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Euro Division
German Economists Push for Exit Clause
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  • Anthony

    “In its attempts to rescue the euro, Germany is often seen as the odd country out….It is often claimed the German approach to the euro crisis, and its emphasis on price stability in particular, is based either on its narrowly defined interest as a capital surplus country or on the historical experience of hyperinflation in the Wiemar Republic.”

    Perhaps, Ordoliberalism gives additional insight to WRM’s survey:

    Ordoliberalism differs from other schools of liberalism in that it places a greater emphasis on preventing cartels and monopolies, but it keeps a number of beliefs central to other strands of economic liberalism….There are very few academic economists explicitly working in the ordoliberal tradition today. However, most influential economists (German) in today’s universities and in the public sector have been influenced by ordoliberal ideas during their education….In fact, the German consensus is close to what is known internationally as New Classical Economics – that is, the modern branch of macroeconomics that builds on neoclassical microeconomics, with its strong influence of rational expectations. Economists of this paradigm believe that markets always work smoothly – that is, financial markets always get the price of assets in a way that reflects all relevant information correctly. They also believe national economies have the capacity to swiftly adjust to shocks. If prices and wages sometimes do not react quickly, they would argue that this is due to institutional barriers such as collective bargaining or legal minimum wages. The solution is structural reform to make markets more flexible. Fiscal problems are mainly a consequence of irresponsible behavior by policymakers, which in turn leads to a number of policy positions.” For additional background and context to WRM’s thesis see: http://www.ecfr.eu/article/commentary_the_long_shadow_of_ordoliberalism

  • Andrew Allison

    WRM misunderstands “A permanently unco-operative member state should not be able to threaten the existence of the euro,” the economists said in a special report, published on Tuesday, calling for countries to exit the eurozone if it is necessary as an “utterly last resort”. This is simply a reiteration of Schäuble’s position that Greece (and countries which find themselves in the same situation) would be better off outside the eurozone. The members of the Eurogroup already have the option to resign and reintroduce their own currencies. What’s missing is a mechanism to eject a “permanently uncooperative member”.

  • Jacksonian_Libertarian

    Like cracks in a Dam, the EU and the Euro are beginning to crack.

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