Faced with deflationary forces in its core, and a lasting depression in the periphery, the Eurozone requires a major investment drive. One of the Modest Proposal’s policy recommendations is that the European Investment Bank (along with the European Investment Fund) embarks upon a massive investment drive (up to 8% of Gross Eurozone Product) without any national co-funding. These investments could be funded through 100% issues of EIB-EIF bonds, with the European Central Bank purchasing, in secondary markets, sufficient quantities of these bonds to ensure that their yields stay well below 1.5%, thus making a European New Deal not only possible but also self-financing – and off the books of national budgets. Continue reading
In this Q&A with a Greek journalist, on the occasion of the launch of the Greek translation of the Modest Proposal, James K. Galbraith argues that Italy and Greece can play an important role in changing the terms of the European ‘conversation’, so that rational, minimalist solutions like the Modest Proposal can have a chance of saving the Eurozone. He also explains that the Greek implosion was always a political choice by Berlin and Frankfurt; and that if the troika squeeze is lessened, it is due to SYRIZA’s success – not to the success of the austerity program. Finally, he answers an important question on the Chinese government’s investment strategies in Greece and in the rest of the Eurozone.
“The Modest Proposal requires a change of thinking, not a change of European Treaties.”
“If Greece has been declared a success, it is largely due to the success of SYRIZA – not of the austerity program”
If you happen to be in Athens tonight (Tuesday 17th June), come to the Byzantine Museum (2 V. Sofias Avenue) at 8pm for the launch of the Greek translation of our Modest Proposal for Resolving the Euro Crisis 4.0. It will be presented by Yanis Varoufakis (who will speak to the proposal itself), George Krimpas (who will place it in a broader context) and Alexis Tsipras (who will speak to it as Leader of the Official Opposition and, primarily, the European Left party’s candidate for the Presidency of the European Commission). (Unfortunately no translation will be available.)
László Andor, European Commissioner for Employment, Social Affairs and Inclusion, has recently given a speech (at the Hertie School of Governance, Berlin, 13 June 2014) entitled Social dimension of the Economic and Monetary Union: What lessons to draw from the European elections? It is a good speech, well worth reading carefully, that outlines a proposal for a federal-like Eurozone-wide unemployment insurance scheme. While I have my concerns regarding its feasibility, and in particular the notion of fiscal transfers without democratically elected Eurozone federal insitutions, Mr Andor’s speech marks a third category in our classification of proposals to save the Eurozone: Federalist Anti-Austerians. For Commissioner Andor’s speech… Continue reading
Proposals for resolving the Eurozone crisis, and re-designing its architecture, are multiplying – especially as evidence mounts that the crisis is continuing, despite all the official announcements of its end. Our Modest Proposal was the first to have been tabled, along with Breugel’s Blue Bond Proposal, back in 2010. In this review article, J.K. Galbraith and I argue that, while there is now a plethora of proposals for ‘fixing’ the Eurozone, there are only two competing camps. One is our ‘Modest Camp’, whose policy recommendations would re-configure the Eurozone immediately, using existing institutions, and without cumbersome federal moves that would legitimate a permanent Austerity Union. The other being, what we described as, the Federalist Austerians’ Camp. Click here for the OPEN DEMOCRACY site
How the current policies of the Brussels-Berlin-Frankfurt triangle are based on a propaganda campaign reflecting continuing Crisis Denial and why they constitute an attempt to create a new financial bubble - Why SYRIZA is a pro-European progressive party, in contrast to UKIP and Ms Le Pen’s FN - What should we expect of the new Italian government and why there is important room for an alliance between Italy and a SYRIZA-led Greek government. In conversation with Alessandro Bianchi of L’Antidiplomatico (click here for the Italian version) Continue reading
Tom Bowker, of the Central Banking Journal and centralbanking.com, has written about my proposal that the ECB’s Quantitative Easing program should be aimed at purchasing bonds issued by the European Investment Bank/Fund as part of an Investment-led Recovery Program for the Eurozone as a whole. Continue reading
The ECB has no alternative to enacting some form of Quantitative Easing (QE) in order to prevent deflationary expectations from setting in fully. Core inflation has already reached a level that, even according to Mr Draghi’s own pronouncements on 24th April, should have already triggered off QE. (See also Wolfgang Munchau’s well argued case here.) However, the ECB’s governing board is finding it hard to agree on what assets the ECB ought to buy. In this post I suggest a simple answer to this debilitating question.
A group of noted international economists (including Joseph Stiglitz, Peter Bofinger and Stefanie Griffith-Jones), known as the European Progressive Policy Initiative (EPPI), has issued a policy paper that endorses the main planks of our Modest Proposal for Resolving the Euro Crisis 4.0.
EPPI was assembled in 2013 by Europe’s social democratic alliance in the European Parliament. This is significant, given the social democrats acquiescence to the Merkel-led toxic policies, which are causing Europe to fragment. Coming, as it does, a few weeks before the European Parliament Election, this policy document flags the potential for breaking the stranglehold over European politics of the indefensible ‘official EU position’, i.e. the toxic trio of claims that: Europe is on the mend – Austerity is working – Europe has taken important steps in shoring up the Eurozone’s institutions).
Bengt-Ake Lundvall is a co-signatory of the petition by 74 of us in favour of an immediate restructuring of Portugal’s public debt. Here are his reasons for signing the petition. (And, for readers who missed them, here are the reasons I gave for signing the same petition.)
The Centre for Labour and Social Studies (CLASS) kindly invited me to draft a possible Manifesto for the European Left, in view of the May 2014 European Parliament election. Here is the final document I produced entitled THINK BIG, THINK BOLD: Why the European Left must aim for a radical, Pan-European, Green New Deal.
Jorge Rodrigues, of Portuguese daily Expresso, asked me to explain why it is that I signed the petition of 74 economists calling for an immediate debt restructuring of Portugal’s public debt, how this ‘call’ squares up with our Modest Proposal and what type of debt restructuring I had in mind. Click here for the interview as published in Expresso. My original answers in English follow… (See also this piece on lessons for Portugal from the Greek PSI – click here for the Portuguese published version) Continue reading
by James Galbraith, Stuart Holland and Yanis Varoufakis (*)
Peter Bofinger’s proposal for Euro-bundles (see here for an introduction) serves the noble purpose of rekindling the debate on the Eurozone’s fiscal and monetary incoherence. The idea behind Euro-bundles is to issue a common bond without joint liability that the ECB can then purchase in the context of a monetary policy that uses quantitative easing to fend off deflation, with the welcome side effect of lessening the Eurozone’s borrowing costs. While we shall be arguing that Professor Bofinger’s Euro-bundles are ill- conceived, we applaud his idea of a common bond involving, in some capacity, the ECB. This idea points in the direction of a genuine solution to the Eurozone’s fiscal and monetary fragility. Continue reading
For those of us who grew up under totalitarian regimes, it is noteworthy that Europeans are resorting to a time-honoured tradition: telling jokes as a form of defiance. Here is one: “Why did Europeans agree to form the euro?” “Because”, the joke goes, “the French feared the Germans, the Irish wanted to escape Britain, the Greeks were terrified of Turkey, the Finns wanted to prove they were more European than the other Scandinavians, the Spanish wanted to become more like the French, the Italians wanted to become German, the Dutch and the Austrians had all but become German, the Belgians sought to join both Holland and France, and, finally, the Germans feared… the Germans!” Continue reading
Language Log featured a critical post the other day on our Modest Proposal for Resolving the Euro Crisis. It criticised not the substance of our economic proposals but our choice of title. Surprised and incensed that our Modest Proposal lacked the irony (or was it sarcasm?) of Jonathan Swift’s original Modest Proposal, the author accuses us of, at best, ignorance of Swift [" Maybe (some) economists no longer read Swift?"] and, at worst, of “erasing cultural history”. Interestingly, the said blog post generated quite a number of comments, most of which assumed that we were unaware of Jonathan Swift’s playful proposal. A reply was, I thought, in order. This is the one I just posted on that blog, and which I paste below: Continue reading
Roger Strassburg and Jens Berger, of NachDenkSeiten, interviewed me on the Modest Proposal to Resolve the Euro Crisis and the Eurozone Conference that James K. Galbraith and I organised in Austin in November 2013. Part A of the long interview was posted here. Here is Part B of the interview, which (as you will see) focuses more on Greece and the chances of kickstarting the debate that Europe is refusing to have, so far…. Continue reading
En coédition avec l’Institut Veblen.
Confrontée à une crise économique et sociale majeure qui nourrit la montée des nationalismes, la zone euro n’a plus droit à l’erreur. Il faut agir et vite !
Comment ? D’abord en partant du bon diagnostic. Non, le problème majeur n’est pas la dette. Celle-ci n’est que le symptôme d’un mal plus profond : l’architecture défaillante de la zone euro. Face à l’urgence, il faut se montrer réaliste et pragmatique : on ne va pas changer les traités et rouvrir des débats source de division.
Tout l’intérêt de ce petit ouvrage est de formuler une proposition immédiatement applicable pour sortir de la crise, s’inscrivant dans le cadre institutionnel actuel et propre à remettre la zone euro sur la voie de la prospérité.