link here to article
Ken Rogoff, is normally more conservative and more circumspect than he is in this post. He believes, along with more liberal economists like Paul Kruman. that Europe's response to the fiscal problems in the PIGS will make matters worse and that it could bring the European Union down if it is not changed. These countries do not have a liquidity problem. They are insolvent. Moreover, the fiscal policy that is being imposed on them by the ECB and the iMf will make matters worse. They need to restructure their debt and be in better position to stimulate their economies. The austerity program that is currently in favor in Europe is the wrong medicine.
He also raises the question about the impact of a deepening crisis in Europe on the rest of the world. Problems in Europe could bring the rest of the world down with them.
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