The Revolt Against The Euro

PAUL KRUGMAN reminds us that the problems of southern Europe are not caused by past profligacy. He is right in some sense. It is true that according to any off-the-shelf definition of the government budget, a number of these countries (though certainly not all) were doing fine: running surpluses and reducing the debt burden. Yet it isn't clear that a static, cash-basis accounting concept of the government budget is the most reasonable.

By Shareholders Unite:In this article, we'll try to show that the main benefits of the euro are related to the perfection of a single market, and the main cost is the lack of adjustment mechanisms to country-specific shocks and developments. The latter now seem to far outweigh the former.

Keynes (1923):

Reader "JB" thinks I am blaming Germany for what is happening. That's not exactly correct, but let's take a look at what "JB" has to say via email. Hi Mish, I read your blog daily. We are generally on the same page. We even agree that in all probability the eurozone will break up. However, You cannot blame the Germany, the German government, or the German people for doing the right thing. Germans can accept austerity. The phrase "tightening the belt" is an axiom in the German language. .... JB

Credit where it's due. The European Commission is usually considered a lumbering bureaucratic animal, but in devising a system for preventing future fiscal crises in the Eurozone, it's moving pretty fast. There are only two problems: European governments are unlikely to sign up to the proposals, and the current fiscal crisis still has a long way to run.

Michael Burda, Stefan Gerlach , 17 June 2010While the Stability and Growth Pact had good intentions, it failed because nothing happened when governments broke the rules. This essay proposes an enhanced Pact with increased fiscal transparency, an independent committee of fiscal experts, and a 1% tax on new debt above the 60% debt-to-GDP ratio. This would redistribute the costs of running Europe from the countries that have their house in order to those that don’t.

PARIS (AP) — The Geneva Motor Show has long had a reputation as one of the glitziest stops on the global auto show circuit — the place to unveil luxury models and out-of-this-world fantasy concept cars. But this year the dire state of the European auto industry will hang over the exhibition halls. Hit by fleeing customers, struggling economies and idle production lines, the region's carmakers need to make tough decisions if they are going to survive.

By Shareholders Unite:The Germans want to turn euroland into a form of Germany, but by doing that they might very well turn it into a form of Greece.Jürgen Stark's strangely schizophrenic parting shot at the ECB: