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As the Eurozone hangs on the precipice, the European Commission and the ECB must take swift action to remedy Europe’s deflationary spiral

de Grauwe, Paul (2012) As the Eurozone hangs on the precipice, the European Commission and the ECB must take swift action to remedy Europe’s deflationary spiral. LSE European Politics and Policy (EUROPP) Blog (07 Jun 2012) Blog Entry.

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Abstract

The seeds of the current crisis were sown nearly twenty years ago when European leaders agreed to create a currency without a country. Now, the Eurozone is split in two, with the creditor countries of the north able to borrow at next to zero interest rates, and those of the south facing massive deficits and economic instability. But both face a prescription of heavy austerity from the European Commission. Paul De Grauwe argues that the ECB and the European Commission can no longer afford to sit on the sidelines while the stability Eurozone continues to be undermined by those who fear for its future. The ECB must step in to guarantee the bonds of solvent but illiquid countries, such as Ireland, Spain, Portugal and Italy, the European Commission must encourage surplus countries to spend to offset the southern countries’ deficits, and the Eurozone must take steps towards budgetary union.

Item Type: Website (Blog Entry)
Official URL: http://blogs.lse.ac.uk/europpblog/
Additional Information: © 2012 The Author
Library of Congress subject classification: J Political Science > JA Political science (General)
J Political Science > JN Political institutions (Europe)
Sets: Departments > European Institute
Collections > LSE European Politics and Policy (EUROPP) Blog
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 20 Sep 2012 15:34
URL: http://eprints.lse.ac.uk/46223/

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