Financial Times
September 19, 2011
Response to Lawrence Summers
There is a big difference between the Vietnam War and the euro battle: it is hard to think that the former could have been won whatever the means deployed. But as regards the latter Lawrence Summers is right to point out that instead of acting promptly with overwhelming force, Europe has consistently been one day late and one euro short. The Greek crisis was after all a very small problem when it emerged. Denial, procrastination and parsimony have now led to contagion to the core.
Bygones are bygones, however, and the only question that matters is, what to do now? Mr Summers advocates a bold view of the future, a swift recapitalisation of banks and a reversal of the macroeconomic policy stance. All three are necessary, with the important caveat that most eurozone countries cannot afford a fiscal stimulus. Among the significant players only Germany has the possibility of changing course, and it will not do it. It may, at most, slow down consolidation, and this only will not change the landscape.
More
No comments:
Post a Comment