Athens University of Economics and Business
Department of Economics
February 2013
As a result of the financial crisis of 2008, the weaknesses of the Eurozone, including the public debt crisis, materialized in severe depressions in certain of its country members. We argue that the weakness of the Eurozone are structural and can be traced to (i) institutional differences, (ii) differences in the economic structures, (iii) the fundamental inability of European Bureaucracy to deal with crises, (iv) the extreme rigidity of markets which prevents a general equilibrium in product and credit markets. Our conclusion is that the eurozone is not sustainable, and we discuss the implications of dissolving it in the best interest of the international banking and financial system. We examine in detail the recent policies of the ECB of “cheap” credit expansion. The approach of the essay is along the lines of the Austrian (von Mises’ and Hayek’s) tradition. Additionally we present substantive international empirical evidence that supports the Austrian approach.
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