Sunday, August 21, 2011

Germany Must Choose Between Two Undesirable Choices To Save Euro

link here to article

Barry Eichengreen boils the Euro Zone crisis down to the problems in Italy. Its debt is too large for current approaches to remedy. Italy's economy must grow at least 1% and inflation must be at least at 2% so that the sum is equal to or greater than the 3% that it pays for debt. The future of the Euro Zone is in the hands of Germany. It has to choose between two fixes: support for Euro bonds, or support for greater Euro Zone inflation.

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