First published in Le Monde. Translated by David Broder.
No European sovereign, no real budget; no budget, no viable economic policy. As long as Europe does not break out of this dilemma, the Eurozone will remain mired in the vicious circle of stagnation, resentment, and conflicting responsibilities. If a budgetary federalism is out of reach, it is crucial that we can adjust exchange rates in order to give dynamism to growth and employment. And this requires leaving the currency union.
"If I told you eight years ago that America would reverse the great recession, reboot the auto industry, and unleash the greatest stretch of job creation in our history ... you might have said our sights were set a little too high." Thus boasted the former US president Barack Obama in his farewell address. But is the financial crisis really behind us? Has the strategy implemented to save the banks not, on the contrary, created the conditions for the next conflagration? Cédric Durandwrites.
An abbreviated version of this article appeared in the February 2017 Le Monde diplomatique. Translated by David Broder.
Figure 1: GDP growth in the advanced economies
Happy anniversary! On 2 April 2007, New Century Financial Corporation entered into liquidation. The collapse of this US real estate investment company — the second biggest provider of the now-infamous subprime mortgages — fired the starting gun on a financial crisis bigger than any the world had seen since 1929. Ten years on, capitalism is still yet to recover from this major shock. Growth is sluggish, under-employment endemic and the extreme monetary policies implement by central banks are reaching their limits.
The second Ιnternational Conference of EReNSEP (The European Research Network on Social and Economic Policy), "France and Europe after Brexit", was held in Paris December 2-3, 2016. Videos from the event — including presentations by Costas Lapavitsas, Heiner Flassbeck, Stathis Kouvelakis, and Cédric Durand — are available on YouTube.
The collective statement below was drafted following the conference, and signed by 25 academics, writers, and politicians.
via Wikimedia Commons.
These are critical moments for Europe. It is clear that the Economic and Monetary Union has irrevocably failed, the economies of the periphery of Europe remain in severe crisis, and the economies of the core lack any impetus. The single currency has become a tool for Germany to implement mercantilism through wage dumping and — with the support of other core economies of the EMU — to dictate “structural reforms," which create economic stagnation, poverty, and unemployment. The big corporations and promoters of neoliberalism are taking advantage of the crisis to intensify their offensive against the social and democratic conquests of the twentieth century.
First published on the blog of the Centre de recherche en Économie at Sciences Po. Translated by David Broder.
Upon its introduction at the turn of the millennium, the euro was widely perceived as a major achievement for Europe. Its apparent economic success, combined with the convergence of multiple economic indicators across the various countries, fed this feeling of success. A few years later, the picture looks radically different. The global financial crisis has revealed the imbalances that led to the sovereign debt crisis and which have driven the Eurozone to the brink of breaking apart. The austerity policies that became a continent-wide norm in 2011 have fuelled a long stagnation [See the reports of the independent Annual Growth Survey (iAGS)], with growth rates paling in comparison to those of the United States and the United Kingdom.
This economic under-performance has fed popular resentment against the euro, with a growing number of Europeans today considering it the problem rather than the solution. The financial community itself seems to be preparing for the possibility of leaving or dissolving the single currency, by reducing its cross-border exposure. Greece came close to breaking away in 2015. Finally, the intellectual atmosphere has also changed: leading thinkers like the American economist Joseph Stiglitz and the German sociologist Wolfgang Streeck are but the most visible representatives of a more generalised change in attitudes.