It's a strawman. In every country, you will find sectors (and the associated people) who have a net gain from the EUR and some with a net loss. It doesn't really matter and would be impossible to figure out who benefits and loses more, both on the micro and the macro level.
I myself think about it in this (admittedly broad stroke) way:
1) The EUR is not just an economic project. It is a political instrument. That's why it exists, and that's what will determine its future. The economics is only a constraint (alas, now binding) not the objective.
2) No matter the history, a breakup now would be incredibly costly for everybody. Bob Rubin, US treasury secretary under Clinton, aptly described it as "Lehman times x". That's why a complete reversal is highly unlikely.
3) There is a solution: Peripheral states must accept a German-dominated external voice in their fiscal affairs; Germany must let the ECB monetize the debt. Neither of which is politically realistic.
4) In the absence of a conventional political solution, the continent "needs" a holy-shit-moment, something that will scare enough people sufficiently s.th. politicians can reach the costly compromise (3). So I expect one to happen.
5) What journalists, economists, and whoever writes about the success of a country ex post does not matter, it's just noise. Think about what people wrote about Japan in the 80s, the "Asian tigers" in the 90s, the "Washington consensus", etc etc. Until just a few months ago, it was China's state-dominated model, now it's Germany's social-consensus-based turn. Or, to stay with Germany, remember the Economist cover about "the sick man of europe"? It's quite similar to the attribution bias when successful people write autobiographies (or have biographies written about themselves). People like "the illusion of control", and a nice story with a neat, understandable "explanation" with max three identifiable causes or "factors" that led to the observation supports it.
Personally, I think the best way to test your understanding of how the world works is to make predictions and bet on them, preferably money, less preferably your reputation or your ego. So yeah, this article is probably blah but I will read it anyway because it will probably make me feel good, having grown up in and thus having links to the successful system du jour ;-)
1) The EUR is not just an economic project. It is a political instrument. That's why it exists, and that's what will determine its future. The economics is only a constraint (alas, now binding) not the objective.
This can not be repeated often enough. All the gloom and doom commentators making break-up predictions are highly underestimating this aspect. EU behavior can not be explained by rational/economic factors based logic.
People like "the illusion of control", and a nice story with a neat, understandable "explanation" with max three identifiable causes or "factors" that led to the observation supports it.
Hmm. Reminds of a comment I just read here on HN. Trying to put my finger on it... :)
Flood the debt with inflation ;) That means the ECB buys the debt basically, but of course it creates the Euros out of nothing, so that creates more Euros for the same economical situation.
The reason behind that is that if the ECB buys the debt, it can keep the rates under a certain level, buying everything that's above with its - theoretically - unlimited buying power. Of course that has a few flaws. The Euro is then less valued, so that's a reason more for wanting even more return on bonds.
I myself think about it in this (admittedly broad stroke) way:
1) The EUR is not just an economic project. It is a political instrument. That's why it exists, and that's what will determine its future. The economics is only a constraint (alas, now binding) not the objective.
2) No matter the history, a breakup now would be incredibly costly for everybody. Bob Rubin, US treasury secretary under Clinton, aptly described it as "Lehman times x". That's why a complete reversal is highly unlikely.
3) There is a solution: Peripheral states must accept a German-dominated external voice in their fiscal affairs; Germany must let the ECB monetize the debt. Neither of which is politically realistic.
4) In the absence of a conventional political solution, the continent "needs" a holy-shit-moment, something that will scare enough people sufficiently s.th. politicians can reach the costly compromise (3). So I expect one to happen.
5) What journalists, economists, and whoever writes about the success of a country ex post does not matter, it's just noise. Think about what people wrote about Japan in the 80s, the "Asian tigers" in the 90s, the "Washington consensus", etc etc. Until just a few months ago, it was China's state-dominated model, now it's Germany's social-consensus-based turn. Or, to stay with Germany, remember the Economist cover about "the sick man of europe"? It's quite similar to the attribution bias when successful people write autobiographies (or have biographies written about themselves). People like "the illusion of control", and a nice story with a neat, understandable "explanation" with max three identifiable causes or "factors" that led to the observation supports it.
Personally, I think the best way to test your understanding of how the world works is to make predictions and bet on them, preferably money, less preferably your reputation or your ego. So yeah, this article is probably blah but I will read it anyway because it will probably make me feel good, having grown up in and thus having links to the successful system du jour ;-)