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Reply #49: Killing the Euro By PAUL KRUGMAN [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-02-11 08:07 AM
Response to Reply #5
49. Killing the Euro By PAUL KRUGMAN
http://www.nytimes.com/2011/12/02/opinion/krugman-killi...

Can the euro be saved? Not long ago we were told that the worst possible outcome was a Greek default. Now a much wider disaster seems all too likely.

True, market pressure lifted a bit on Wednesday after central banks made a splashy announcement about expanded credit lines (which will, in fact, make hardly any real difference). But even optimists now see Europe as headed for recession, while pessimists warn that the euro may become the epicenter of another global financial crisis.

How did things go so wrong? The answer you hear all the time is that the euro crisis was caused by fiscal irresponsibility. Turn on your TV and youre very likely to find some pundit declaring that if America doesnt slash spending well end up like Greece. Greeeeeece!

But the truth is nearly the opposite. Although Europes leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending in Europe as a whole. And their efforts to fix matters by demanding ever harsher austerity have played a major role in making the situation worse...
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