Paul Krugman* knows best

7 Ago

This Morning’s Grim Eurothought

Ryan Avent has a further take on the mess in Yurp:

The European Union, and its single-currency extension, were forged in the decades following the war in an effort to make sure that war never again divided and savaged the continent. But strangely enough, in the effort to tie itself together, Europe imposed some of the same fiscal and monetary constraints that precipitated the collapse of the 1930s. And here we are, watching history repeat itself. Within a Europe riven by imbalances, the fiscal and monetary screws are once again being applied to countries with no hope of escaping their financial burdens. Markets are attacking, and efforts to salvage the situation through massive aid packages are emerging too small and late to matter. The pressure within the squeezed economies is building, and that pressure will find a release, one way or another. A Europe hoping never to repeat its historical tragedies has gone and blundered into institutions that make those same tragedies more likely. The European project, as it looks now, has failed.

Indeed. The Great Depression in Europe, which was key to the political disaster of the 1930s, had a lot to do with the constraints of the gold standard.

It’s therefore a bitter irony that in the attempt to prevent history from repeating itself, European leaders imposed what amounts to a new gold standard — and when things went wrong, demanded that afflicted nations impose Chancellor Bruening policies.

Avent is right that this is all taking place on a much smaller scale than in the 1930s; I don’t expect to see fanatical Greek armies overrunning the continent. But it’s still a terrible story of folly.

*Paul Krugman recebeu o Prémio de Ciências Económicas em Memória de Alfred Nobel em 2008, é professor de Economia em Princeton e colunista no The New York Times. Para este e mais artigos passem pelo seu blog The Conscience of a Liberal.

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