http://www.voxeu.org/article/ez-crisis-consensus-narrative
The Eurozone needs fixing, but it is impossible to agree upon the steps to be taken without agreement on what went wrong. This column introduces a new CEPR Policy Insight that presents a consensus-narrative of the causes of the EZ Crisis. It was authored by a dozen leading economists from across the spectrum. The consensus narrative is supported by a long and growing list of economists.
The Eurozone Crisis broke out in May 2010; it is a long way from finished. Although some positive signs have emerged recently, EZ growth and unemployment are miserable and expected to remain miserable for years.
A large slice of Europe’s youth have been or will be jobless during the critical, formative years of their working lives;
The economic malaise is feeding extremist views and nationalistic tendencies just when Europe needs to pull together to deal with challenges ranging from the migration crush to possible new financial shocks.
Worse yet, many of the fragilities and imbalances that primed the monetary union for this crisis are still present.
Many of Europe’s banks face problems of non-performing loans;
Many are still heavily invested in their own nation’s public debt – a tie that means problems with banks threaten the solvency of the government and vice versa;
Borrowers across the Continent are vulnerable to the inevitable normalisation of interest rates that have been near-zero for years.
As a first step to finding a broad consensus on what needs to be done to fix the Eurozone, we have written what we consider to be a consensus narrative of the Eurozone Crisis. It is published today as CEPR Policy Insight 85, which can be downloaded for free from:
http://www.voxeu.org/sites/default/files/file/Policy%20Insight%2085.pdf
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