Abstract
In this chapter, we explore the key economic problems the European Union (EU) is facing, namely the crises of the Eurozone and its inability to promote economic growth in the wider Single Market. Here, we go back to the political and economic foundations of the Euro in the Maastricht Treaty, the creation of a ‘two-tier’ EU, and the background of the European debt crisis – with its epicentre in Greece.
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Notes
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http://diepresse.com/home/wirtschaft/international/500632/Korruption-und-Steuerhinterziehung_Griechenland-versinkt-im-Sumpf- Christine Lagarde remarked in the summer of 2012, to much criticism, that she felt more sympathy with children in Africa than tax evaders in Greece.
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Joseph Stiglitz (in The Guardian, 17 August 2012) argued that ‘No large economy has ever recovered from a downturn as a result of austerity. It is a certain recipe for exacerbating the recession and inflicting unnecessary pain on the economy. Any additional spending should address the longer-term problems – inequality and industrial restructuring – and target the neediest in society who, because of the downturn, are suffering the most. A more progressive tax structure – higher taxes at the top, lower taxes at the bottom – would stimulate the economy. Taxing the excessive speculation that goes on in the financial sector would also be a good thing.’
- 31.
A Bloomberg editorial entitled cast the role and responsibility of Germany in the debt crisis in this light: In the millions of words written about Europe’s debt crisis, Germany is typically cast as the responsible adult and Greece as the profligate child. Prudent Germany, the narrative goes, is loath to bail out freeloading Greece, which borrowed more than it could afford and now must suffer the consequences.…By December 2009, according to the Bank for International Settlements, German banks had amassed claims of $704 billion on Greece, Ireland, Italy, Portugal and Spain, much more than the German banks’ aggregate net capital. In other words, they lent more than they could afford.…Irresponsible borrowers can’t exist without irresponsible lenders. Germany’s banks were Greece’s enablers.’ It concluded that ‘Europe’s taxpayers have provided as much financial support to Germany as they have to Greece.’
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Gros, ‘Macroeconomic Imbalances in the Euro Area: Symptom or Cause of the Crisis?’ Centre for European Policy Studies, Policy Brief, No. 226, Brussels (2012).
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Keynes, The Economic Consequences of Mr. Churchill. Essays in Persuasion, Macmillan, London (1931).
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When, on May 6th, 2011, Der Spiegel reported that the Greek government was threatening to stop using the Euro, the currency suffered its worst two-day plunge since December 2008. The report is available online athttp://www.spiegel.de/international/europe/athens-mulls-plans-for-new-currency-greece-considers-exit-from-euro-zone-a-761201.html.
- 35.
For more on this subject see Mark Weisbrot and Luis Sandoval, ‘Argentina’s Economic Recovery: Policy Choices and Implications,’ published by the Centre for Economic and Policy Research, October 2007.
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Krugman, ‘Crash of the Bumblebee’ The New York Times, July 29 (2012).
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Theodore, J., Theodore, J., Syrrakos, D. (2017). Europe at a Crossroad. In: The European Union and the Eurozone under Stress . Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-52292-0_2
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