Nobel prize winning US economist says Euro "utter economic failure"
Amid growing indications of shifting American opinion about the European Union following the Brexit vote, Nobel Prize winning economist Joseph Stiglitz says the Euro has been a disaster and collapse could now be inevitable
In an interview to mark the launch of his new book, The Euro: How a Common Currency Threatens the Future of Europe, Nobel Prize winning, and Left-leaning, US economist Joseph Stiglitz has issued a stark warning that the euro has been a failure and that its collapse is a very real possibility.
Echoing sentiments that British eurosceptics have voiced for two decades, Stiglitz told the New Republic:
"[The Euro] impeded or made impossible the ability to adjust when there was a shock. It was a big shock, 2008, and the basic idea was that exchange rate systems are part of the adjustment mechanism. And when they created the euro, they took away that adjustment to a shock, and they didn’t put anything in its place".
"European officials thought that austerity was part of what they called their “convergence policies,” of trying to bring countries together. Instead, it actually made things worse. There’s more inequality within countries and more disparity across countries."
Setting the situation in a broader frame, Stiglitz's core observation is damning:
"The euro really didn’t start until 1999, so it didn’t even have a decade of success before the crisis. The crisis period has now been almost as long as the period before the crisis, and you have to say it’s been an utter economic failure.
"Because of the structure of the Eurozone, there’s nothing the individual country can do to get out of the mess except to accept depression and this horrific kind of adjustment process, which really clearly undermines society. You see it happening over and over again."
Though Stiglitz argues in his book that it could be theoretically possible to save the single currency -- via measures such as a banking union -- he does not appear to think this likely. An amicable break up, he says, would be far preferable to the status quo.
This is an important intervention, and there is already talk in influential quarters that it could affect sentiment towards the euro in the context of market readjustments to the Brexit vote on June 23.
In a recent article for Marketwatch entitled: Stiglitz's attack could tilt debate on the euro, the author, Darrell Delamaide, said,
"...the timing of his new book in the fragile post-Brexit environment and the compelling nature of his arguments presented in a detailed and systematic fashion may represent a tipping point in debating the future of the EU."
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