From Prof Emiliano Brancaccio, Prof Riccardo Realfonzo and others.
Sir, The European crisis continues to destroy jobs. The employment crisis strikes, above all, the peripheral member countries of the European monetary union, where an exceptional rise in bankruptcy is also under way, whereas Germany and the other central countries of the eurozone have instead witnessed growth on the job front. The European authorities have taken a series of decisions that have in actual fact, contrary to announcements, helped to worsen the recession and widen the gaps between the member countries. In June 2010, when the first signs of the eurozone crisis became apparent, a letter signed by 300 economists pointed out the inherent dangers of austerity policies, which would further depress the demand for goods and services as well as employment and incomes, thus making the payment of debts, both public and private, still more difficult. This alarm was, however, unheeded. The European authorities preferred to adopt the fanciful doctrine of “expansive austerity”.

The correction of the imbalances within the eurozone would require concerted action on the part of all the member countries. Expecting the peripheral countries of the union to solve the problem unaided means requiring them to undergo a drop in wages and prices on such a scale as to cause a still more accentuated collapse of incomes and violent debt deflation with the concrete risk of causing new banking crises and crippling production in entire regions of Europe.
John Maynard Keynes opposed the Treaty of Versailles in 1919 with these far-sighted words: “If we take the view that Germany must be kept impoverished and her children starved and crippled . . . If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp.” Even though the positions are now reversed, with the peripheral countries in dire straits and Germany in a comparatively advantageous position, the current crisis presents more than one similarity with that terrible historical phase, which created the conditions for the rise of Nazism and the second world war. All memory of those dreadful years appears to have been lost, however, as the German authorities and the other European governments are repeating the same mistakes as were made then. This short-sightedness is ultimately the primary reason for the waves of irrationalism sweeping over Europe, from the naive championing of flexible exchange rates as a cure for all ills to the more disturbing instances of ultra-nationalistic and xenophobic propaganda.
In the absence of conditions for a reform of the financial system and a monetary and fiscal policy making it possible to develop a plan to revitalise public and private investment, counter the inequalities of income and increase employment in the peripheral countries of the union, the political decision makers will be left with nothing other than a crucial choice of alternative ways out of the euro.

by James Harkin

In 2009, engineers at Google claimed they could predict the progress of flu epidemics simply by looking at the words people were typing into their browsers. The idea was both plausible and ingenious; since Google services 3bn search queries every day, the company is quite capable of tracking how often people are asking about flu symptoms or medicine.
Crucially, however, the algorithm for crunching all this information didn’t depend on hunting for obvious flu-related words or phrases. All it needed to do was to work out a correlation – a statistical relationship between previous outbreaks of flu and the search terms being entered at the time. For the engineers at Google Flu Trends these findings, published in the scientific journal Nature, represented a Eureka moment. In a future epidemic, they reckoned, they would be able to chart the spread of the virus as it was happening – and much faster than the medical authorities.

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by Geoffrey Wood

Germany keeps being told that it must pay up to save the euro. But how much can Germany pay? No one seems to have thought about that, but there is already concern about the possible size of the bill. German bond yields rose soon after news of the Spanish bailout, even before it was announced where the money was going to come from. (And it was a bailout for Spain, regardless of what Spain’s prime minister says. If I borrow money and then lend it to someone else, I’ve still borrowed it.)

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by Martin Wolf

Yet again, the EU is about to hold a summit to deal with the crisis in the eurozone. Yet again, it is likely to fall far short of a convincing solution. A heavy weight rests on the shoulders of weary and disillusioned leaders. The question is whether there is hope for success.
What is needed, as I have argued before, is a solution that is both politically feasible and economically workable. The former means an ability not only to achieve agreement among governments responsible to national electorates, but also to obtain at least toleration of that agreement among those voters, something that greatly worries Angela Merkel, the eurozone’s most significant politician. Economic workability means offering electorates enough hope for the future to persuade them to elect leaders prepared to stick with membership of the eurozone.

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By Costas Lapavitsas

Greek politics is splitting into two camps to contest the coming election, one led by the rightwing New Democracy, the other by the leftwing Syriza. Both insist Greece must stay in the eurozone, even though New Democracy accepts the bailout programme, while Syriza rejects it. Yet harsh reality is now imposing itself. If Greece stays in the eurozone, it will die a slow death. If it leaves, it will go through a crisis, but will also have the opportunity to recover and reshape its society.

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dby Philip Stephens

I keep hearing people say don’t blame the rating agencies. My first reaction is why not? After due and sober reflection my considered response is why the hell not?

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