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  • ‘Can the Eurozone Crisis be saved?’ conference

    Strange title….
    Are you sure anyone wants to ‘save’ the crisis?

  • (Oops, accidentally posted this comment in an older post; please, ignore and delete that one, Professor Varoufakis)

    Sadly, I’ve missed the live stream, but I thought I’d add my two cents’ worth anyway. As a matter of economics, making our currency area work is very much feasible. It also really should happen, since there’s probably no other way to avoid utter economic disaster, political animosity, and the disintegration of the EU (if the eurozone collapses, we’re going to be facing a nasty zero-sum gain between the core and the periphery over the question of whose currencies existing obligations will be redenominated in) As a matter of politics, though, it’s probably not going to happen, because every single efficient solution is contrary to the interests of too many actors.

    Firstly, I would argue that the politicians of the developed core don’t have a lot of economic incentive to make the EZ work: As the periphery collapses, the euro’s exchange rate becomes lower relative to what it would be if the EZ were prospering; as the core countries themselves are not the ones experiencing collapse, from their point of view the currency becomes ever more undervalued, making their products more and more competitive outside the eurozone. Furthermore, as long as the peripheral countries practice austerity to repay foreign debts, the losses of the core countries’ financial systems are minimised. Not least, a collapse of the periphery is causing a migration of mostly young, skilled labour to the core, making the demographic situation of the core better and their social systems less expensive to maintain (the opposite holds for the periphery).

    Secondly, even if the core economies and the EU as a whole were faced with disaster by maintaining their current policy (a credible threat by the peripherals to leave and cause the pan-European disintegration, for example), it’s unlikely that would change anything, because the political masters of the core economies have a direct incentive not to change course; if they reversed their position, they would have to admit that they’ve been peddling tripe to their voters for years, and that the economic models they’ve been supporting have contributed to the crisis and are ultimately unsustainable (no, you cannot run permanent trade surpluses, Herr Schaeuble). That would be a political and professional suicide for far too many luminaries, from Northern European politicians, to members of the Commission and the economists of the ECB.

    In short, this probably won’t end well. Personally, I’ll be happy if the EU doesn’t go all Yugoslavia on us.

  • Yanis,

    I just watched the speech of Alexis Tsipras at the conference and of course I recognised your influence in writing his speech.
    In your “confession of an erratic marxist” you confessed that your goal is to “save” capitalism from its self thus the need for a new deal etc. I respect that. What i dont see why Syriza and you bash (pure) social democrats which also would have no problem pushing for this idea? Isnt that a social democratic policy? Last question. Why is Syriza pushing for this? As socialists, wouldnt they prefer for a socialist unployement (co-ops etc) rather than a new deal nevertheless capitalist growth and unployment?
    thanks

  • Hello,

    I watched the last session & found Mr Tsipras’s talk rather flat & depressing (maybe he was exhausted)…the funny comment for me was the “secret” nomination of Mr Galbraith as a possible Fed Chairman in the run up to 2000 election as well as a possible future French PM 🙂

  • Γιάννη καλημέρα,
    Που μπορούμε να δούμε την ομιλία σου αυτή;
    Ευχαριστώ

  • Unfortunately, I haven’t been able to watch, but I would love to read the presentations, especially from the OECD, so I hope you will post them in some form on your blog. σας ευχαριστώ Michael (we met briefly at the House of Commons and have a friend in common in Athens (Sofka Z)!