The Euro and Europe’s economic stagnation

Published on March 31, 2015   30 min

Other Talks in the Series: Hot Topics

0:00
Dear listeners, my name is Jan Willem Blankert. I'm an analyst of events in Europe and in Asia. In this talk I want to discuss with you Europe's most serious problem today, the six-year economic slump of the Eurozone. It's the longest period, consider that, of peacetime economic stagnation in Europe. The longest period of peacetime stagnation since the Great Depression of the 1930s. How can we improve the living standards of the people in the EU? How can we restore the economic growth path we were on?
0:36
I would first like to see with you how this long slow down can be explained and, second, if there's a way out. My conclusion is that the main reason for this continuous half-recession has been wrong policies applied by myopic policymakers who have been focusing on the wrong issues. It is sad to see the outright suffering this has caused in southern Europe and the stagnation and lack of progress in Eurozone countries in general, including Germany, where in spite of the praise the country receives, real progress of income per head has been practically zero for over the last decade. Full disclosure, my talk is based on the first chapter of a book I'm writing about the euro, how it works, and how bad policies have contributed to bad economic outcomes. So, my idea is to give you a sort of a pre-taste now of that book.
1:33
If we are lucky, the Eurozone will see some economic growth in 2015 after six years of stagnation, from 2009 to 2014. The crisis that began in 2009 affects all Eurozone members. In 2014, the Eurozone economy was 1.5% smaller than in 2008. Even the economy of Germany, 'top performer', was no more than a meager 3% larger than in 2008. In the years before 2008, annual economic growth rates of between 1.5% and, say, 2% were the standard. Unemployment in the Eurozone stands well above 11% now. I'm talking 2015. That is more than twice as high as unemployment in the United States. Political leaders in the European Union hail the prospect of a possible, modest 1% economic growth in Spain in 2015, maybe even 1.5%. Fine, but this is after six years during which Spain saw its economy shrink by 8%, unemployment go up to 25%, and youth unemployment to 50%. Yes, this step at growth is a success, if coming out of a disaster can be considered a success. For Greece the story is salary decreases of 25%, pensions slashed by 40%, tens of thousands of government workers fired, and the health care system in shambles. At the same time, the rich in Greece still escape paying their taxes.
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The Euro and Europe’s economic stagnation

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