Bill Mitchell — Eurozone has failed – a major shift in direction is needed

Summary analysis from Bill: It's the (neoliberal) design, stupid.

Conclusion
As it stands, the Eurozone is a failed system. It has been for 14 years.
Unless there is a major shift in thinking it will continue to be.

The fix —

What is required immediately is: 

1. Overlook the SGP rules – allow nations to exceed the deficit and debt thresholds (encourage them to do so) – they can invoke the emergency let outs in the Treaty. 

2. Announce that the ECB will buy any government debt. This can be done within the Treaty via the secondary markets. That will eliminate any problems with bond markets and higher yields. The ECB can guarantee solvency implicitly in this way and still stick within the legal constraints. 

3. Announce a massive public employment and public infrastructure program throughout Europe. That would eliminate unemployment and spur growth in private spending. 

4. Do not waste time introducing a quantitative easing program. All bond purchases should be tied to increasing fiscal deficits. 

5. Provide a demogrant of some euro amount to all people in the bottom 3 quintiles of the income distribution funded by the ECB. That would flow straight into the expenditure stream. There is nothing in the Treaty rules that say the ECB cannot do this. They just cannot bail out governments or allow overdrafts to them.

Bill Mitchell – billy blog
Eurozone has failed – a major shift in direction is neededBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

1977 European Commission MacDougall Report

   (commentary posted by Roger Erickson)
Bill Mitchell: "If you read [this] Report in detail you will wonder why the Eurozone [currency union] was ever created."

We wonders, my precious, yes, we wonders.

So why was it created, over the objections of all then-rational people? Several of it's early proponents have since issued mea culpas, but not enough to matter. Yet apologies are not needed. Only corrections and fixes.

Yet it all comes down to methods. A common saying posits that any set of methods will work, if you get the right people to run it.

What were and are the Desired Outcomes of the currency union?

Are they being met?

Does the EZ even have a method for assessing whether Outcomes are being met or not?

If they do, have EZ citizens elected the right people to make this system work?

                                          ***

So why was the ECU created, despite rampant warnings? The core answer framework is circular, even before considering the details that Bill Mitchell reviews.

Clearly, many European governments, plus EEU Parliamentarians, were elected that did not represent the interests of European citizens.

Also clearly, that only happened because European citizens did not elect representative who had their citizen's interests in mind.

If citizens don't know where they want to go, all voting options look the same?
Citizens of Europe - and everywhere - only greater distribution of adequate Situational Awareness will save you now, or ever.