Europe’s Monetary (Dis)Union
Europe's Progress Toward Economic Integration
New Opportunities and New Challenges
Euro Fantasies: Common Currency as Panacea
The Case for EMU: More than Money
EMU and International Conflict
The Dollar and the Euro
The Degeneration of EMU
The Future of the Euro
Why the Greek Crisis Will Not Ruin Europe’s Monetary Union
The Failure of the Euro
The Little Currency That Couldn’t
The Crisis of Europe
How the Union Came Together and Why It’s Falling Apart
Can Europe’s Divided House Stand?
Separating Fiscal and Monetary Union
Saving the Euro Will Mean Worse Trouble for Europe
Charting the Disastrous Choices Ahead
Can the Eurozone Be Saved?
Yes, but the EU Summit Was Too Little, Too Late
How to Save the Euro -- and the EU
Reading Keynes in Brussels
Why Only Germany Can Fix the Euro
Reading Kindleberger in Berlin
The Myth of German Hegemony
Why Berlin Can't Save Europe Alone
Europe's Optional Catastrophe
The Fate of the Monetary Union Lies in Germany’s Hands
Why the Euro Will Survive
Completing the Continent’s Half-Built House
Avoiding the Next Eurozone Crisis
How to Build an EU that Works
Europe After the Crisis
How to Sustain a Common Currency
Europe's New Normal
It's Here, It's Unclear, Get Used to It
So Long, Austerity?
Syriza's Victory and the Future of the Eurozone
Austerity vs. Democracy in Greece
Europe Crosses the Rubicon
Why Greece Will Cave—and How
Alexis Tsipras and the Debt Negotiations
Why Greece and Europe Will Still Stay Attached
How to Contain Athens' Economic Problems
A Pain in the Athens
Why Greece Isn't to Blame for the Crisis
The Agreekment That Could Break Europe
Euroskeptics, Eurocritics, and Life After the Bailout
When the euro was conceived two decades ago, few people expected it to have to weather a storm as great as the recent global economic and financial crisis. And many observers now think the entire European construct -- its institutions and currency -- has been so damaged by the crisis that it might not survive. A careful analysis of the problems within individual eurozone economies, particularly Greece’s, and in the architecture of the monetary union among them reveals what went wrong, how the EU has responded, and what the prospects of the euro really are.
Between 2008 and 2010, several things went wrong in Europe, the biggest of which was Greece’s financial crisis. For years, Greek fiscal policy had been unsound. Although private debt had been rising, the country’s overall debt-to-GDP ratio had not ballooned, because the Greek economy was growing. But that growth turned out to be unsustainable. When the global economic crisis hit, Greece’s deficit more than doubled. The problem was compounded by revelations that the government had grossly falsified and padded its budget in the run up to the 2009 parliamentary elections.
Unlike countries with national currencies, Greece could not address its problems through monetary policy. It can neither print money to inflate its debt away nor depreciate its currency to recover the international competitiveness of Greek goods and grow the economy out of debt. And unlike a subnational federal region in trouble, Greece, as a sovereign unit itself, could not have its falling revenues and rising social expenditures offset through simple fiscal transfers from the rest of Europe. Its labor force, moreover, is not mobile enough for excess to be exported elsewhere in the eurozone.
As far as the euro’s architects were concerned, this kind of problem should never have arisen. European financial markets should have put pressure on countries with excessive debt-to-GDP ratios, such as Greece, by charging them higher interest rates for loans. The European Central Bank (ECB) prohibits loaning money to service
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