Continued Paul Krugman
Aug. 30th, 2012 01:07 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jackA few other comments spun off from what I read.
Europe
Europe is in a much more difficult position. Krugman describes the Euro as a bold experiment that came too soon, and isn't sure if rescuing it, or abandoning it quickly would be better. It was a mistake to enter into a monetary union without unified control of fiscal policy. (People disagree whether "no euro" or "more unified euro" would be better, but the current mess is from having neither.)
Greece is actually running out of money, and does need rescuing from abroad (which will hopefully happen) rather than economic tweaking.
The other European countries in trouble are solvent, but are suffering from the same sort of problems as the UK and US, but can't fix it because they need to devalue their currency and can't.
Germany is understandably terrified of inflation, but unfortunately, inflation is what's needed. And worried they'll end up subsidising the rest of the European countries indefinitely, so they're insisting on harsh austerity measures in return for subsidy, which probably don't actually help.
He's not sure if Europe can be fixed, but it probably needs either (a) an orderly transition to either Germany, or Greece leaving or (b) Germany and France to guarantee government loans in Euros from other countries.
Europe
Europe is in a much more difficult position. Krugman describes the Euro as a bold experiment that came too soon, and isn't sure if rescuing it, or abandoning it quickly would be better. It was a mistake to enter into a monetary union without unified control of fiscal policy. (People disagree whether "no euro" or "more unified euro" would be better, but the current mess is from having neither.)
Greece is actually running out of money, and does need rescuing from abroad (which will hopefully happen) rather than economic tweaking.
The other European countries in trouble are solvent, but are suffering from the same sort of problems as the UK and US, but can't fix it because they need to devalue their currency and can't.
Germany is understandably terrified of inflation, but unfortunately, inflation is what's needed. And worried they'll end up subsidising the rest of the European countries indefinitely, so they're insisting on harsh austerity measures in return for subsidy, which probably don't actually help.
He's not sure if Europe can be fixed, but it probably needs either (a) an orderly transition to either Germany, or Greece leaving or (b) Germany and France to guarantee government loans in Euros from other countries.