Monday, 8 August 2016

The Greek Disaster and the Future of the EMU [audio]

Max Planck Institute for the Study of Societies
Lecture Series: One Crisis - Nineteen Points of View: The Division of the Euro Area from its Members' Perspective
Cologne | May 10, 2016

Costas Lapavitsas explores the fundamental causes of the Greek debt and public finance crisis since 2009. He shows how closely these causes are related to the functioning and policies of the EMU, particularly to the divergence of nominal unit labor costs, which is due mostly to extraordinary German wage moderation. The competitive advantage gained by Germany is the fundamental cause of the EMU crisis and the associated Greek disaster. The policies of austerity and fiscal stabilization have caused a depression in Greece with no real prospects of sustained growth in the future. Greece needs a different set of policies, including debt forgiveness and exit from the EMU, to begin to recover. Moreover, for Europe as a whole, the EMU needs to be thoroughly reconsidered, including a dismantling of key practices and institutions.