Thursday, 26 May 2011

Euro crisis leaves 'Experts' confused

The former head of the German Bundesbank, Axel Weber, claims that there is nothing wrong with the Euro per se but that closer control of the budgets in the member states are required. But keeping a lid on the deficits in the states will do little to make sure that the competitiveness of individual economies does not diverge too much over time. One will have to see if there is any appetite for Brussels to control wages and prices in each state in command-and-control style.
At the same time a Jeremy Warner (Daily Telegraph) forgets to consider that it would be perfectly simple for a member state of the Eurozone to default and reset the level of its internal and external indebtedness. The main obstacle in the way of this solution to the problems the PIGS face is that the banking systems in the Eurozone are dangerously overexposed to transnational lending.

No comments: