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Punk Economics

Tuesday, 31 January, 2012

Irish economist, David McWilliams, explains the euro crisis using “punk economics“, which he describes as “a new way looking at the economy based on the central idea that what is important is not complicated and what is complicated is never important.”

Snippet: “The German solution will only cause a recession, or more recessions, in the periphery. This will cause money to flow into Germany, not out of Germany, because the risk of default in the periphery increases and in time much of Europe will begin to look like Greece, teetering on the edge. As money flows into Germany, German bond yields fall, Greece will default, and this will give the others permission to do likewise because a default in Greece sets off a domino effect all over Europe because Europeans will say, ‘Well, if the Greeks can do it, why can’t we?’ Is it any wonder right now that the price of gold is firm, that the yield on German bonds is falling and that the euro is weakening against the dollar?” He’s onto something.


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