Monthly Archives: August 2012

By A. Edward Gottesman

It’s only money, for heaven’s sake! The euro is a great convenience for trade and travel, and it is a powerful symbol of unified purpose for countries that have been at each other’s throats for 1000 years. But it doesn’t cure cancer or the common cold. In October, Angela Merkel, German chancellor, said: “If the euro collapses, then Europe collapses.” This hyperbole may have worked as scare politics, but it was bad economics. Keynes identified as long ago as 1923 what we can now call the Merkel mistake:

“Conservative bankers regard it as more consonant with their cloth, and also as econo­mising thought, to shift public discussion of financial topics off the logical on to an alleged ‘moral’ plane, which means a realm of thought where vested interest can be triumphant over the common good without further debate.”

 Read more

Heleen Mees

Last week both the ECB’s governing council and the Fed’s rate setting committee FOMC convened. Since the problems in the eurozone are of a different nature than those in the United States, there is no reason for the ECB and the Fed to employ the same instruments. Read more