This Is The Way The Euro Ends

Paul Krugman Conscience of a Liberal November 10, 2011

This is the way the euro ends.

Not with a bang but with bunga-bunga.

Seriously, with Italian 10-years now well above 7 percent, we’re now in territory where all the vicious circles get into gear — and European leaders seem like deer caught in the headlights. And as Martin Wolf says today, the unthinkable — a euro breakup — has become all too thinkable:

A eurozone built on one-sided deflationary adjustment will fail. That seems certain. If the leaders of the eurozone insist on that policy, they will have to accept the result.

Every even halfway plausible route to euro salvation now depends on a radical change in policy by the European Central Bank. Yet as John Quiggin says in today’s Times, the ECB has instead been part of the problem.

I believe that the ECB rate hike earlier this year will go down in history as a classic example of policy idiocy. We would probably still be in this mess even if the ECB hadn’t raised rates, but the sheer stupidity of obsessing over inflation when the euro was obviously at risk boggles the mind.

I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what’s needed to avoid that failure. Irresistible force, meet immovable object — and watch the explosion.

Paul Krugman is an Op-Ed columnist for The New York Times.

Some links to stuff I've written bearing on macroeconomic policy. Read all of them, and you'll have a good sense of where I'm coming from.

Will our political system delay the energy transformation now within reach?

The stark reality is that we have a society in which money is increasingly concentrated in the hands of a few people. This threatens to make us a democracy in name only.

The weaponized Keynesians are out in full force.

There were alternatives to the economic doctrine that championed bank bailouts and mass suffering from the public. Look at Iceland.

It's looking more and more as if the euro system is doomed as one rescue plan after another falls flat and a vicious circle takes hold.

November 10

Original Sin And The Euro Crisis

Italy's fatal fall.

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It’s Not About Welfare States

What isn't troubling the euro.

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Governor Goodhair

Molly Ivins was right.

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This Is The Way The Euro Ends

Hoo boy.

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I Am A Frankfurter

But can I cut the mustard?

From the Opinion Blogs Latitude The Chavez Way

If you're not a dyed-in-the-wool Chavista, just going to the Venezuelan consulate feels like entering enemy territory.

Campaign Stops Contrarian Common Sense

Liberals and conservatives defied conventional wisdom this week and did the right thing.

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Italy's fatal fall.

November 10

It’s Not About Welfare States

What isn't troubling the euro.

Governor Goodhair

Molly Ivins was right.

This Is The Way The Euro Ends

Hoo boy.

I Am A Frankfurter

But can I cut the mustard?

From the Opinion Blogs Latitude The Chavez Way

If you're not a dyed-in-the-wool Chavista, just going to the Venezuelan consulate feels like entering enemy territory.

Campaign Stops Contrarian Common Sense

Liberals and conservatives defied conventional wisdom this week and did the right thing.

What isn't troubling the euro.

November 10

Governor Goodhair

Molly Ivins was right.

This Is The Way The Euro Ends

Hoo boy.

I Am A Frankfurter

But can I cut the mustard?

From the Opinion Blogs Latitude The Chavez Way

If you're not a dyed-in-the-wool Chavista, just going to the Venezuelan consulate feels like entering enemy territory.

Campaign Stops Contrarian Common Sense

Liberals and conservatives defied conventional wisdom this week and did the right thing.

Molly Ivins was right.

November 09

This Is The Way The Euro Ends

Hoo boy.

I Am A Frankfurter

But can I cut the mustard?

From the Opinion Blogs Latitude The Chavez Way

If you're not a dyed-in-the-wool Chavista, just going to the Venezuelan consulate feels like entering enemy territory.

Campaign Stops Contrarian Common Sense

Liberals and conservatives defied conventional wisdom this week and did the right thing.

Hoo boy.

November 09

I Am A Frankfurter

But can I cut the mustard?

From the Opinion Blogs Latitude The Chavez Way

If you're not a dyed-in-the-wool Chavista, just going to the Venezuelan consulate feels like entering enemy territory.

Campaign Stops Contrarian Common Sense

Liberals and conservatives defied conventional wisdom this week and did the right thing.

But can I cut the mustard?

If you're not a dyed-in-the-wool Chavista, just going to the Venezuelan consulate feels like entering enemy territory.

Liberals and conservatives defied conventional wisdom this week and did the right thing.

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This Is The Way The Euro Ends

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