mainly macro: Eurozone delusions-Simon Wren Lewis

map of Europe; blue: Eurozone, green: monetary...

map of Europe; blue: Eurozone, green: monetary agreement with the Union, purple: Euro as currency (outside of Eurozone), orange: ERM II, lightgreen: currency pegged to Euro, red: members of Union outside of Eurozone or ERM II; language: Hungarian (Photo credit: Wikipedia)

This is an outstanding, must-read article from top Oxford economist, Simon-Wren Lewis (SRL). Check it out!

via mainly macro: Eurozone delusions.

Wren-Lewis argues that the Eurozone is in major crisis because of ineffective monetary policy not because of Southern European economies, like Greece. SRL blames Germany, who is destabilizing Europe – either through naivety or deliberate greed on Germany’s part.

The solution is suspending the Stability and Growth Pact (SGP), and preferably by a coordinated fiscal stimulus. Consensions to France is not likely to be enough.

Whilst SWL blames Germany for causing the crisis, he equally rounds on Europe’s leaders for not standing up to Germany.


mainly macro: Balanced-budget fundamentalism – Simon Wren-Lewis

A yellow flag.

A yellow flag. (Photo credit: Wikipedia)

This is an excellent article by respected Oxford scholar, Simon Wren-Lewis. Check it out!

mainly macro: Balanced-budget fundamentalism.

Personally, I tend to identify with the argument here. For me, we have seen a clear rise in economic fundamentalism in both London and Berlin.

Economic fundamentalism seems to protect the wealthy and the privileged but is universally hard on the middle and working classes.

What’s the significance of the yellow-flag. Let me offer a definition:

a ship’s yellow flag, denoting the letter Q for ‘quarantine.’ When flown with another flag, it indicates disease on board; when flown alone, it indicates the absence of disease and signifies a request for customs clearance.

Economic fundamentalism is preached by economic policy-makers, like George Osborne, in the UK, who tend to have no formal training in economics. For me, the economic fundamentalists need to be identified, quarantined and neutralized.

Let me turn this to an open question:

How should we overcome economic fundamentalism in London and Berlin in favor of economic policy that recognizes the social costs of extreme policy?