendo »