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This is a MUST READ article from the New Yorker. Check it out!
Why Is Europe So Messed Up? An Illuminating History : The New Yorker.
This article, written by John Cassidy, summarizes why the US is recovering from the financial crisis and Europe continues in recession. Cassidy sums up the situation in Europe as follow:
At this stage, austerity is the biggest threat to the euro. If the recession lasts for very much longer, political unrest is sure to mount, and the currency zone could well break up.
Cassidy analyzes the history by reference to a new book by Mark Blyth, a professor of political economy at Brown University: “Austerity: The History of a Dangerous Idea.” Let me try to summarize.
Simply, best practice monetary policy and fiscal policy options are not available in Europe because of the narrow-mindedness of German policy-makers who are continuing to “tilt the game” in favor of German industry. Of course, German policy-makers see the problem very differently, with their own extremist “austerian” economic views (called ordoliberalism). The article concludes focusing on the human calamity of austerity.
What do you think?
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