Secular Café: The end of the eurozone

Secular Café For serious discussion of politics, political news, policy, political theory and economics and events happening round the world

The end of the eurozone Jul 17th 2012, 11:30 http://www.guardian.co.uk/commentisf...e-begin-greece Quote: It is now a fair guess that the European Monetary Union (or the eurozone) has crossed the Rubicon and is heading towards breakup or collapse. In the periphery of Greece, Portugal, Ireland and Spain, there is despair at the ever-deepening recession. In France and Italy there is burgeoning opposition to long-term austerity. In Germany there is frustration at feckless southerners. Disintegration is likely to take a turn for the worse in 2013, as a global slump is in the offing. The large economies of Europe, including the UK, are entering recession largely due to austerity policies. The US economy is veering towards negative territory, as Barack Obama's expansionary policies were never vigorous enough. China is facing a hard landing that will force a re-examination of its growth strategy. The international financial system, meanwhile, remains weak and unreformed. After three years of festering, truly drastic action is now required. Peripheral countries must abandon austerity as part of a Europe-wide programme to raise productivity, financial institutions must be taken into public ownership, and debt written off. But it is unthinkable that Europe's current political leaders would embark on such changes. Hidebound by neoliberal economics, they will continue with austerity, privatisation and liberalisation. The financial markets have sensed it and are preparing for disaster. The disaster is likely to start in Greece. The country is in the midst of an unprecedented depression, made largely in Brussels. In 2012 output is likely to contract by 7% to 9%, on top of about 14% in 2008-11. Not surprisingly, the bailout programme is again missing its targets as recession has reduced tax revenues... ...They also cynically promised to renegotiate bailout terms knowing full well that renegotiation was impossible as long as the framework of the bailout was accepted. In practice, they are about to impose the spending cuts demanded by the EU, while liberalising closed professions and selling public assets in the ludicrous hope of boosting growth. The government is unlikely to survive for long. As depression worsens in the next six months to a year, Greece will again confront the impossibility of sticking with bailout policies. This time the decision is likely to be final, with profound implications for the ruling elite that took the country into the EMU on a wing and a prayer. The elite is now watching in horror as its strategy is falling apart, and seems incapable of devising an alternative path. But Greece is unlikely to attempt suicide: at some point it will default on its debts and exit the EMU. There will then be a genuinely new government, perhaps formed by the left, which will navigate the chaos and guide the rebuilding of economy and society. Once Greece has made its move, the unravelling of the EMU will probably start in full earnest. I certainly think Greece must leave the eurozone. Whether that leads to its breakup seems to me to be moot. Meanwhile, little Norway, which, like Switzerland remains outside the EU, seems to be doing well http://www.telegraph.co.uk/finance/m...-FTSE-100.html

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions