In this interview James Galbraith explains our Modest Proposal for Resolving the Euro Crisis, argues that the Eurozone’s dismantling is a bad idea, discusses money and debt (in the context of Modern Money Theory) and, finally, comments on current developments in the US social economy. The interview was conducted by Roger Strassburg Continue reading
European Political Leaders and Policy Experts to Meet for Two Days in Austin to Discuss
The LBJ School of Public Affairs of the University of Texas at Austin will host a two-day conference on the fate of the Eurozone on Nov. 4 and 5. “Can the Eurozone Be Saved?” will convene European political leaders and policy experts to examine alternative policies to keep the Eurozone intact.
The meeting will feature: Continue reading
(This article was commissioned by The New Left Project – click here for the NLP’s site)
A few days before the German federal election, the American commentator Bob Kuttner called upon German Chancellor Angela Merkel to use the election victory that was clearly in the making to change tack regarding the European Periphery. Focusing on Greece, Kuttner added to a chorus of commentators who have called for a Marshall Plan, accompanied by a generous degree of debt forgiveness, as a ‘second phase’ of the program of budget austerity and reform imposed on Greece over the past three years. Kuttner even suggested labeling it The Merkel Plan, so as to afford the Chancellor a timeless legacy for genuine ‘tough love’, as opposed to being permanently remembered, at least in the Mediterranean, for unremitting heartlessness toward citizens of countries bankrupted when the Eurozone’s architecture was found wanting.
The problem with Kuttner’s noble suggestion is that Germany cannot afford such largesse. Continue reading
Rather than the claim of German finance minister Wolfgang Schäuble that the rest of Europe needs austerity to be able to compete (The Guardian, July 19th), François Hollande was right to say in an interview with Le Monde (September 3rd) that Europe should stop apologising for the Eurozone crisis and its failure to recover growth and jobs, and act.
Asymmetrical monetary unions, wherever and whenever tried in combination with free trade and deregulated capital movements, ended up in tears and retribution. The Gold Standard, the various pegs between domestic currencies and the US dollar (S.E. Asia, Argentina, Mexico etc.), the ERM (European Exchange Rate Mechanism), the Eurozone that followed the latter’s collapse etc. they all resembled invasions of Russia – that is, a brisk beginning full of enthusiasm and hope, rapid progress that seemed unstoppable, followed by a heart wrenching slowdown as Cruel Winter took its toll, ending up with blood on the snow and infinite retributions thereafter.
This short paper offers a theoretical explanation of asymmetrical monetary unions’ inexorable slide toward crisis and explains:
(a) Why the Eurozone’s current response to its crisis (e.g. the so-called banking union decided upon, the ECB’s OMT, the insistence on austerity with ‘structural reforms) will ultimately fail, and
Is Chancellor Merkel right when she recently said: “Greece should not have been admitted into the euro area”? Continue reading
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Moralising is not a good foundation for macroeconomic policy, especially at a time of Crisis. Still, moral objections to sound policy recommendations must be taken seriously as they have the potential to prevent their adoption, with terrible consequences for all. Here, I respond to a Portuguese reader’s question regarding double standards in the moral assessment of the interest rates a debtor nation should pay. Continue reading
Portuguese readers have returned (see this and this, for the original Q&As) with two more questions on the Modest Proposal‘s limited debt conversion policy (with which we believe the Eurozone’s debt crisis could be dealt a decisive blow).
I do not understand quite well the “moral “ difference between mutualizing the debt above Maastricht rule and mutualize the debt only up to the 60%?
Let me build up my answer in three steps:
(a) Each of our member-states had the ‘right’ to run up debt up to 60% of GDP – I call this Maastricht Compliant Debt (MCD).
(b) If the ECB helps with the servicing of part of one’s debt, it is a form of assistance or aid.
(c) It is much easier to justify politically and even morally help in servicing a member-state’s MDC (since the member-state had the ‘right’ to that debt) than in servicing part of the debt that was somewhat ‘illicit’, ‘unapproved’.
The debt reconversion through the ECB will be for all Eurozone members? Or only for those who have excessive debt (above 60%)?
For any member-state of the Eurozone that wants it. Without any pre-approval by the Eurogroup, the troika or indeed any conditionality. By the same token, if any member-state does not want to be part of it, it does not need to be.
Our Q&As on aspects on the Modest Proposal 4.0 continue here with a barrage of pertinent questions posed by a Slovak reader. They concern our recommended Limited Debt Conversion Programme (Policy 2 here) with which we believe the Eurozone’s debt crisis can be resolved. (Tomorrow’s post continues the conversation turning to the issue of moral harazed, our policies involving the ESM and the EIB as well as the TARGET2-funded European Social Solidarity Programme that we are proposing). Continue reading
The debate on the Modest Proposal 4.0 is hotting up. Here are comprehensive answers to queries from Portuguese readers of Exrpesso magazine concerning debt haircuts, the European Stability Mechanism, the differences between a Debt Redemption Fund and our Modest Proposal etc. My answers were later incorporated into this comprehensive story by Jorge Nascimento Rodrigues.
A reader has sent us a set of questions regarding Modest Proposal 4.0 and, in particular, (a) the role of the ECB in converting the Maastricht compliant part of member-state public debt, and (b) the EIB’s involvement in our Investment-led Recovery Program. His questions allow us to clarify the proposed policies. Continue reading
For a year now, Europe has been lying to itself, pretending that the Euro Crisis has been, more or less, resolved. It is now clear that the Euro Crisis is alive and well and threatening Europe with disintegration, permanent damage, widespread poverty, a loss of democratic legitimacy and a swing toward misanthropy. Our Modest Proposal for Resolving the Euro Crisis has never been more pertinent. Version 4.0 is now out, co-signed not only by its original authors, Yanis Varoufakis and Stuart Holland, but also by James K. Galbraith who has contributed signficantly to its evolution.
This blog was initially established to discuss the global crisis of 2008 and, in particular, to promote our Modest Proposal for Resolving the Euro Crisis. As Version 4.0 of the Modest Proposal is being prepared (and will be published early next week), it is perhaps time to take stock of almost four years of Euro Crisis. Continue reading