Bill Mitchell — Either the Eurozone as we know it is dead or Italy goes out – latest research

It’s Wednesday and my snippet day, which just means I don’t write as much so that I can write more elsewhere. But today, I summarise some research that has just been released which seeks to assess the sensitivity of the commitment by the Italian population to the euro to tolerating further austerity. The research finds that if the technocrats start forcing Italy into austerity measures via a return to the Excessive Deficit Mechanism (and enforcement of the Stability and Growth Pact fiscal rules) then the majority will prefer to leave the Economic and Monetary Union. The majority are happy to retain the euro but only if there is no austerity and structural reforms imposed on the nation. This is a big swing in public sentiment and will give the neoliberals in Brussels one huge headache. Either their neoliberal monetary union is done, or they will face instability from one of the largest euro economies.

Failure was built into the assumptions on which the EZ was based. Now the inevitable conclusion is unfolding. The institution of the EZ was based on wagging the dog's tail. The monetary union was supposed to lead to a political union, which was unpopular and could not pass. However, a political union is required for a monetary union, as in the US. The EZ was built on emulating the US but with the cohesion of an actually federation across which fiscal could be distributed seamless. Europe as it stands is is not capable of being a single currency zone for a translational currency. It was and is a pipe dream.

Bill Mitchell – billy blog
Either the Eurozone as we know it is dead or Italy goes out – latest research
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia