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posted on 26 April 2016

Wolfgang Streeck: I Think We Have To Abandon The Euro, Which Is A Disaster.

from Dirk Ehnts, Econoblog101

Wolfgang Streeck has given an interview to the Spanish magazine CTXT.

He says:

Creo que hay que acabar con el euro, es un desastre. En tanto en cuanto exista el euro en su forma actual, la situación de los pa'ses mediterrflneos continuarfl empeorando y la de los alemanes, mejorando. No hay posibilidad de crear mecanismos igualitarios en Europa. Hay gente de los pa'ses del sur que tiene la esperanza de que en algún momento, alguien convencerfl a los gobiernos del norte de que les interesa rebajar la competitividad de la econom'a alemana para incrementar la de la italiana. Esto es una completa ilusión.

A translation into English would roughly look like this (I am neither native in English nor in Spanish, so I kept as close to the Spanish as I could):

I think we have to abandon the euro, which is a disaster. que hay que acabar con el euro, es un desastre. Insofar as the euro exists in its actual form, the situation of the Mediterranean countries will continue to worsen and that of the Germans will continue to improve. There is no possibility of creating egalitarian mechanisms in Europe. There are people in the countries of the South that have the hope that at some moment, somebody will convince the governments of the South that it would be of interest to put down the competitiveness of the German economy to help increase that of the Italian. This is a complete illusion.

So, Streeck ignores the taboo that exists in the group of academic economists, which is that the euro cannot be put into question. However, I do not agree with Streeck's economics. The German government is not supposed to decrease the competitiveness of its economy, but is supposed to create more demand so that the current account moves towards balance. This, I believe, is still in the cards. However, I do not think that it will happen with the government that Germany now has, nor with the next one. The taboo regarding the euro has worked quite well, and it will take some years to break down the ideas of competitiveness and bad debt/Swabian housewife so that we can move forward again. Perhaps European integration will break down before that happens, but then this is the result of an intellectual failure of European elites. It would not be the first time.

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