Monday, December 16, 2013

Pissarides on the Euro

Nobel laureate Christopher Pissarides, once a passionate supporter of the euro, now thinks the EMS must either be changed profoundly or dismantled:

The euro should either be dismantled in an orderly way or the leading members should do what’s necessary as fast as possible to make it growth and employment friendly. We will get nowhere plodding along with the current line of ad hoc decision-making and inconsistent debt-relief policies. (Compare, for example, Cyprus and Greece, where the source of problem was similar but the solution very different). The policies pursued now to steady the euro are costing Europe jobs and they are creating a lost generation of educated young people. This is not what the founding fathers promised.

2 comments:

Dick Sindall said...

A lost generation of young people certainly sounds familiar.

Anonymous said...

The political class's commitment to the euro is showing itself to be deeply incoherent. Exhibit A is the negotiations over banking union, which absolutely must be constructed over the next decade if the EMS is to make any financial sense and have minimal stability. One can understand Merkel's cautious but cruel disposition to do only what's minimally necessary to get along and prevent euro collapse, but right now, by preventing the formation of a true banking union foundation, she's not even doing that. Wolfgang Munchau is good on these matters.