Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
The euro has got these huge problems for a simple reason: salaries rose far too quickly in the periphery and far too slowly in Germany. At least that is true when we speak of Spain and Ireland as the periphery:

Salaries rise when house prices rise. Adam Smith said that wages must inevitably rise when the necessary living costs rise. The problem of Europe is high economic rent. Too much credit, unproductive loans and household debt, low or non-existent land tax, large monopoly profits. Competitive economy has a low economic rent. That is what competitiveness is. Banana republics (like eurozone?) have a large one. Labour and industries are punished, privileges rewarded. The German surplus, unproductive credit and debt was directed to peripherals not to Germany. And now Germany and neoliberals cannot accept the fact that german banks have destroyed the wealth of german savings, their labour and industry.

by kjr63 on Fri Dec 24th, 2010 at 06:40:10 AM EST
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