The risk is that the eurozone has no plan other than fresh rounds of austerity, effectively betting on global growth and even bigger trade surpluses. That would not even qualify as a sound plan B. Instead, a proper recovery plan must include a lasting return to normal fiscal policies, normal public investment spending in particular.
This is the lynchpin of the “Euro Treasury Plan” which foresees a Euro Treasury that pools future eurozone public investment spending funded by proper Euro Treasury securities. This is done in a steady fashion and both investment grants and the interest service burden on the common debt are split among members based on their GDP shares. Figure 1 shows very clearly what the problem is: to really recover the eurozone will have to invest in its own future again.Multiplier Effect
Euroland Has No Plan B: It Needs an Urgent Recovery Plan
Jörg Bibow
Good column by Bibow, as usual. I'm glad to see people are finally addressing deep and pervasive failures in the developed world economies, and putting aside the obsessive focus on short-term countercyclical techniques associated with various forms of monetary or fiscal "stimulus".
ReplyDeleteFundamentally, the societies in the developed world have failed to organize their inchoate and confused views about the various possible futures that are open to them, and put them into a coordinated strategic investment plan for transformational socioeconomic change.
"No Plan B" = Technical incompetency
ReplyDeleteWho needs a plan B, austerity is working splendidly!
ReplyDeleteSeems to be working fine for some. A lot of people is now better off than ever in Europe, great "deals" are being done, etc.
ReplyDeleteLet's not assume that the elites care about the majority of the people.