The Euro Crisis Revisited: Radio interview with Doug Henwood for Behind the News, KPFA 94.1FM

In this half-hour interview (jump to 29′ 10”) Doug Henwood gave me an opportunity to lay bare the pieces of the euro crisis jigsaw puzzle but also to expand upon the inter-connections with the global crisis and its US menifestation in particular. Any comments?


  • Unfortunately the recording’s quality of sound matches the quality and effectiveness of current EU solutions for the crisis. A transcript or summary would be most welcome.

    • Concur !
      I would be greatly indebted if you took the pain to give us the written version of it … thanks in advance Yannis !

  • It is very refreshing to hear such a detailed analysis of the broad viewpoint from someone that demonstrates a complete understanding of the complexity of the present economic situation. I was particularly interested in the potential for major social structural problems caused by the underpayment of workers in Germany. Something that others have been recently highlighting.

    The quality issue is perhaps caused by a deliberate reduction of quality to encourage us to upgrade to a paying version.

  • No comments… Unfortunately this is exactly the reality of Europe, today.

  • Dear Yani,

    Thanks for the post. I would like to state an opinion even though I’m probably wrong.

    I wonder whether the Eurobond solution is really what the people of Europe should be asking for seeing as it wouldn’t necessarily solve the problem of political representatives not being representative on popular democratic demands (Blair going to war, Papandreou signing the mid-term, bank bailouts etc). I’m an advocate for Direct-Democracy and almost wish the financial problems aren’t paved over with the eurobond you propose or governments defaulting on their debts.

    Also from what I understand the US can’t fix it’s problems unless it increases taxes on their rich, considerably reduces their military spending and reduces its deficit. What would be the result of a US default/overprinting on the EU and the Euro and would eurobonds be enough in such an event?
    Personally I wouldn’t mind seeing a global decentralized (digital?) currency backed by hard assets like gold and maybe even an end to fractional reserve banking.

    Also what is your opinion on Bitcoin? I can’t seem to get over it not being a tangible material and that there could be more such networks created in the future thus decreasing Bitcoins rarity.

    Any opinion appreciated. All the best…

    • I don’t think the Amero or a new currency would solve the problem.

      Look at the Swiss franc skyrocket as a safe heaven, creating an uncompetitive Swiss economy.

      The problem is that the whole world is awash with debt. And there are only two ways out of heavy debt: either you write it down or you inflate.

      And it seems that the Americans who never experienced Germany’s 30s have no problem with inflation and a huge problem with deflation. And the Germans the opposite. Therefore, tension in coming up with a unified global solution. The American model says inflate and the European model says deflate.

  • I had no problem with the recording’s quality. I use ” Real Player.”

  • The ever enlarging circle of euro-idiots never ceases to amaze. Can anyone explain the latest nonsense eminating from the Finnish, Dutch et al?

    Who are these people? and who told them that they posses even the elementary skills to lead through a global crisis?

    • Sure. The question is whether they are shooiting themselves in the foot. So far this is precisely what they have been doing.

    • People tend to prefer to shoot themselves in the foot over getting shot in the back by ohers.

    • Or they shoot a media clone of themselves while they are safe and sound to maneuver as they like. Causing troubles is a preferred way for loopholes to exist.

  • And the amazing thing is that the Germans don’t lack rason; simply they are refusing to use it.

    This is straight from Der Spiegel:

    “The introduction of euro bonds would not be a betrayal of German interests. The road to a union characterized by solidarity, much like the recognition of the Oder-Neisse border between a unified Germany and Poland, is indeed in Germany’s well-considered interest. It is an expression of European and German realpolitik. Why shouldn’t Europe introduce a financial transaction tax, which would establish a financial scope for a social and environmental Europe, which in turn would promise workers security through Europe, and in doing so address the greatest concerns of young Europeans?

    The concept of more justice through more Europe contains an appeal in terms of a transnational community of solidarity. “Be outraged, Europeans.” Just as many demonized Brandt’s talk of rapprochement with the communist bloc as treason, today’s call for “more Europe!” is a blow in the face of national self-awareness.

    Merkel’s back-and-forth and forward-and-backward approach could also create an opportunity for a future project involving the Social Democrats and the Green Party. As soon as the SPD and the Greens have explained that a social Europe is more than an introverted tightwad, but rather — using Hegel’s argument — an historic necessity, even the SPD will regain stature and win elections. This, of course, is predicated upon its having the courage to declare Europe to be its main project, just as Ostpolitik was more than 40 years ago.”

  • Eurobonds are often intended to relax the hard budget constraint of Europe’s fiscal policy
    rules and to finance public investment at the European scale in order to stimulate the
    European economy in the context of fiscal austerity. However, the evidence for such
    desired effects from public investment is weak. By contrast, private investment is the main
    driver of growth in Europe. The fragmented nature of European debt markets is an obstacle
    for investment particularly in smaller Member States. The benchmark character of the
    German Bund allows German borrowers to raise credit at low cost, while peripheral debt
    markets are handicapped. This disadvantage does not only apply to countries with high
    public debt.

    The benchmark function of the German Bund generates a competitive advantage for the
    German economy that seems to justify German policy makers in imposing their policies on
    the rest of Europe. However, in fractured credit markets, peripheral borrowers will never be
    able to access capital at the same conditions as German borrowers. This is of particular
    importance for sovereign borrowers, who need to cut services in order to be able to service
    the high cost of debt. A political backlash against this system, including against European
    integration as such, is then increasingly possible. The solution is to fully integrate Europe’s
    financial markets and abolish their fractured nature.