Posted 1 year ago on Feb. 3, 2012, 10:56 a.m. EST by flip
This content is user submitted and not an official statement
"The eurozone crisis is a self-generated one. Europe is attempting to impose austerity at a time of near, if not actual, recession. That's a recipe for disaster. I mean, every economist knows that. In fact, the International Monetary Fund just came out with a study of 150 cases of austerity under recession and they are all a disaster. You can see it in the UK right now; the economic decline has now lasted longer than it did during the Great Depression. Austerity just makes matters worse. What is required is economic stimulus and Europe has the resources for that, which would allow countries to grow their way out of the situation and overcome the decline.
"Admittedly, there is a lot of variation in Europe and Greece has very special problems. But take, say, Spain. Until the housing bubble crashed, the country had a budget surplus. It is not long-term government spending policies that are causing the problems. The Spanish housing bubble, of course, should never have been allowed to continue. But it was a rather local problem, not a fundamental problem of government spending and with stimulation to the economy - Spain should be able to overcome it."
If further and deeper integration is not what the future holds for Europe, then what is the alternative? And how can Europe resolve the current economic crisis? "The right move would be economic stimulation and abandoning the rigid concern of the European Central Bank for a 2 per cent inflation rate. The only argument I can see for that is class war. It weakens labour and helps dismantle the welfare state, but it is not the way out of Europe's economic problems. The ECB is substantially German-controlled – although, I should say, that in the last couple of weeks it has been easing its policies slightly, but it has to do much more. Germany has been a hugely successful economy of late and a large part of its success relies on the fact that it has a European market. It now has a responsibility to carry the system forward towards growth and development; and not sink it deeper into a vicious cycle of austerity, decline of growth and inability to pay debt and so on – which is what is happening. As to this vacuum of leadership among European leaders – well, there doesn't seem to be much sign of change there at the moment I'm afraid."