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The euro: More than a disaster

Thursday, 12 April, 2012

Spanish euro El Confidencial is a centre-right Spanish digital publication so, given the ideology of the current leadership in Madrid, it’s worth keeping an eye on to see how the wind is blowing. “La única alternativa de Rajoy: sacar a España del euro” is the title on the latest column by Federico Quevedo and the message is clear: Prime Minister Mariano Rajoy must get Spain out of the euro currency zone at once. Meanwhile, an op-ed by three Spanish economists in El Mundo, “Prisioneros del populismo pasado” argues that Spain is heading for a major crisis and a bail-out. With the country’s unemployment rate at 23.6 percent, it’s interesting to note where the authors are based: Jesus Fernandez-Villaverde is a professor of Economics at the University of Pennsylvania, Luis Garicano is a professor of Economics and Strategy at the London School of Economics and Tano Santos is a professor at Columbia Business School.
From Madrid to London. She wrote leaders for the Financial Times and worked at the US Treasury, all before she was 30. Now, Stephanie Flanders is the BBC’s Economics Editor. Asked by the Guardian‘s Zoe Williams whether the euro was a disaster, she said:

“It’s more than a disaster, I think it’s a tragedy. It was quite an ambitious project, which had pros and cons, but it was basically mis-sold to everybody. So the Germans were sold it as a way of spreading a German approach to economics, and German stability, across the eurozone; but they were told that it would come without any obligations on them, there would be no bailouts. At the same time, the others were told this was a quick ticket to German stability, and they would get low interest rates and low inflation, and they weren’t told: there’s one catch — you have to be as competitive as Germany for ever. And if you do have any problems, all the usual tools you’d use to get out of them won’t be available to you. For many of these countries, the implication is years more austerity, which has a big sign on it saying, ‘Brought to you by the euro.'”

Adding salt to the wound, in a leader titled “Why Europe’s leaders should think the unthinkable“, the Economist says that “the worst outcome of a euro split would be a chaotic breakdown. An orderly process increases the chance that it might be possible to salvage from the wreckage other gains of European integration, notably the single market… No self-respecting general would refuse to plan for a predictable war, no matter how much he dislikes the idea of fighting it.”

Despite the nightmare, we should not forget what the great writer Philip K. Dick once said: “It really seems to me that in the midst of great tragedy, there is always the horrible possibility that something terribly funny will happen.”


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